Schwab sells bonds; Chicago Parking to price 10-year notes; Goldman notes a touch weaker

By Andrea Heisinger and Cristal Cody

New York, July 19 - Charles Schwab Corp. priced bonds on an otherwise uneventful Monday in the high-grade bond market.

The securities brokerage and financial services provider priced an upsized $600 million of 10-year notes. The size was increased by $100 million from $500 million and priced at the tight end of talk.

It was likely earnings season that has slowed the market down, a market source said, adding, "That, and it was Monday."

Chicago Parking Meters LLC announced and launched a $500 million sale of 10-year senior secured notes early in the day. The deal is expected to price mid-week after marketing. It's the company's first debt issue.

Industrial bonds were the talk of the day on news that BP plc's capped oil well had started to leak in the Gulf of Mexico, a trader said.

The industrial sector was off about 2 basis points on the day.

While activity in the financial sector was mostly quiet, Goldman Sachs Group Inc.'s notes were slightly weaker on the light trading day, a source said.

"Corp volume was low," one source said. "Slow, quiet day."

The CDX Series 14 North American investment-grade index was unchanged from Friday's spread of 113 bps, according to a source.

Overall investment-grade Trace volume was up about 16% from Friday's level, but still low at about $9 billion, a source said.

A continued stock market rally on Monday helped investors sell off U.S. Treasuries and push yields up.

"Treasuries were up on Friday. Today, they're off a little bit, but they weren't very volatile as they have been," a trader said.

The yield on the benchmark 10-year Treasury note rose 4 bps to 2.96%.

The yield on the 30-year Treasury bond was up 4 bps to 3.98%.

Schwab ups 10-years

Charles Schwab sold an upsized $600 million of 4.45% 10-year senior unsecured notes (A2/A/A) by late afternoon to yield Treasuries plus 150 bps, a source close to the deal said.

The size was $500 million initially. The notes priced at the tight end of guidance in the 150 bps to 155 bps range.

In secondary trading, the notes were seen tighter on the offer side, a trader said.

"Saw the bonds offered at 145 [bps]," the trader said.

J.P. Morgan Securities ran the books.

Proceeds are being used for general corporate purposes.

The deal comes after the company reported second-quarter net income of $205 million on Friday. This was a flat result as Schwab also reported $205 million for the same quarter a year ago. The Q2 earnings beat expectations, however.

The securities brokerage and financial services company is based in San Francisco.

Earnings slow sales

It was not looking like a particularly busy Monday to begin with, a syndicate source said, but getting deeper into earnings season, some uncertainty over the financial reform bill and the Gulf oil spill slowed things further.

"I don't know if there was anything specific today," one syndicate source said. "Maybe people weren't ready to go, and a lot are in [earnings] blackout."

Charles Schwab priced its notes after announcing Q2 earnings on Friday. Some have suggested that more companies, including financials, may do the same because of low rates in the investment-grade market.

The day was "unchanged to weaker," according to one syndicate source, who added that it was hard to tell if there was any significant change in the primary due to a lack of deals both for the day and on Friday.

Other than the Chicago Parking Meters sale, there aren't any specific deals on tap.

"We're slow all week," the syndicate source said.

Chicago Parking launches deal

Chicago Parking Meters launched a $500 million deal of 10-year senior secured notes on Monday, with pricing expected mid-week after a series of investor calls and marketing, a source said.

The notes (Baa3/BBB-) are being priced under Rule 144A, and it's the company's first debt issue.

Bookrunners are Barclays Capital Inc. and Credit Suisse Securities.

Proceeds are being distributed to equity and to make the required termination payments under an existing swap to be terminated at closing.

The operator of parking meters is based in Chicago.

Industrials wider

Bonds from BP, Anadarko Petroleum Co. and Bridge Petroleum Ltd. were wider on the day, according to a trader.

"They were the big movers today, all off a couple of points."

BP's 4.75% notes due 2019 were seen going out Monday at 91 bps bid, 92 bps offered.

The credit default swaps on Woodlands, Texas-based Anadarko, which owns 25% of BP's Gulf oil well, were up 67 bps to 479.9 bps over Treasuries, a source said.

London-based BP had capped the well last week after months of gushing oil in the Gulf waters.

Goldman weaker

Goldman's notes were slightly weaker on the light trading day, a source said.

"The financial sector was very quiet," one trader said.

Goldman's 7.5% notes due 2019 were seen trading in the afternoon at "225 to 215 off the 10-year," the trader said.

The notes ended the day wider at 227 bps, a source said.

New York-based Goldman Sachs agreed on Thursday to pay $550 million to settle fraud claims with the Securities and Exchange Commission.

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