France's CADES prices sovereign deal; other sales on hold; bank, telecom, tech bonds tighter

By Andrea Heisinger and Cristal Cody

New York, June 30 - Caisse d'Amortissement de la Dette Sociale closed out the month of June with a sale of short bonds on Thursday.

The Paris-based debt agency priced $2.5 billion of three-year notes in the Rule 144A market.

This was likely the last deal of the week as many syndicate desks will have bare-bones staffing on Friday, a source said.

"I can't imagine there will be anything," he said.

The market tone had rebounded by Thursday, although there weren't any corporate deals ready to take advantage of that fact. By late Wednesday, many deals that had already been held were again shelved until after the July 4 holiday.

Spreads have been "a touch wider" on the deals that have been completed throughout the week, the source said, but that hasn't stopped investor demand or companies' willingness to tap the debt market as low borrowing rates continue.

"There may have been some pullback, but nothing too obvious," he said.

Overall trading volume edged up to more than $13.5 billion on Thursday.

The Markit CDX Series 15 North American investment-grade index has tightened all week and firmed another 3 basis points on Thursday to a spread of 92 bps, according to Markit Group Ltd.

"The market in general is doing much better," a trader said. "Better across the board."

High-grade bonds in the financial, telecom and technology spaces traded tighter on the day.

Bank and financial paper continued a second strong day, with financials "closing 10 to 15 better," a trader said.

Paper from Bank of America Corp., which announced the mortgage-backed securities settlement over its Countrywide unit on Wednesday, continued to outperform on Thursday.

Telecom and technology bonds firmed 7 bps to 10 bps in trading. In the sector, Time Warner Inc.'s 10-year notes came in 8 bps by late afternoon.

Teck Resources Ltd.'s bonds sold the previous day closed "up 13 to 15 better on the day," a trader said. "The rest of that space is 10 basis points better, so they're outperforming."

Secondary trading was strong out of the gates, and bonds "going out the door are continuing to be well-bid," according to a trader.

Activity on Friday is likely to be light as traders head out early for the holiday weekend.

"It seems like most guys are aiming for an early close even though, technically, there's not one," a trader noted.

Treasuries were mixed on Thursday, with bonds better on the short and long ends of the curve. The benchmark 10-year note yield rose 5 bps to 3.16%. The 30-year bond yield fell 1 bp to 4.37%.

CADES private deal

Caisse d'Amortissement de la Dette Sociale priced $2.5 billion of 1.25% three-year notes to yield Treasuries plus 49.95 bps, a source away from the offering said.

The notes (Aaa/AAA/AAA) were sold under Rule 144A.

Bookrunners were Barclays Capital Inc., BNP Paribas Securities Corp. and J.P. Morgan Securities LLC.

The French debt agency is based in Paris.

Bank of America stronger

Bank of America's notes due 2021 were seen trading 15 bps tighter at 198 bps bid, 193 bps offered, compared to 210 bps bid, 205 bps the previous day, a trader said on Thursday.

"It's probably 15 basis points better, whereas Morgan Stanley and Goldman are 10 or 11 [bps tighter]," the trader said.

Charlotte, N.C.-based Bank of America provides banking and financial services.

Time Warner firms

Time Warner's 4.75% notes due 2021 traded "8 basis points better on the day," a trader said on Thursday.

The 10-year notes (Baa2/BBB/BBB) firmed to 136 bps bid, 131 bps offered. Time Warner priced the notes on March 29 at a spread of 140 bps over Treasuries.

The media and entertainment company is based in New York City.

Teck tightens

Teck Resources' new bonds narrowed in secondary trading on Thursday, a trader said.

The company sold $2 billion of senior notes (Baa2/BBB/BBB) in three maturities late on Wednesday in the U.S. high-grade bond market.

A $300 million tranche of 3.15% notes due 2017 priced at a spread of Treasuries plus 150 bps and firmed on Thursday to 141 bps bid, 138 bps offered.

A second tranche of $700 million of 4.75% notes due 2022 sold at 165 bps over Treasuries narrowed 11 bps on the bid side to 154 bps bid, 151 bps offered.

The last tranche the company sold - $1 billion of 6.25% 30-year bonds priced a spread of Treasuries plus 190 bps - traded 10 bps tighter at 180 bps bid, 178 bps offered.

The diversified resource company for mining and mineral development is based in Vancouver, Canada.

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