Alliant Energy units, John Deere Capital, Vestjysk Bank tap primary; utility bonds gain

By Andrea Heisinger

New York, June 10 - Wisconsin Power & Light Co., Interstate Power & Light Co., John Deere Capital Corp., Maxim Integrated Products Inc., Bank of Nova Scotia and Denmark's Vestjysk Bank AS each priced mostly small deals in the investment-grade bond market on Thursday.

An upsized sale was done by John Deere Capital in mid-afternoon. The financing arm of Deere & Co. priced $500 million of three-year notes at the tight end of guidance, after initially announcing a size of $300 million.

Utilities Wisconsin Power & Light and Interstate Power & Light, both subsidiaries of Alliant Energy Co., priced their deals early in the afternoon. Wisconsin Power priced $150 million of 10-year notes, and Interstate Power sold $150 million of five-year notes.

Vestjysk Bank sold its $500 million issue of three-year government-guaranteed floating-rate notes. The offering has been in the market since it was announced on Monday.

Maxim Integrated Products priced what a source said was its first bond issue. The analog circuit maker priced $300 million of three-year notes.

One deal from the Bank of Nova Scotia priced late in the afternoon. The bank priced $1 billion of senior notes due in 2013.

Terms were given early in the day for two deals priced late on Wednesday from Citigroup Inc. and National Australia Bank Ltd.

Citigroup remarketed its 6.455% junior subordinated notes as $1.875 billion in three-year senior notes, while NAB priced $250 million in floating-rate notes due in 2011.

An "OK" tone in the morning unleashed part of the backlog that has built up in recent weeks due to volatility relating to the BP plc oil spill in the Gulf of Mexico and other headlines.

"If they were going to [price] this week, they had to get it done today," a market source said after the close. "It's not a good idea to hold off over the weekend."

Jobless claims were better than expected, sending stocks higher.

Treasuries moved much wider than the previous day by the market close. They had been unchanged for the past day.

"They got killed," a trader who deals with the sector said after the close.

The five-year Treasury note was wider by 13 basis points at 2.07% yield, and the 10-years were out by 14 bps to yield 3.32%. The 30-year bond ended the day 12 bps wider at a 4.23% yield.

"I don't know if you want to call it a relief rally since there really was no relief," the trader said. Stocks were up 3%, and the euro and oil were better, he said. However, there is still a lot of bad news lurking in the headlines.

"I think people just decided they wanted a rally and went for it," he said.

The Markit Series 14 CDX showed that spreads were 5 bps tighter by the end of Thursday. The CDX was at 126 bps, after ending Wednesday at 131 bps.

John Deere Capital upsized

John Deere Capital sold $500 million of 1.875% three-year medium-term notes (A2/A) in the afternoon at Treasuries plus 68 bps, a source close to the sale said.

The notes were priced at the tight end of guidance in the 70 bps area, a source said. The size of the sale was increased from $300 million.

A trader said that they did not see the notes in trading, possibly because they had a short maturity.

Bookrunners were Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.

The financing arm for Deere & Co. products is based in Reno, Nev.

Two Alliant units sell bonds

Wisconsin Power & Light and Interstate Power & Light each sold $150 million of senior unsecured debentures by early afternoon, a source who worked on both of the sales said.

Wisconsin Power priced 4.6% 10-year notes (A2/A-) at Treasuries plus 135 bps.

They were quoted as trading more than 10 bps better at a bid of 122 bps, according to a source in the secondary.

Bookrunners were RBS Securities Inc. and UBS Investment Bank.

Interstate Power sold 3.3% five-year notes (A3/BBB+) at 130 bps over Treasuries.

This bond was trading at the same level as the Wisconsin Power & Light sale, with a bid of 122 bps.

Bookrunners were Barclays Capital Inc., JPMorgan, RBS Securities and UBS Investment Bank.

Proceeds for both issues are being used to repay short-term debt and to invest in short-term assets, to fund capital expenditures consisting of wind farms and pollution control equipment and for working capital.

Both issuers are electric and natural gas subsidiaries of Alliant Energy Co., with Wisconsin Power based in Madison, Wis., and Interstate Power in Cedar Rapids, Iowa.

Issuers brave market after backlog

It had been a somewhat sleepy week until Thursday, when an OK open to the day led to several new deals from companies that didn't want to wait to see what happened over the weekend.

"People decided there was a window open to issue," a source said. "Even though the Treasury yields are higher, the all-in cost of capital is still pretty low."

At least one of the day's sales, from Vestjysk Bank, had been announced earlier in the week and priced so it didn't have to go over the weekend, a source said.

The two sales from utilities were no surprise, as that sector has been one of the more well-received in recent weeks.

"I think those are always a safe bet when we have volatility," the source said.

Maxim Integrated prices $300 million

Maxim Integrated Products priced $300 million of 3.45% senior unsecured notes (Baa1/BBB) to yield Treasuries plus 225 bps, a source close to the sale said.

It was the first bond issue for the company, the source said.

JPMorgan was the active bookrunner.

Proceeds are being used to fund the acquisition of Teridian and for general corporate purposes.

The maker of linear and mixed-signal analog circuits is based in Sunnyvale, Calif.

Denmark's Vestjysk Bank sells floaters

Vestjysk Bank priced $500 million of three-year floating-rate notes on Thursday at par to yield three-month Libor plus 55 bps, a source said.

The sale was announced on Monday and was not intended to price until later in the week, a source said.

The notes (Aaa/AAA) were sold under Rule 144A and are guaranteed by the government of Denmark.

Bookrunners were JPMorgan and Nordea Bank.

The retail and corporate bank is based in Lemvig, Denmark.

Bank of Nova Scotia sells $1 billion

The Bank of Nova Scotia priced $1 billion of 2.375% senior notes (Aa1/AA-) due 2013 late in the day at Treasuries plus 125 bps, a market source said.

The deal wasn't announced until mid-afternoon.

Bookrunners were Bank of America Merrill Lynch and Citigroup.

The financial services company, commonly called Scotiabank, is based in Halifax, N.S.

Citi gives terms for remarketing

Citigroup remarketed its issue of 6.455% junior subordinated deferrable debentures as $1.875 billion in 6% three-year notes late on Wednesday to yield Treasuries plus 425 bps, a source away from the sale said.

The notes (A3/A/A+) were originally issued as debentures due on Sept. 15, 2041 to Citigroup Capital XXX. In early May they were given senior ranking, giving them a shorter maturity. Then on May 24, Citigroup Capital XXX was dissolved and the notes distributed to holders of the capital securities.

Citigroup was the remarketing agent.

The bond was one of the best performers of the day from the crop of new bonds. A trader said the notes tightened between 10 bps and 20 bps to a bid to 410 bps, or a bid of about 415 bps and offer of 405 bps.

Proceeds will not go to Citigroup Inc. but are instead being used to pay the remarketing agent, purchase an interest-bearing deposit with Citibank, and if any money is remaining, will be remitted to holders of Upper DECS Equity Units participating in the remarketing.

The financial services company is based in New York City.

NAB gives terms for late pricing

Melbourne-based financial services company National Australia Bank priced $250 million of global floating-rate notes due 2011 late on Wednesday at par to yield three-month Libor plus 25 bps, a source away from the deal said.

The notes (Aa1/AA) were sold under Rule 144A.

JPMorgan was the bookrunner.

Traders: Oil names eyed

Oil companies got a boost during Thursday trading, traders reported, with BP Capital Markets plc - whose bonds are now trading off of junk desks - leading the way.

BP saw its bonds "bounce back by 2 to 3 points," a trader said.

The trader said the 5¼% notes due 2013 were the "most active" at 95 3/8, up 3 points, while the 3 7/8% notes due 2015 were also up 3 points at 901/2. The 1.55% notes due 2011 were meantime up a deuce at 941/2.

Another trader said BP's bonds "made up the bulk of trading," with "hundreds of millions" turning over. He pegged the 3 7/8% notes at 88 bid, 90 offered.

"Everybody is feeling around," he said, noting that parts of the gyrations in the debt were "half sentiment driven."

"Lots of people are selling one to buy another," he added.

Still, not everyone understands BP's fall to junk status.

"It doesn't make sense," BP spokesman Toby Odone was quoted as saying in a Bloomberg report. "We are generating significant cash flow because the oil price is higher than $60 a barrel. We have a strong asset base."

BP remained in headlines on Thursday, as it was announced that the company would give $75 million to three states - Alabama, Florida and Mississippi - in order to help with clean-up efforts related to the Gulf of Mexico oil leak. That is in addition to the funds BP has already committed to Louisiana.

Also on Thursday, government officials called for the company to halt its dividend payments.

BP's current containment plan is estimated to be getting 630,000 gallons of the gushing oil. The company said it planned to launch a second oil-catching system over the weekend.

Bank, broker CDS move wider

The cost of insuring banks and brokerages moved higher today as the credit-default swaps were out between 2 bps and 25 bps, a trader in that sector said.

Bank names were quoted as 2 bps to 15 bps wider. Brokerages moved out even more at a range of 7 bps to 25 bps.

Stephanie N. Rotondo contributed to this report

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