GE Capital, Fairfax Financial sell paper as primary slows; new bonds mixed in trading

By Andrea Heisinger and Cristal Cody

New York, May 4 - General Electric Capital Corp. and Fairfax Financial Holdings Ltd. sold high-grade bonds Wednesday as momentum slowed in the primary market following a busy previous day.

Fairfax Financial priced $500 million of 10-year notes under Rule 144A and Regulation S. The notes sold tighter than initial guidance.

GE Capital sold $1.8 billion of notes in two parts. There was $1.5 billion of five-year fixed-rate notes and $300 million of five-year floating-rate notes.

The Council of Europe Development Bank also came with a sovereign deal. The AAA rated financier of social projects priced $1 billion of notes due 2015.

The day was "pretty much as expected," said one syndicate source, referring to the number of trades.

"I think there was demand on the GE deal," he added.

A source who worked on the GE deal said he didn't know offhand how oversubscribed it was.

The market has had steady issuance for the week, and a market source said that they "weren't expecting an empty market" for Thursday. The week has yet to hit the low estimate of $15 billion in new deals, the source said.

There have not been any upcoming deals announced.

In the secondary market, the new deal sold earlier from Fairfax Financial narrowed in trading, while GE Capital's notes widened on the bid side, traders said.

Overall investment-grade Trace volume rose 20% to nearly $15 billion on Wednesday, a market source said.

The Markit CDX Series 14 North American investment-grade index was 1 bp weaker at a spread of 90 bps, according to Markit Group Ltd.

Treasuries rallied on softer economic data. The 10-year note yield shed 2 bps to 3.22%, and the 30-year bond yield fell 3 bps to 4.32% on the day.

GE Capital sells $1.8 billion

GE Capital sold $1.8 billion of notes (Aa2/AA+) in two parts, an informed source said.

The first tranche was $300 million of five-year floating-rate notes priced at par to yield three-month Libor plus 87 bps.

There was also a $1.5 billion tranche of 2.95% five-year notes priced at a spread of 105 bps over Treasuries.

Bookrunners were Barclays Capital Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC and Morgan Stanley & Co., Inc.

Proceeds will be used for general corporate purposes.

In the secondary, GE Capital's notes due 2016 traded wider on the bid side at 107 bps bid, 104 bps offered, a trader said.

Another trader saw the notes at 106 bps bid 104 bps offered.

The financing arm of General Electric Co. is based in Fairfield, Conn.

Fairfax sells privately

Fairfax Financial Holdings issued $500 million of 5.8% 10-year senior notes (Baa3/BBB-) to yield 262.5 bps over Treasuries, said a market source away from the trade.

Price guidance was in the 275 bps area, and the notes priced significantly tighter than that level.

The notes sold under Rule 144A and Regulation S.

Bank of America Merrill Lynch was the bookrunner.

Proceeds are going to refinance $500 million of existing notes issued by Fairfax and its subsidiaries.

In secondary trading, Fairfax Financial's notes due 2021 tightened to 253 bps bid, 248 bps offered, a trader said.

A trader on another desk saw the notes at 256 bps bid, 242 bps offered.

The financial services holding company for casualty insurance and reinsurance subsidiaries is based in Toronto.

COE's $1 billion

The Council of Europe Development Bank priced $1 billion of 1.5% senior notes due 2015 (Aaa/AAA/AAA) to yield mid-swaps plus 1 bp, or 60.4 bps over Treasuries, according to an FWP filing with the Securities and Exchange Commission.

Bookrunners were Credit Suisse Securities LLC, Goldman Sachs International, HSBC Securities and JPMorgan.

The institution for the financing of social projects is based in Paris.

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