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By Stan Rosenberg Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Monday's typically start out slowly in credit markets, but Treasurys were busy with a $35 billion three-year auction, while investment-grade and high-yield corporates also saw new issuance. Nearly $3 billion of asset-backed securities also were offered. Oracle Corp. and Time Warner brought multibillion dollar deals in the high-grade sector, while Windstream had a $400 million deal on tap in the junk bond sector. The asset-backed market saw almost $3 billion of debt, including deals from Toyota Motor and SLM Corp. The Treasury's auction was "decent but not spectacular," according to one strategist, coming in at a yield higher than that of the when-issued notes just before the auction. Investment-Grade Corporates Monday offered a promising start to the week in terms of high-grade debt issuance. Two high-grade corporates names came to market. Oracle Corp. (ORCL) launched a $3.25 billion debt issue in the Rule 144A private-placement market. The software giant launched the deal in two parts. A $1 billion, ten-year piece launched with a risk premium of 85 basis points over cover Treasurys, and a 30-year, $2.25 billion piece launched at 140 basis points over comparable Treasurys. Oracle's bond sale marks a big start to the week at a time when weekly debt issuance has been slow but dominated by single issuers coming to market with multi-billion dollar, multi-tranche deals. Time Warner (TWX) priced a $3 billion, three-part deal on July 7, an issue that made up more than a third of last week's $8.9 billion high-grade issuance. Wal-Mart (WMT) priced $3 billion of bonds on June 30, making up nearly half of that week's $6.06 billion in issuance. ERP Operating launched a $600 million offering at 180 basis points over comparable Treasurys. ERP Operating, the operator of REIT Equity Residential (EQR), which owns more than 1,100 apartment communities in 36 states, ratcheted up the size of the deal by $100 million at launch. The cost of protecting BP PLC's (BP, BP.LN) debt fell sharply Monday amid reports that the U.K. oil giant is in talks to sell more than $10 billion of assets to exploration and production company Apache Corp. (APA), and separately that ExxonMobil (XOM) may offer to buy BP. Yields also dropped across the board for BP's bonds in the secondary market. BP's 3.875%-coupon notes due March 2015 were the secondary market's most actively traded Monday, with the risk premium falling 19 basis points to 384 basis points, or a yield of 5.668%, according to MarketAxess. Spreads for BP's bonds have rallied over recent weeks, with the spread for the 2015 notes falling 40% since the high of 645 basis points on June 25. The Markit CDX North America Investment Grade credit-default swaps index started wider and stayed that way. The benchmark index was trading 1.5 basis points worse at 112 basis points as of 3 p.m. EDT, according to Markit. Junk Bonds Windstream Corp. Monday afternoon will sell $400 million in 8-year senior unsecured notes in a drive-by deal announced Monday morning. The deal, run by Morgan Stanley, will repay its revolver, drawn on to fund its acquisition of Iowa Telecom. The notes are expected to price with a 8.375% coupon at 99 cents on the dollar for initial buyers, according to people familiar with the deal. Interactive Data will sell $700 million in 8-year senior unsecured notes to help fund its leveraged buyout by private equity firms Silver Lake Technology Management and Warburg Pincus. The deal, led by Barclays Capital, goes on roadshow Tuesday and is slated to price July 20. The Markit CDX North America High Yield Index dropped 0.5 point to 96.5, according to Markit. Meanwhile, the corporate loan market has rebounded to precrisis levels, but only for the most creditworthy borrowers. The cost for borrowers in the so-called leveraged-loan market, where weaker and deeply indebted companies come for financing, is still too high for many companies to pay. Overall, companies are taking out loans at the fastest pace since before the collapse of Lehman Brothers rocked credit markets 18 months ago: $703 billion worth in the three months ending June 30, according to data provider Dealogic. That's close to the total of $722 billion in the third quarter of 2008. But borrowings by companies that already have a lot of debt relative to their size, in the form of leveraged loans, have yet to recover. They are still down by 25% over the same time to $177 billion from $237 billion. Agency Mortgages Agency mortgage-backed securities were flat Monday compared to Friday. "Volume was pretty light," said Kevin Cavin at Sterne Agee in Chicago. "Some sections of the market are showing response to refinancing activity, but lending standards are very tight and borrowers are having to go through the wringer to qualify for new loans. That has slowed refi activity relative to rates," he said. Risk premiums on agency mortgages are quoted at 129 basis points, the same as late Fri. Asset-Backeds Nearly $3 billion of asset-backed bonds were on offer Monday, including deals from Toyota Motor Co. (TM, 7203.TO), student lender SLM Corp. (SLM) and a Louisiana agency financing recovery from recent hurricanes. Toyota Auto Receivables Trust is in the market with a $1.25 billion auto loan-backed deal. SLM Corp., also known as Sallie Mae, has an $869 million student loan-backed bond, and Louisiana Utilities Restoration Corporation Project has a $700 million asset-backed bond. All three securities are expected to price this week. Total asset-backed issuance stands at a little more than $57 billion this year, according to a note from Citigroup. The bank estimates issuance this year will be about 18% less than last year's $138 billion. Most asset-backed bond issuance this year has been in the auto sector, and this trend is expected to continue. Such bonds will likely dominate supply and "will largely mirror auto sales," according to a note from Citigroup analysts. They project the volume of auto-loan-backed bonds could be $30 billion in the second half of the year. So far this year, auto sector asset-backed issuance has totaled $32 billion versus $20 billion for the same period last year, according to Citi data. Issuance of credit card debt-backed bonds is likely to remain low for the rest of 2010, according to the Citi analysts, who project only $5 billion. Treasurys The Treasury sold three-year notes for the lowest yield on record, but prices still slipped as investors set up for the government's remaining 10- and 30-year auctions this week. The new notes yielded 1.055%, the lowest yield on record for three-year sales, traders said. Ahead of the sale, the market had seen the yield at 1.046%. In afternoon trading, most Treasury prices were lower. The price of the three-year note was off 1/32 to yield 1.027%, the two-year note was down 1/32 to yield 0.649%. The 10-year note was flat to yield 3.057%. The 30-year Treasury was off by 7/32 to yield 4.053%. -By Stan Rosenberg, Dow Jones Newswires, 212.416.2226; stan.rosenberg@dowjones.com (Chris Dieterich, Katherine Greene, Anusha Shrivastava, Prabha Natarajan and Deborah Lynn Blumberg contributed to this article.) (END) Dow Jones Newswires July 12, 2010 16:38 ET (20:38 GMT)