Credit Suisse, Deutsche Bank, Chubb, Dow, Jackson National, ProLogis among issuers as market takes off

By Andrea Heisinger and Paul Deckelman

Omaha, May 1 - Investment-grade was flooded with issuers like Dow Chemical Co., The Chubb Corp., Jackson National Life, Credit Suisse, ProLogis, Deutsche Bank Contingent Capital Trust V and Toyota Motor Credit Corp taking advantage of positive market conditions.

A split-rated issue from CenterPoint Energy, Inc. also priced.

Issuers took advantage not only of continued stability, but a boost in the markets due to the Federal Reserve rate cut announcement Wednesday, sources said.

"The market was definitely on fire today," a source said.

In the investment-grade secondary market Thursday, advancing issues led decliners by a better than eight-to-five ratio, while overall market activity, reflected in dollar volumes, fell by about 14% from Wednesday's pace.

Spreads in general tightened as Treasury yields rose, with the yield on the benchmark 10-year issue, for instance, widening out by 5 basis points to 3.77%.

With the continued barrage of new issues, trading in those new bonds dominated the secondary. Credit Suisse's huge new offering was seen having traded up when it moved into the aftermarket, as did Dow Chemical's new bonds, and those of ProLogis.

Deutsche sells $1.1 billion trust preferreds

Deutsche Bank priced $1.1 billion, or 44 million, trust preferred securities after announcing it Wednesday.

The 8.05% perpetual securities priced at par of $25 and are non-callable for 10 years.

They have an overallotment option of $165 million, or 6.6 million securities, to be used within 15 days.

Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Inc. and Wachovia Capital Markets LLC were bookrunners.

Dow sells $800 million

Dow Chemical priced $800 million of 5.7% 10-year senior notes at 99.553 to yield 5.759% with a spread of Treasuries plus 200 bps.

Merrill Lynch, HSBC Securities and RBS Greenwich Capital were bookrunners.

Jackson upsizes

Jackson National Life, a subsidiary of Prudential plc, priced an upsized $500 million 5.375% five-year notes at 99.922 to yield 5.393% with a spread of Treasuries plus 235 bps.

The issue was increased from $300 million.

They priced via Rule 144A and carry a guaranteed investment contract.

Banc of America Securities LLC and Morgan Stanley & Co. Inc. were bookrunners.

Credit Suisse, Chubb bring deals

Credit Suisse, acting through its New York branch, priced $4 billion of 5% five-year medium-term notes at 99.779 to yield 5.05% with a spread of Treasuries plus 200 bps.

Credit Suisse Securities was bookrunner.

The Chubb Corp. priced $1.2 billion of senior notes in two tranches.

The $600 million of 5.75% 10-year notes priced at 99.106 to yield 5.869% with a spread of Treasuries plus 210 bps.

The $600 million of 6.5% 30-year notes priced at 98.814 to yield 6.591% with a spread of Treasuries plus 210 bps.

Both tranches priced at the tight end of price talk of 210 to 215 bps, a source close to the deal said.

This was even tighter than the first whispers of price talk which were 215 to 225 bps, he said.

The issue was about 10 times oversubscribed, making for what he called "kind of a crazy deal."

"They're kind of a best-in-class name and an infrequent issuer," he said.

Citigroup, Goldman Sachs & Co. and Merrill Lynch were bookrunners.

ProLogis upsizes

ProLogis was also highly popular, pricing an upsized $600 million of 6.625% 10-year senior notes at 99.766 to yield 6.657% with a spread of Treasuries plus 290 bps.

The size was increased from $350 million.

The issue priced on the tight end of talk of 290 to 300 bps, a source said.

The issuer was considered a prime owner of commercial retail real estate, a source close to the issue said, which allowed them to price tighter.

CenterPoint Energy priced $300 million of 6.5% 10-year notes at 99.487 to yield 6.571% with a spread of Treasuries plus 282 bps.

Bookrunners for the split-rated issue were RBS Greenwich, Lehman Brothers Inc. and Wachovia.

Toyota priced $275 million of floating-rate medium-term notes in two parts.

The one-year notes have a coupon of three-month Libor minus 8 bps and priced at par.

Bookrunners for $170 million of the issue were Banc of America, J.P. Morgan and Toyota Financial Services Securities USA Corp.

Bookrunner for the remaining $105 million was J.P. Morgan.

Israel Electric set for Friday

Israel Electric Corp. announced an issue of 10-year notes via Rule 144A/Regulation S.

A market source said talk is that $1 billion in notes will price at Treasuries plus 350 bps. Official price guidance was given at Treasuries plus 375 bps.

The notes are expected to price Friday via Citigroup and Lehman.

Rate cut opens door for deals

The investment-grade market remained fairly stable Thursday, a source said, with the secondary continuing to be quiet.

"Investors are busy looking at new issues," the source said.

Following the Federal Reserve's announcement of a 25 bps cut to its Federal Funds rate Wednesday, market conditions were ripe for new issues.

"The backdrop today was definitely helpful," a source said. "We had a couple of best-in-class issuers that got good deals."

Issuers were waiting to make sure there were no new surprises from the Fed, a source said, and that was the reason for the spike in new issues Thursday.

"The open was fine and people just dug in," he said.

Friday should slow considerably, although sources weren't ruling out a couple of new issues.

One source called it a non-event, saying people would close up shop as usual at the end of the week.

Another said there should be a small amount of action.

"There should be a couple of things, but nothing like today," he said.

Credit Suisse up in trading

A trader saw the new Credit Suisse 5% notes due 2013 - which had priced earlier in the session at a spread over comparable Treasuries of 200 bps - having tightened to 189 bps bid, 187 bps offered.

The trader said that the new Dow Chemical issue "was bid well."

Looking at the actual trading level on the new 5.70% notes due 2018, he exclaimed "Wow!" in noting the better than 20 bps tightening in the bonds' prices once they hit the secondary market. He quoted them at 177 bps bid, 179 bps offered, well in from the 200 bps over spread at which the bonds had priced.

For ProLogis' new 6.625% notes due 2018, he said that the bonds were trading at 283 bps bid, 278 bps offered, "or maybe even better out there in the gray [market]," versus the 290 bps spread at which the bonds had priced earlier in the session.

"I think that's very good performance," he said, "certainly outstanding, considering that they upsized the deal and it priced at the tight [end] of price talk, and it still managed to tighten [about] 10 basis points, or maybe even more."

Low Treasury yields cut costs

Commenting on the oft-expressed theory that many recent new deals have done as well as they have in the secondary market because they were priced too cheaply to begin with in the interest of just getting the deal out there and done in an environment of credit uncertainty, the trader essentially said: so what? He observed that "where Treasury yields are, in absolute yields to the company, what's an extra 10 bps to them at this point?

"With Treasuries where they are, its still cheap money - even 200 [bps] on a five-year," where the Credit Suisse deal priced, " is only 5% in five-year land," in contrast to market conditions just a couple of years ago.

"So," he declared, "absolute yields are still relatively cheap money for these companies."

WaMu tightens

Among more established credits, a market source saw Washington Mutual Inc.'s 5.50% notes due 2013 tighten by about 50 bps on the session, ending at a bid-side spread of about 450 bps.

Another trader meantime saw WaMu's debt-protection costs narrow by another 20 bps to 250 bps bid, 270 bps offered.

Credit-default swap spreads on big banks and brokerages generally were 2 to 8 bps narrower - a sign of increased investor confidence in the recently hard-hit sector.

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