High-Grade Issuers Brave A Jittery Corporate Bond Market

30th Jun 2010 17:35

By Katy Burne Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Disappointing private-sector U.S. jobs data and Chicago Fed President Charles Evans' warning that economic recovery will be slow were not enough to deter high-grade corporate borrowers from the capital markets Wednesday. Three household-name companies braved the market with new issues, including Wal-Mart Stores Inc. (WMT), the Campbell Soup Co. (CPB) and Fidelity Investments (FMR). Wal-Mart is selling five-, 10-, and 30-year senior unsecured paper in benchmark size; Campbell is selling $400 million in seven-year senior unsecured notes; and Fidelity is selling $250 million in 30-year senior unsecured bonds. "Who better than Wal-Mart to step in during an extremely volatile time and issue a benchmark size deal?" Tim Backshall, chief credit strategist at Credit Derivatives Research, wrote in a note. "We doubt they will have any trouble getting this done." Wal-Mart's deal was initially priced at 60 basis points over Treasurys for the five-year notes; 75 over for the 10-year, and 115 over for the 30-year notes. The company's 4.5% and 2.875% five-year notes are trading with a spread of 54 and 44 basis points, respectively, in the secondary market, according to MarketAxess; 54 basis points in the case of its 4.125% bonds due 2019; and 112 basis points for its 5.625%, 30-year paper. Campbell Soup's sale launched at 65 basis points over comparable U.S. Treasurys, tight of guidance of 65 basis points to 68 basis points. The company's outstanding 5.5% bonds due December 2012 are trading at 44 basis points over Treasurys. Barclays Capital is a lead bookrunner on both the Campbell and Wal-Mart deals; while J.P. Morgan is a lead bookrunner on all three. -By Katy Burne, Dow Jones Newswires; 212-416-3084; [email protected] (END) Dow Jones Newswires June 30, 2010 12:35 ET (16:35 GMT)