JPMorgan, Toyota Motor Credit sell debt at both ends of maturity spectrum; financials improve

By Andrea Heisinger and Cristal Cody

New York, Dec. 15 - The surprise deal of the day came from JPMorgan Chase & Co., which decided to price long bonds on an otherwise quiet Thursday.

The financial services company sold $1.25 billion of 30-year bonds in a self-led deal. JPMorgan last priced a long bond in July.

Toyota Motor Credit Corp. tapped the market for $282 million of one-year floating-rate notes.

This is Toyota Motor Credit's third sale of floating-rate debt since Dec. 9.

A market source away from the JPMorgan sale said that the financial was "taking advantage of the attractive market" tone of the day. The notes were priced with a sizeable new issue premium, but it "was worth it," the source added.

The primary was expected to see little-to-no volume for the remainder of the week, let alone a large sale from a financial name.

"We didn't expect anyone to jump in," a syndicate source said.

The source added that the JPMorgan sale had a "pretty attractive coupon" and that they likely "wanted to get it done before the end of the year."

Overall trading volume fell to less than $10 billion on Thursday.

"Pretty quiet day out there," a bond source said. "Low trading volumes and low issuance."

Many traders spent the day eating lots of cookies and food at holiday parties and trying to stay awake during the afternoon.

"Food hangover," one source said.

The Markit CDX Series 17 North American Investment Grade index was unchanged at a spread of 130 basis points on Thursday.

In the secondary market, JPMorgan's new notes traded 5 bps wider after pricing, a trader said.

Bank and financial paper mostly traded tighter on Thursday before Fitch downgraded six global banks, including Bank of America Corp. and Goldman Sachs Group, Inc.

But since Fitch's downgrades follow drops earlier in the year from Moody's and Standard & Poor's, the move was considered "old news," a source said.

"Spreads have definitely calmed down a little bit today," the source said.

Bank of America's notes were better, and Morgan Stanley's 5.5% notes due 2021 traded about 15 bps tighter, the source said.

Investment-grade bank and brokerage credit default swaps costs were lower on Thursday, reflecting better investor sentiment toward the financial sector, another source said.

Bank paper CDS costs traded down 5 bps to 7 bps, and brokerage company paper CDS costs were off by 5 bps to 10 bps.

In other trading, Best Buy Co., Inc.'s notes stayed wider on Thursday.

Treasuries were flat to weaker following positive economic data. The 10-year Treasury note yield rose 1 bp to 1.91%. The 30-year bond yield added 2 bps to end at 2.92%.

JPMorgan sells $1.25 billion

JPMorgan Chase priced $1.25 billion of 5.4% 30-year bonds (Aa3/A/AA-) to yield 250 bps over Treasuries, a market source said.

J.P. Morgan Securities LLC ran the books.

Proceeds are being used for general corporate purposes.

JPMorgan last priced 30-year paper in a $1.75 billion sale on July 14. The 5.6% paper priced at 140 bps over Treasuries. The company was last in the debt market on Nov. 10 with a $1.8 billion sale of five-year floaters.

In the secondary market, JPMorgan's notes traded wider at 255 bps bid, 250 bps offered, a trader said.

The financial services company is based in New York.

TMCC's short floaters

Toyota Motor Credit priced $282 million of one-year medium-term floaters (Aa3/AA-) at par to yield Federal Funds plus 73 bps, according to an FWP filing with the Securities and Exchange Commission.

Loop Capital Markets LLC and Toyota Financial Securities USA Corp. were the agents.

The U.S. financing arm of Toyota is based in Torrance, Calif.

Bank of America better

In the secondary market, Bank of America's 5% notes due 2021 traded better earlier in the day at 443 bps, a source said.

The notes were sold on May 10, 2011 at a spread of 185 bps over Treasuries.

In addition, Bank of America's 7.625% notes due 2019 traded about 20 bps tighter to 520 bps going out, another source said. The notes were sold in 2009 at a spread of 410 bps plus Treasuries.

The financial services company is based in Charlotte, N.C.

Best Buy weaker

Best Buy's 5.5% senior notes due 2021 traded about 5 bps wider, "but trading is pretty thin," a source said. "I only see about four trades in the institutional side today."

The retailer's bonds have moved out in trading since it reported weaker third-quarter earnings on Tuesday.

Best Buy sold the 5.5% notes due 2021 on March 8, 2011 at a spread of 200 bps over Treasuries.

The electronics and entertainment retailer is based in Richfield, Minn.

Paul Deckelman contributed to this review

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