Ontario prices $1.25 billion; issuance in week ahead forecast to be 'heavy'; Verizon weaker

By Cristal Cody

Tupelo, Miss., May 9 - New issuance in the investment-grade market on Friday stayed mostly quiet with one deal brought by the Province of Ontario, while the upcoming week should be busy, according to market sources.

Ontario priced $1.25 billion of 10-year bonds at a spread of Treasuries plus 60.5 basis points, or mid-swaps plus 52 bps.

Ontario's deal caps off a week that saw investment-grade issuance of more than $20 billion, according to a market source.

High-grade issuers are expected to be in the primary market with about $25 billion of deals in the week ahead, a syndicate source said.

"We're calling for a heavy week," the source said.

In the secondary market, spreads headed out mostly unchanged in light activity, a source said.

The Markit CDX North American Investment Grade series 22 index was flat at a spread of 64 bps.

Verizon Communications Inc.'s bonds were weaker in trading on Friday, according to a market source.

Ontario prices $1.25 billion

Ontario (Aa2/AA-/DBRS: AA) sold $1.25 billion of 3.2% 10-year bonds at 99.864 to yield 3.216% on Friday, according to an FWP filing with the Securities and Exchange Commission.

The notes due May 16, 2024 priced at a spread of Treasuries plus 60.5 bps, or mid-swaps plus 52 bps, in line with guidance on Thursday at the mid-swaps plus low 50 bps area.

The underwriters were CIBC World Markets Corp., Credit Suisse Securities (Europe) Ltd., J.P. Morgan Securities plc, RBC Capital Markets, LLC, BMO Capital Markets Corp., National Bank Financial Inc., Scotia Capital (USA) Inc. and TD Securities (USA) LLC.

Proceeds will be used for general provincial purposes.

Verizon weaker

Verizon's 5.15% notes due 2023 (Baa1/BBB+/A-) traded lower at 110.92 on Friday from 112.63 in the previous session, according to a market source.

The company sold $11 billion of the notes at 99.676 to yield 5.192% in the Sept. 11, 2013 $49 billion eight-tranche offering.

Verizon's 6.55% bonds due 2043 (Baa1/BBB+/A-) traded about ½ of a point lower on the day at 123.70, according to the market source.

The company sold $15 billion of the 30-year bonds at 99.883 to yield 6.559% on Sept. 11, 2013.

The telecommunications company is based in New York City.

CDS costs mostly unchanged

Investment-grade bank and brokerage credit default swap prices were mostly unchanged, according to a market source.

Bank of America Corp.'s CDS costs were flat at 65 bps bid, 68 bps offered. Citigroup Inc.'s CDS costs ended unchanged at 68 bps bid, 71 bps offered. JPMorgan Chase & Co.'s CDS costs eased 1 bp to 54 bps bid, 57 bps offered. Wells Fargo & Co.'s CDS costs were flat at 34 bps bid, 37 bps offered.

Merrill Lynch's CDS costs closed unchanged at 69 bps bid, 73 bps offered. Morgan Stanley's CDS costs were unchanged at 71 bps bid, 74 bps offered. Goldman Sachs Group, Inc.'s CDS costs closed flat at 82 bps bid, 85 bps offered.

Paul Deckelman contributed to this review

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