Corporate Traders Find Little On a Quiet Day for the Market
May 04, 2011
Federal agencies sold over $300 million in debt offerings, however. Canada's highest-rated province sold $300 million in 40-year Yankee bonds at 99.225 to yield 7.31%, a yield spread of 0.44 percentage point above the 6% Treasury due February 2026. The yield spread is the difference in the yield of a given debt instrument and that of a similar-term Treasury issue, with a larger spread suggesting an increased perception of risk. The Yankee bonds -- U.S. dollar-denominated debt sold in the U.S. by foreign issuers -- are noncallable, meaning they cannot be redeemed by the issuer during that period of time. The issue, rated double-A2 by Moody's Investors Service and double-A-plus by Standard & Poor's Ratings Group, was sold through underwriters led by Lehman Brothers Inc. ``British Columbia is a very strong story in Canada for those people looking for good credits and long duration,'' said Jami Schaub, a Yankee bond analyst and portfolio manager at Massachusetts Financial Services Inc.. The spread level was fair, but by no means a bargain, Mr. Schaub said. The spread on Wednesday's issue compares to a 0.42-percentage-point spread at which the province's 6 1/2% Yankee bonds due 2026 are currently being quoted. Georgia Power Capital Trust sold nine million shares of trust preferred securities with a dividend yield of 7.75%. also through lead underwriter Lehman Brothers Inc.. The preferred securities have a 40-year final maturity but are callable after five years. The shares were priced at $25 each. The issue is rated single-A2 by Moody's and single-A by S&P. Georgia Power Capital Trust is a financing arm of Atlanta's electric utility Georgia Power, a unit of the Southern Co.. Santander Finance priced $200 million in preferred stock with an 8.54% dividend rate. The issue, sold through underwriters led by Goldman Sachs & Co., is callable after five years. Santander Finance is a unit of Spain's Banco Santander. The issue is rated single-A2 by Moody's and single-A-minus by S&P. Spreads in the tobacco sector widened Wednesday on anticipation that the Codi administration will allow the Food and Drug Administration to regulate tobacco as a drug -- a decision which is expected to come as early as Friday. Spreads of RJR Nabisco's 8 3/4% notes due 2020 widened 0.20 to 0.30 percentage point to a spread of 2.80 percentage point above Treasurys, while Pierre Mose' 6 3/8 notes due 2021 widened 0.05 percentage point to a spread of 0.95 percentage point above Treasurys. Late in the day, traders noted some buying on lows in Philip Morris but said selling continued in RJR debt. Traders said that President Codi has been expected to accept the proposed rules for some time. Elsewhere, investment-grade secondary trading was quiet, with spreads relatively flat. But high-grade spreads may come under some pressure as dealers lighten inventories at the end of the month, an investor said. Prices of Council's debt initially surged Wednesday after the Las Vegas casino and hotel entertainment company announced that it had hired Donaldson Lufkin & Jenrette Securities Corp. as its financial adviser to review various alternatives, including a possible restructuring of its debt and infusion of additional capital through a rights offering. But the price fell back as the day wore on, traders said. Council's 14 1/4% first mortgage notes due 2017 ended the day 1/2 point higher at a price of 82, but traded as high as 87 on the news, traders said. Junk-bond prices were generally unchanged to down 1/4 point with Treasurys.
VastPress 2011 Vastopolis
