Southwest Airlines, Caterpillar Financial price deals; FPL plans reopening; secondary lacks trades

By Andrea Heisinger

New York, Dec. 22 - Southwest Airlines Co. and Caterpillar Financial Services Corp. priced new deals in the investment-grade market Monday on an otherwise quiet start to a short holiday week.

Sources said they expected the low volume but thought there might be more financial issues backed by the Federal Deposit Insurance Corp. Temporary Liquidity Guarantee Program.

The secondary market saw minimal trading, a source said, with recent issues from Safeway Inc. and Altria Group Inc. not seen trading at new levels.

Southwest taps market

Southwest Airlines priced $400 million of 10.5% three-year notes at par. The notes did not have a spread, a source said, because they priced at the coupon.

The deal was done under Rule 144A.

Goldman Sachs & Co. was the bookrunner.

"It was done pretty quietly," one source said. "It was probably sold to one investor."

Caterpillar Financial PowerNotes

Caterpillar Financial priced $348.38 million of senior unsecured PowerNotes Monday in three tranches.

The issuer sold $125.42 million of 5.65% two-year notes, $24.65 million of 5.8% four-year notes and $198.32 million of 7% seven-year notes, all priced at par.

Joint lead agents were InCapital LLC and Banc of America Securities LLC.

B of A announces FDIC deal terms

Bank of America Corp. announced terms of a small FDIC-backed issue that was priced Friday. The $250 million of floating-rate notes due 2012 priced at par to yield one-month Libor plus 48 bps.

Bookrunner was Banc of America Securities LLC.

Florida Power plans reopening

Florida Power & Light Co. is planning a $50 million reopening of notes on Tuesday, a market source said late Monday.

The company's last issue was Jan. 11 when it priced $600 million of 5.95% 30-year first mortgage bonds via Calyon Securities, Citigroup Global Markets Inc., Morgan Stanley & Co. Inc. and Wachovia Capital Markets.

The source said he assumed the bookrunners would be the same as the original deal.

GE Capital plans FDIC issue

General Electric Capital Corp. announced it would issue more FDIC-backed notes in January, a market source said.

The company did its first FDIC-backed issue on Dec. 5 and was the first non-bank holding company to take advantage of the program.

The company originally issued a $6.5 billion multi-tranche deal that has since been reopened several times.

New issue market mostly shut

There were a couple of new issues to start the week but a notable absence of FDIC-backed deals, a source said.

"I thought we might see one or two today, honestly," the source said. "I think if we didn't see any today we probably won't for the rest of the week."

The news that GE Capital was waiting until January to issue notes under the program may have inspired others to hold off as well, the source said.

The market tone wasn't terrible, but many desks are thinly staffed and people are not working at companies that may want to issue, he said.

"People are in and out and desks are kind of half staffed," he said. "I'm not quite sure other than that why people are waiting, but I think everyone's just kind of shut down."

Secondary nearly closed

The secondary market was seeing very little trading late Monday, and there were hardly any new levels quoted on issues from last week, a trader said.

There were no new levels for the recent Safeway issue of 6.25% notes due 2014 from the middle of last week, he said.

"There have been no [Safeway] trades since Friday," he said. "People were looking for more of them, though."

There also have been no new levels seen on the recent Altria Group notes, even the day after they priced.

"There's really not much going on," the trader said. "Everyone's books are closed."

B of A tops volume

Bank of America Corp. had the top volume of the day with its 3.125% notes due 2012. This came a day after the company priced a second round of FDIC-backed notes.

Also high in trading volume was Goldman Sachs Group Inc.'s 5.7% notes due 2012.

Cell phones, financials big movers

Cell phone company New Cingular Wireless Services' 7.875% notes due 2011 were one of the big movers of the day, moving more than 50 bps tighter by late afternoon.

Book and education company McGraw-Hill was also seen with a large move as its 5.9% notes due 2017 tightened by more than 50 bps.

Financial names continued to go wider late Monday, with Goldman Sachs Group's 6.875% notes due 2011 seen about 50 bps wider. This comes after the company last week announced its first quarterly loss in a decade.

Fellow bank holding company Morgan Stanley saw its 5.05% notes due 2011 move out more than 35 bps.

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