GE brings FDIC-backed deals; FDIC deals seen continuing; HP, FPL deals continue tight trading versus issue

By Paul Deckelman and Sheri Kasprzak

New York, Dec. 12 - Pricing activity tapered substantially on Friday, but a market insider said Federal Deposit Insurance Corp.-backed deals may dominate the coming week.

General Electric Capital Corp. was back in the news Friday, announcing term on two more FDIC-backed notes, a trend that is likely to continue unabated into next week and possibly into the next year, said one market source reached Friday afternoon.

"It's a big trend," he said. "I wouldn't be surprised at all to see more in the next week. Maybe we'll see some more the week after that, but my guess is things will slow down a lot before the holiday."

In the secondary market Friday, recent new deals from Hewlett Packard Co. and FPL Group Capital Inc. continued to trade at a considerable premium to their respective issue prices.

Advancing issues continued to lead decliners, by a seven-to-six ratio. Overall market activity, reflected in dollar volumes, fell nearly one-third from Thursday's pace.

Spreads in general were seen wider, in line with lower Treasury yields; for instance, the yield on the benchmark 10-year issue eased by 3 basis points to 2.57%.

GE brings more deals

Moving to the largest reopened GE offering, the corporation announced that on Wednesday it sold another $250 million in three-year floating-rate senior notes backed by the FDIC, according to an FWP filing with the Securities and Exchange Commission.

The non-callable notes (Aaa/AAA/) priced at 99.85 with a coupon of three-month Libor plus 85 basis points.

The bookrunners for the sale were Banc of America Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Goldman, Sachs & Co. and Morgan Stanley & Co. Inc.

Also at GE on Wednesday, the corporation reopened $100 million in three-year series G senior fixed-rate notes, also backed by the FDIC.

The 3% non-callable notes (Aaa/AAA/) priced at 99.76 with a spread of Treasuries plus 190 basis points.

The bookrunner for the deal was Goldman, Sachs & Co.

Fairfield, Conn.-based General Electric Capital is the financing arm of the General Electric Co., a technology, media and financial services company.

GE Capital bonds trade actively

In the secondary market, GE Capital's 3% notes due 2011 were the most actively traded issue of the day, a source said, quoting those bonds at a spread over comparable Treasuries of 131 bps.

Its 5% notes due 2016 were meantime seen trading in the 300 bps over area, a 40 bps tightening on the day.

Hewlett Packard retains gains

A trader said Hewlett Packard's recently priced 6.125% notes due 2014 were trading at 380 bps bid, 365 bps offered - about 5 bps tighter on the bid side and 10 tighter on the offered side than Thursday's levels, as investors continue to buy into the bonds, which have consistently been among the most actively traded bonds in high-grade market since their Dec. 2 pricing.

The bonds have steadily moved up, session-by-session, from the 460 bps over level at which the Palo Alto, Calif.-based computer and printer manufacturer priced its $2 billion issue.

New FPL bonds remain tight

Another new credit which has been trading strongly since its pricing -- FPL Group's 7.875% notes due 2015 - continued along that path Friday.

A trader saw the Juno Beach, Fla.-based electric power generating company's $450 million of new notes at 553 bps bid, 540 bps offered, little changed from Thursday's level but considerably tighter than the 596 bps over level at which the bonds had priced on Tuesday.

du Pont seen little changed

EI du Pont de Nemours & Co.'s $1 billion offering of new 5.875% five-year notes, which priced on Tuesday at 437 bps over, were quoted at 425 bps bid, 420 bps offered.

That was little changed from the level at which the Wilmington, Del.-based chemical giant's bonds had traded on Thursday, though tighter than where they had priced.

Shell bonds are static

The trader saw Shell International Finance BV's 6.375% notes due 2038 at 331 bps bid, 324 bps offered. The global energy company priced $2.75 billion of the bonds at 325 bps off this past Monday.

Week's activity dwindles

The first trader said that most of the issues he watches "came early in the week - and most of it has fizzled out since then." He characterized the market as "very quiet," adding "finally, a break."

Another trader said that Friday was "a kind of really choppy day, and things felt a little weaker."

He said that things mostly "hinged on the auto news. As the auto news came out and developed, and as it changed, it affected where things were trading and how things were trading. Once [investors] felt a little more comfortable that something was going to be done, it got better, but it was a very choppy session, with the focus on the autos. Our stuff generally felt a little better by day's end."

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