Busy Day In US Corporate Debt, China News Gives A Boost

21st Jun 2010 18:03

By Katy Burne and Chris Dieterich Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--The U.S. investment-grade corporate debt market got off to a busy start Monday, with eight deals coming to market, led by the financial sector. The key driver behind the return to a more bullish sentiment was China's decision to allow more flexibility in the trading of its currency, the yuan. The pickup in issuance and the improved sentiment follow several weeks of jitters, prompted by concerns the euro zone's debt problems could spread and hurt the global recovery. "The China news was overwhelming--the market was looking for something positive to rally on, even it if wasn't the solution to what the market went down on," said Sandy Ewing, founding principal at Chapdelaine Credit Partners. "In this environment all the bearishness will continue to create pent-up real-money [investor] demand," he said. Financials, both foreign and domestic groups, are in the market in a continuation of last week's trend. According to data provider Dealogic, the financial sector last week sold some $9.8 billion in debt. Two deals have already priced: a $500 million sale for Citic Bank International Ltd., the Hong Kong unit of China Citic Bank Corp. (0.998.HK); and an offering of $1.25 billion in 10-year notes from the Export-Import Bank of Korea. Citic sold 10-year subordinated bonds at 362.5 basis points over comparable Treasurys--at the tight end of guidance set at 362.5 to 375 basis points. The sale was led by Barclays Capital and HSBC, with Citic Securities as the co-manager. KEXIM sold its offering of senior unsecured notes through Banc of America, BNP Paribas, Citigroup, Deutsche and Royal Bank of Scotland. The deal priced at 198 basis points over Treasurys, at the tighter end of guidance between 198 and 202 basis points. Bank of Montreal (BMO) and General Electric Capital Corp., the financing arm of General Electric (GE) each brought $1 billion deals, with three-year and five-year tenors, respectively. Bookrunners for BMO's offering, which is expected to price in the 95-98 basis points over Treasurys area, are Bank of America Merrill Lynch, Barclays Capital, Morgan Stanley and BMO itself. GE Cap's offering, expected to price around 150 basis points over Treasurys, is being led by BofA, BarCap, Morgan Stanley and Deutsche Bank. Still on deck is a two-part, benchmark five-year offering from Shell International Finance, underwritten by BofA and HSBC; and another benchmark issue of five-year senior notes for HSBC Bank, which the bank is selling itself. Health-care product group Covidien International Finance is selling three-, five- and 10-year notes via BarCap, Goldman Sachs and Morgan Stanley. Each tranche will be a minimum of $250 million; price guidance is 75 basis points over Treasurys for the three-year note; 85 basis points over Treasurys on the five-year note; and 100 basis points over Treasurys on the 10-year offering. Also in the market, a $300 million offering of 10-year notes for insurer Genworth Financial (GNW) via BofA, Credit Suisse, Goldman and UBS. High-grade issuance has accelerated in recent weeks in the absence of market-shuttering news from Europe. Last week's $21.5 billion in volume is the highest since mid-March. -By Katy Burne and Chris Dieterich, Dow Jones Newswires; 212-416-3084, 212-416-2611; [email protected] -0- (END) Dow Jones Newswires June 21, 2010 13:03 ET (17:03 GMT)