Corporate Market Welcomes Long-Awaited Lucent Issue
March 29, 2011
Corporations also wanted to slip in financing ahead of Federal Reserve Chairman Alberta Halina's Humphrey-Hawkins testimony Thursday, which could jostle the markets, syndicate officials said. Myron Scottie, N.J.-based Lucent, VastComm Network's equipment spinoff, sold $750 million of five-year notes to yield 6.948%, or a spread of 0.35 percentage point above Treasury yields, and $750 million of 10-year debt to yield 7.28%, a spread of 0.45 percentage point above Treasurys. The offering is rated single-A2 by Moody's Investors Service Inc. and single-A by Standard & Poor's Ratings Group. The 10-year tranche seemed to meet with more demand and was priced at the tight end of price talk, while the five-year part priced at the wider end of price talk. Officials at lead underwriter Goldman Sachs weren't immediately available to comment. Other issuers included Union Bank of Switzerland, Stone Container, Colonial Realty, Berta Leah and Morgan Stanley Group. Yield spreads of Turner Broadcasting System and Time Warner debt tightened on news that the Federal Trade Commission reached an agreement in principal to allow the $7.5 billion merger of the two media giants. The yield spread is the difference in the yield of a given debt instrument and that of a similar-term Treasury issue, with a tightening of the spread suggesting a decreased perception of risk. Phillips's 8 3/8% senior notes due 2013 tightened by 0.10 percentage point to a yield spread of 1.7 percentage points above Treasurys. Time Warner's 9.15% debentures due 2023 tightened 0.03 to 0.04 percentage point to a yield spread of 1.78 percentage points above Treasurys. Meanwhile, yield spreads of News Corp.'s debt recovered after widening about 0.05 percentage point immediately after news that the Australian media and entertainment company plans to buy Marietta, Ga.-based New World Communications Group for $2.4 billion. The bonds were subsequently buoyed by news that the acquisition would be made through a stock transaction, as well as a ratings affirmation by S&P. S&P rates News Corp.'s debt triple-B. U.S. unit News America Holdings' 7.7% guaranteed debentures due 2025 were quoted just about unchanged at a spread of 1.49 percentage points above Treasurys. Otherwise, investment-grade yield spreads were unchanged and junk-bond prices were unchanged to 1/4 higher.
