EIB prices $3 billion offering; spreads ease; BofA trades better in secondary

By Aleesia Forni

Virginia Beach, Aug. 28 – The investment-grade primary market saw the European Investment Bank bring to market an offering of seven-year notes on Thursday.

The $3 billion issue of notes sold in line with price talk.

In other market news, MetLife, Inc. entered into a remarketing agreement for two tranches of series E senior component debentures.

EIB’s new offering doubled the week’s supply of new investment-grade bond issuance, bringing it to nearly $6 billion.

Looking ahead, the market is expected to remain muted on Friday heading into the extended weekend.

Sources are predicting primary activity to resume in September following the Labor Day holiday.

In secondary market happenings, investment-grade bond spreads eased during the session.

The Markit CDX North American Investment Grade series 22 index was 1 basis point wider on Thursday at a spread of 56 bps.

Meanwhile, Bank of America Corp.’s bonds traded better on Thursday.

EIB brings $3 billion

The European Investment Bank priced $3 billion of seven-year notes on Thursday at mid-swaps plus 9 bps, according to a market source.

The notes priced in line with talk, which was set in the area of mid-swaps plus 9 bps.

BofA Merrill Lynch, TD Securities and J.P. Morgan Securities LLC ran the books.

The lender for the European Union is based in Kirchberg, Luxembourg.

MetLife remarketing

MetLife entered into on Aug. 26 a remarketing agreement with Deutsche Bank Securities Inc. as remarketing agent and Deutsche Bank Trust Co. Americas as stock purchase contract agent for its series E senior component tranche 1 debentures due 2018 and its series C senior component tranche 2 debentures due 2045, according to a filing with the Securities and Exchange Commission.

The agents are obligated to use their commercially reasonable efforts to obtain a price for each tranche of the remarketed securities resulting in proceeds, net of fees, equal to at least 100% of the total principal amount plus accrued interest to Oct. 8, plus the product of 5 bps and the aggregate principal amount of the remarketed securities.

MetLife issued the second-tranche debentures due 2045 on Nov. 1, 2010. The securities originally formed part of the company’s common equity units, which were offered to investors under MetLife’s shelf registration statement filed on Nov. 30, 2010.

Effective on Sept. 15, the series E debt securities will automatically convert into units consisting of the first-tranche series E debt securities and second-tranche series E debt securities, with each $2,000 principal amount of series E debt securities consisting of $1,000 principal amount of the first-tranche series and a like amount of the second-tranche securities.

Following a successful remarketing, the respective interest rates on each tranche of the remarketed securities will be reset.

Effective Oct. 8, the stated maturity of the first-tranche securities will automatically be adjusted to Dec. 15, 2017, while the stated maturity of the second tranche will automatically be adjusted to Dec. 15, 2044.

The insurance and financial planning company is based in New York City.

Bank of America firms

Bank of America’s $1 billion of 1.7% senior notes due 2017 was quoted 5 bps better on Thursday at 70 bps bid, 68 bps offered.

Pricing was at a spread of Treasuries plus 80 bps.

The bank’s 4.2% subordinated notes due 2024 firmed 4 bps to 164 bps bid, 163 bps offered.

The notes priced at 180 bps over Treasuries.

Both tranches sold as part of a $4.5 billion three-part offering priced on Aug. 21.

Bank of America is a financial services company based in Charlotte, N.C.

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