Westpac, Progress, BBVA, Kellogg among issuers; new deals trade briskly, secondary volume light

By Andrea Heisinger

New York, Nov. 16 - Westpac Banking Corp., Progress Energy, Inc., Duke Energy Carolinas, LLC, Kellogg Co., AmerisourceBergen Corp., Thomas & Betts Corp. and Banco Bilbao Vizcaya Argentaria number among the companies offering investment-grade bonds Monday.

Universal Corp. priced a $100 million issue of split-rated five-year notes that was announced on Friday.

Upcoming sales include offerings from Scana Corp. and Private Export Funding Corp.

United Air Lines, Inc. is planning an $810.337 million, split-rated issue of pass-through certificates.

The largest deal of the day came from Westpac Banking. It totaled $4 billion and was split evenly between three-year and 30-year tranches. This, along with the $1 billion sale of floating-rate notes due in 2011 from BBVA, was one of the last to price for the day.

Duke Energy sold $750 million of mortgage bonds due 2040 at the wide end of guidance. The bonds also struggled in the secondary.

There were two tranches totaling $950 million from Progress Energy. They have maturities of 10 and 30 years.

Electrical components maker Thomas & Betts sold $250 million of notes due in 2021. AmerisourceBergen - a pharmaceutical services company - sold $400 million of 10-year notes to repay a revolver.

Kellogg priced $500 million of 10-year notes.

Pefco is planning a sale of notes due in 2021, while Scana is said to be pricing $100 million of junior subordinated notes due in 2065.

Many of the new bonds didn't improve much once being freed for trading, and one recent deal moved wider than where it priced.

Thomas & Betts, AmerisourceBergen and Kellogg all saw their bonds tighten modestly.

Duke Energy Carolinas moved a few basis points wider, while Progress Energy's tranches straddled where they came to market.

Two tranches sold Friday by defense contractor Lockheed Martin Corp. were quoted as significantly wider than their original pricing levels.

Spreads moved wider overall as Treasury yields tightened across the board. The five-year note came in 7 basis points from the previous day to 2.18%. The 30-year bond moved similarly, also coming in 7 bps to 4.28%.

In addition to the rally in Treasuries, the flood of new supply in recent sessions was hampering the performance of coporates.

"They're not coming in because of the abundance of new issues," a trader said.

Westpac sells bonds late

Westpac Banking priced $4 billion of notes in two tranches late in the day, an informed source said.

The $2 billion tranche of 2.25% three-year notes priced at a spread of Treasuries plus 100 bps, while the $2 billion tranche of 4.875%10-year notes priced at 155 bps over Treasuries.

The deal took much of the day to price, and had about $6 billion on the books, a source said.

Bank of America Merrill Lynch, Citigroup Global Markets and Deutsche Bank Securities ran the books.

Proceeds are being used for general corporate purposes.

The financial services company is based in Sydney, Australia.

Thomas & Betts prices 12-year

Thomas & Betts sold a $250 million deal of 5.625% 12-year senior unsecured notes by early afternoon at Treasuries plus 237.5 bps.

The deal came at the tight end of guidance in the 250 bps area, with a margin of plus or minus 12.5 bps. Books were about eight times oversubscribed at $2 billion, an informed source said.

Bookrunners were Bank of America Merrill Lynch, J.P. Morgan Securities and Wells Fargo Securities.

Proceeds will be used to repay $125 million outstanding 7.25% notes due in 2015 and to repay $95 million of debt under a senior credit facility.

The electrical components company is based in Memphis.

Progress Energy sells two tranches

Progress Energy priced $950 million of senior unsecured notes in two tranches.

The $350 million of 4.875% 10-year notes priced at Treasuries plus 155 bps.

A $600 million tranche of 6% 30-year notes priced at a spread of Treasuries plus 173 bps.

Barclays Capital, Citigroup Global Markets and RBS Securities were bookrunners for the energy company, which is based in Raleigh, N.C.

Proceeds are going to retire at maturity $100 million of floaters due in 2010, to repay outstanding commercial paper balances, to pre-fund a portion of the amount due at maturity of 7.1% notes due in 2011, and for general corporate purposes.

Duke Energy unit sells mortgage bonds

Duke Energy Carolinas priced $750 million of 5.3% 30-year first and refunding mortgage bonds quickly at Treasuries plus 105 bps.

Pricing was at the wide end of talk, an informed source said. Guidance was from 100 to 105 bps, with a launch at 105 bps. The sale was only slightly oversubscribed, with books between $1 billion and $1.75 billion.

Bank of America Merrill Lynch, Citigroup Global Markets, Morgan Stanley and Wells Fargo Securities were bookrunners.

Proceeds will go to fund capital expenditures for an ongoing construction program and for general corporate purposes. This includes payment of $300 million in 7.375% notes due on March 1, 2010, and $200 million of 4.5% notes due on April 1, 2010.

The electric subsidiary of Duke Energy Corp. is based in Charlotte, N.C.

Week to stay busy

There was about $17 billion in bond sales in the past week, a source said. Monday got this week off to a good start, with a good chunk of bonds pricing.

"Treasuries were on fire today," the source said. "Rates are going down, and I think it will encourage anyone on the fence to jump in. There's a lot in the pipeline still."

There are four deals held over by the high-grade desk, and they are expected to price on Tuesday.

"This is the last [full] week before Thanksgiving," the source said. "Everyone's trying to get things done. It slows down between Thanksgiving and Christmas."

The volume of deals may or may not exceed the past week in numbers, but the dollar amount may.

"I don't know if we have any big [deals]," a syndicate source said. "We just have a lot, again."

Kellogg offers 10-year notes

Cereal maker Kellogg priced $500 million of 4.15% 10-year senior unsecured notes at Treasuries plus 85 bps.

Bank of America Merrill Lynch and SunTrust Robinson Humphrey were bookrunners.

Proceeds will be used to purchase, for cash, a tender offer for up to $500 million of notes due in 2011 that have been tendered and accepted for purchase by the Battle Creek, Mich.-based company.

AmerisourceBergen sells $400 million

Chesterbrook, Pa.-based pharmaceutical services company AmerisourceBergen sold $400 million of 4.875% 10-year senior unsecured notes early in the day at Treasuries plus 162.5 bps.

Bank of America Merrill Lynch and J.P. Morgan Securities ran the books.

The deal is guaranteed by the company's subsidiaries.

Proceeds will go to repay amounts under a multi-currency revolver and for general corporate purposes.

BBVA sells $1 billion late

Spain's Banco Bilbao Vizcaya Argentaria priced an upsized $1 billion of floating-rate notes due in 2011 late in the day at par to yield three-month Libor plus 18 bps, a market source said.

The size was doubled from $500 million, the source said.

The notes priced via Rule 144A, with Deutsche Bank Securities and Morgan Stanley running the books.

The bank is based in the city of Bilbao.

Universal sells split-rated notes

Leaf tobacco producer and processor Universal priced $100 million of 6.25% five-year senior unsecured notes (Ba2/BBB-) at Treasuries plus 425 bps.

The sale was done off the high-grade syndicate desk and went over the weekend after being announced on Friday.

Deutsche Bank Securities was tapped as bookrunner by the Richmond, Va.-based issuer.

Proceeds will be used to repay debt, including notes payable and overdrafts incurred to pay a recent medium-term note maturity.

Scana to price junior subordinated deal

Electric and natural gas holding company Scana announced it is pricing $100 million of enhanced junior subordinated notes at $25, a market source away from the sale said.

Pricing is expected for Tuesday. The notes are initially due in 2065, but can be extended to 2080.

Bookrunners are Bank of America Merrill Lynch, Morgan Stanley and Wells Fargo Securities.

Proceeds will be used to provide funds to subsidiary South Carolina Electric & Gas Co. to redeem outstanding shares of that company's preferred stock and for general corporate purposes.

The issuer is based in Cayce, S.C.

Pefco plans 12-year note sale

Private Export Funding is planning a sale of 12-year notes, a market source said.

The notes are expected to price on Tuesday, the source said.

Bank of America Merrill Lynch and Citigroup Global Markets are bookrunners.

The company assists with financing U.S. exports through private capital and is based in New York City.

UAL to price split-rated pass-throughs

United Air Lines is planning a sale of $810.337 million in split-rated Class A and B pass-through certificates, according to a 424B5 filing with the SEC.

The sale is being done off of the high-grade syndicate desk.

The deal will consist of $697.731 million of Class A certificates (Ba1/BBB) due in 2017, and $112.606 million of junk-rated Class B certificates (B1/BB) due in 2016.

J.P. Morgan Securities, Morgan Stanley and Goldman Sachs & Co. are bookrunners.

Proceeds will be held in escrow to acquire equipment notes to buy aircraft.

The holding company for commercial airline United is based in Chicago.

Thomas & Betts bonds trade better

The new 5.625% notes due in 2021 from Thomas & Betts were trading tighter by late afternoon, a trader said. The notes priced at 237.5 bps over Treasuries, and were quoted at 225 bps bid, 220 bps offered.

Duke Energy 30-year widens

Duke Energy Carolinas saw its new 5.3% notes due in 2040 widen slightly after being freed for the secondary, a trader said. It sold at 105 bps over Treasuries, and was trading at 108 bps bid, 107 bps offered.

AmerisourceBergen bond improves

Pharmaceutical company AmerisourceBergen's new 4.875% bond due in 2019 was quoted by a trader as slightly better than where it priced. It was trading at 157 bps bid, 153 bps offered, and sold at 162.5 bps over Treasuries.

Kellogg 10-year trades in

A 4.15% bond due in 2019 from cereal maker Kellogg traded in slightly once hitting the secondary, a trader said. It priced at 85 bps over Treasuries, and was quoted at 83 bps bid, 79 bps offered.

Progress Energy bonds straddle price

The two tranches of notes priced by Progress Energy didn't move much from their pricing levels in trading, a trader said.

The 4.875% tranche due in 2019 was on both sides of the 155 bps over Treasuries price, quoted at 158 bps bid, 150 bps offered.

The tranche of 6% bonds due in 2039 were about the same, selling at 173 bps over Treasuries, and trading at 177 bps bid, 170 bps offered.

Lockheed Martin tranches worsen

A trader said late in the afternoon that two tranches priced on Friday by Lockheed Martin widened over the weekend from where they were quoted after pricing.

The 4.25% notes due in 2019 were sold at 93 bps over Treasuries, and were trading late in the day at 103 bps bid, 98 bps offered. This was a swing in the wrong direction from the 94 bps bid, 90 bps offered from the previous day.

A 5.5% bond due in 2039 was sold at 120 bps over Treasuries, and was trading at 127 bps bid, 122 bps offered. This was slightly wider than the 120 bps offer from Friday.

Thermo Fisher bonds improve

Thermo Fisher Scientific Inc.'s two bonds priced on Friday had improved in trading by late Monday, a trader said.

The 2.15% notes due in 2012 were trading at 83 bps bid, 80 bps offered. This was tighter than the price of Treasuries plus 90 bps.

A 3.25% tranche due in 2014 was sold at 100 bps over Treasuries and was trading at 92 bps bid, 89 bps offered. This was tighter than the 99 bps bid, 95 bps offered quote from Friday.

Investors look at long bonds, new deals

Long bonds from new offerings are trading at strong levels lately, a trader said on Monday. "There's definitely more interest in the long bond than a three- or five-year," she said.

New bonds have also been taking up much of the spotlight in the secondary, as there is an abundance of them. Spreads are attractive, the trader said.

The day's trading volume was "a little lighter than it has been," with about $7.7 billion changing hands. Friday had about $7.3 billion.

Recent bonds trade briskly

Bonds priced throughout the past week made a strong showing in trading volume on Monday.

Recent notes from Capital One Financial Corp., Quest Diagnostics Inc., Cisco Systems, Inc., Entergy Louisiana LLC and Zimmer Holdings Inc. made a showing on the most-traded list for the day.

Sitting at the top was an 8.55% bond due in 2019 from Dow Chemical Co. - a company that often has notes trading at high volume.

Behind that was a split-rated bond from Capital One that has a coupon of 8.875% and is due in 2040.

The previous week saw almost non-stop action in the primary market, which has carried over into high volume in the secondary.

Both the Capital One note and a 4.45% issue due 2020 from Cisco Systems were also trading heavily on Friday.

A trader said that "Cisco's been trading well. That's just a name everybody loves." She noted the same about Dow Chemical and that "they always seem to be there."

Devon Energy moves in on news

Devon Energy Corp. announced early in the day that it plans to strategically reposition itself as a high-growth North American onshore company, according to a press release. To do this, it plans to divest all of its Gulf of Mexico and international assets.

By late in the day, a trader quoted the company's 5.625% bonds due in 2014 as 10 bps tighter than the previous day. On Friday, the notes were offered at 95 bps, and on Monday were offered at 85 bps, she said.

Bank, broker CDS tighter

Bank and broker credit-default swaps were tighter across the board by late in the day, a trader said.

Bank names were about 3 bps better across the board. Brokers were quoted at between 3 and 7 bps tighter.

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