Trader Talk

Pisani: Another Big Week for Corp. Bond Issuance

U.S. stock futures were weaker overnight as inflation in China rose more than expected — the Consumer Price Index (CPI) was up 2.7 percent, more than the 2.5 percent expected. Throw this in wih the strong exports and the chances are growing that the Chinese will soon join the Australians and begin raising rates.

This has been another big week for bond issuance...on the heels of the successful Citigroup sale of trust preferreds (a hybrid instrument), Bank of America ), GMAC, Novartis Capital , DirecTV , MGM Mirage and Royal Bank of Scotland have all sold bonds this week. Prices have dramatically improved: MGM, for instance, sold $845 million in notes Tuesday night at a yield of only 9 percent.

Dubai World is reportedly meeting with creditors today to present details on restructuring $22 billion in debt.


1) British Petroleum in a major $7 billion deal with Devon Energy to for assets offshore of Brazil. Devon in turn is buying a stake in BP's oil sands interest in Canada. Devon up 2 percent pre-open.

2) Smithfield Foods is up 3 percent after topping Q3 earnings estimates ($0.22 vs. $0.19 consensus) amid a significant rise in margins. The better earnings were led by strength in its packaged meat operations and improvements in its hog processing division (better hog pricing and lower feed costs).

However, revenues were still well short of expectations ($2.9 billion vs. $3.3 billion consensus) in the quarter primarily due to a 7 percent drop in pork and packaged meat volumes.

3) Men's Wearhouse reported a narrower-than-expected Q4 loss (loss of $0.11 vs. loss of $0.16 consensus), but same-store sales fell more than expected (down 7.1 percent). Customer demand for its suits and tuxedos remained weak and margins continued to fall due to greater discounting.

In the current quarter, the men's apparel retailer sees comps flat to down low single digits, while earnings of $0.12-$0.16 exceeds the consensus forecast of $0.09.

4) United Technologies announced a new $4.3 billion stock buyback program. This comes after repurchased $1.1 billion in stock last year and as it is expected to buy back $1.5 billion in shares this year.

5) IPOs dethawing? It's been a miserable year for IPOs so far, but last night Sensata Technologies priced 31.6 m. shares at $18.00, the low end of the price talk of $18-$20.

That doesn't sound like much, but just making the range was a feat. Believe it or not, 70 percent if IPOs have priced below their price ranges this year. Aveo Pharmaceuticals, which was supposed to price last night, has been postponed, but it may price tonight at a lower price.

Sensata, a former subsidiary of Texas Instruments and now backed by Bain Capital, makes sensors that are widely used in automobiles and appliances.

I will be interviewing Sensata's CEO at 10am ET this morning.

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