Primary sees Anadarko Petroleum price upsized deal; Fannie Mae passes; spreads tighten

By Cristal Cody and Aleesia Forni

Virginia Beach, July 1 – Anadarko Petroleum Corp. was the sole issuer in Tuesday’s subdued primary market.

The company came to market with an upsized two-part $1.25 billion offering of senior notes, with both tranches of the sale pricing in line with talk.

The lone new issue saw strong demand on Tuesday, according to a market source, with the orderbook around six times oversubscribed.

In other market action, Fannie Mae announced that it would not issue Benchmark Notes on its announcement date on Tuesday.

This week’s new issuance has already topped sources’ predictions of around $15 billion of issuance, due largely to Monday’s $10 billion megadeal from Oracle Corp.

Anadarko’s trade brings the Independence Day holiday-shortened week’s total supply to $16 billion.

“Very quiet this week,” a market source said. “Not much happening.”

This week has wrapped up a solid month of issuance for June, with $108.29 billion of new paper priced during the month, according to Prospect News data.

This figure is up from May’s $101.04 billion and blew away last June’s total of $38.25 billion.

The market is gearing up for another busy month following the holiday, with around $70 billion to $80 billion expected for July.

Investment-grade bond spreads tightened on Tuesday, according to market sources.

The Markit CDX North American Investment Grade series 22 index firmed 2 basis points to a spread of 57 bps.

In the secondary market, Monsanto Co.’s senior notes (A3/BBB+/A-) traded slightly lower during the session, a source said.

Anadarko upsizes

The high-grade primary saw Anadarko Petroleum price an upsized $1.25 billion of senior notes (Baa3/BBB-/BBB-) in tranches due 2024 and 2044, according to a market source and an FWP filed with the Securities and Exchange Commission.

A $625 million tranche of 3.45% notes due 2024 priced at 99.831 to yield 3.47% with a spread of Treasuries plus 90 bps.

There was also $625 million of 4.5% 30-year bonds sold at 99.33 to yield 4.541%, or Treasuries plus 115 bps.

Both tranches sold in line with talk.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC, RBS Securities Inc., Barclays, BofA Merrill Lynch and Deutsche Bank Securities Inc. were the joint bookrunners.

Proceeds will be used for general corporate purposes.

Anadarko Petroleum was last in the market with $2 billion of seven-year notes priced at par to yield 6.375%, or Treasuries plus 415.6 bps, on Aug. 9, 2010.

The oil and gas exploration and production company is based in the Woodlands, Texas.

Fannie Mae passes

Fannie Mae announced that it will not use its July 1 Benchmark Notes announcement date this month, according to an informed source.

The government-backed mortgage lender is based in Washington, D.C.

Monsanto lower

Monsanto’s 3.375% notes due 2024 closed down at 100.34 on Tuesday from 100.38 on Monday, a source said.

Monsanto sold $750 million of the 10-year notes at 99.94 to yield 3.382% on Thursday.

The company’s tranche of 4.4% senior notes due 2044 ended modestly lower at 99.63 in secondary trading, according to a market source.

The notes traded on Monday at 99.82.

Monsanto sold $1 billion of the bonds at 99.207 to yield 4.448% in Thursday’s offering.

The agricultural company is based in St. Louis.

Bank/brokerage CDS costs lower

Investment-grade bank and brokerage CDS prices firmed, according to a market source.

Bank of America Corp.’s CDS costs firmed 1 bp to 66 bps bid, 69 bps offered. Citigroup Inc.’s CDS costs declined 1 bp to 64 bps bid, 67 bps offered. JPMorgan Chase & Co.’s CDS costs ended unchanged at 55 bps bid, 58 bps offered. Wells Fargo & Co.’s CDS costs firmed 1 bp to 41 bps bid, 44 bps offered.

Merrill Lynch’s CDS costs tightened 1 bp to 69 bps bid, 73 bps offered. Morgan Stanley’s CDS costs firmed 1 bp to 65 bps bid, 68 bps offered. Goldman Sachs Group, Inc.’s CDS costs declined 1 bp to 71 bps bid, 74 bps offered.

Paul Deckelman contributed to this review.

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