UPDATE 2-New AB InBev bond bounces back in secondary trading

(Corrects to five-year floater from three-year in par 7)

By Hillary Flynn

NEW YORK, Jan 14 (IFR) - Most of the seven tranches in AB InBev's new US$46bn bond swung back inside re-offer levels by midday on Thursday, rebounding after first gapping wider when the deal was priced.

The market was closely watching the performance of the second-largest bond ever, which priced on Wednesday to help fund the brewing giant's acquisition of rival SABMiller (Xetra: BRW1.DE - news) .

The 10-year bonds - one of the most sought-after pieces of the deal - were the lone exception, remaining one basis point out from re-offer levels.

But bankers said the early widening in the bond spreads was more to do with the broader market volatility than where the deal was priced.

Among the fixed-rate tranches, the three-year was flat at T+85bp-83bp, in from 87bp earlier, while the five-year was 2bp inside at T+118bp-115bp.

The seven-year and 20-year were about flat to 3bp tighter to re-offer, according to Ron Quigley, managing director at Mischler Financial.

The 30-year was about 7bp inside re-offer after being seen earlier about one basis point wider. The five-year floater was 6bp tighter than re-offer.

The bond priced with new issue concessions ranging between negative 5bp and plus 20bp, with the longer bonds giving a better spread pickup than the shorter ones.

The bond amassed a record US$110bn order book. (Reporting by Hillary Flynn; Editing by Shankar Ramakrishnan and Marc Carnegie)