Caterpillar, Kommuninvest round out week; Caterpillar firms; Suncor eases; bank paper tightens

By Aleesia Forni

Virginia Beach, Nov. 21 – Caterpillar Financial Services Corp. and Kommuninvest i Sverige AB came to Friday’s primary market with $1.14 billion of new issuance to round out the week.

Caterpillar sold both tranches of its new $750 million offering at the tight end of talk, which had firmed around 10 basis points compared to initial guidance.

The primary also saw Kommuninvest sell $400 million of four-year floating-rate notes in a Rule 144A and Regulation S deal.

Friday’s new issuance activity increased the week’s total supply to around $24.7 billion, falling short of what sources had predicted to be around a $30 billion week.

Still, cash continued to pour into investment-grade bond funds, with Lipper reporting net inflows of $3.236 billion for the week ended Nov. 19.

This compares to the previous week’s inflows of $3.44 billion, pushing the year-to-date total inflows to more than $80 billion.

Looking forward, the Thanksgiving holiday-shortened week is expected to see around $10 billion to $15 billion of new issuance.

Investment-grade bonds and credit spreads mostly improved over the session, sources said.

The Markit CDX North American Investment Grade series 23 index tightened more than 1 bp early Friday and ended the day 2 bp better at a spread of 64 bps.

Caterpillar Financial Services’ two tranches of notes traded tighter in the secondary market, according to a trader.

Suncor Energy Inc.’s 3.6% senior notes due 2024 remained better than issuance but widened over the session, a trader said.

Bank and financial paper improved about 1 bp to 10 bps, according to a market source.

Bank of America Corp.’s 4% notes due 2024 tightened 8 bps from Thursday’s level, the source said.

Citigroup Inc.’s 3.75% notes due 2024 came in 9 bps in trading.

JPMorgan Chase & Co.’s 3.625% senior notes due 2024 firmed 4 bps by late afternoon, according to the market source.

Caterpillar two-parter

Caterpillar Financial Services sold $750 million of senior notes (A2/A/) on Friday in five- and 10-year tranches, according to a market source and two separate FWP filings with the Securities and Exchange Commission.

The offering included $500 million of 2.25% five-year notes priced at 99.92 to yield 2.267%, or Treasuries plus 65 bps.

A second tranche was $250 million of 3.25% 10-year notes sold at 99.89 to yield 3.263%, or Treasuries plus 95 bps.

Both tranches sold at the tight end of price talk.

BofA Merrill Lynch, J.P. Morgan Securities LLC, RBS Securities Inc. and SG Americas Securities LLC were the bookrunners.

In the secondary market, Caterpillar Financial Services’ 2.25% notes due 2019 tightened to 62 bps bid, 60 bps offered, a trader said.

The tranche of 3.25% notes due 2024 headed out in the secondary market at 91 bps offered.

The funding arm of heavy equipment maker Caterpillar is based in Nashville.

Kommuninvest floaters

Kommuninvest i Sverige AB priced $500 million of four-year floating-rate notes (Aaa/AAA/AAA) at par to yield Libor plus 3 bps on Friday, an informed source said.

Citigroup Global Markets Inc., Nomura and RBS Securities were the bookrunners for the Rule 144A and Regulation S deal.

Kommuninvest offers funding to municipalities of Sweden and is based in Orebro.

Suncor Energy weaker

The new 3.6% notes due 2024 (A3/A-//A) that Suncor Energy priced on Thursday traded early Friday at 119 bps offered, according to a trader.

“Recent Trace prints are in the 123-124 [bps] area,” the trader said late afternoon.

Suncor Energy sold $750 million of the 10-year notes on Thursday at a spread of Treasuries plus 125 bps.

The energy company is based in Calgary, Alta.

Bank of America tightens

Bank of America’s 4% notes due 2024 (Baa2/A-/A) headed out on Friday at 128 bps offered, better than where the notes traded on Thursday at 136 bps offered, a market source said.

Bank of America sold $2.75 billion of the notes on March 27, 2014 at Treasuries plus 137 bps.

The financial services company is based in Charlotte, N.C.

Citigroup improves

Citigroup’s 3.75% notes due 2024 (Baa2/A-/A) firmed 9 bps to 125 bps offered by late Friday, a market source said.

Citigroup sold $1.25 billion of the 10-year notes on June 9 at Treasuries plus 115 bps.

The bank is based in New York City.

JPMorgan paper firms

JPMorgan’s 3.625% senior notes due 2024 (A3/A/A+) tightened 4 bps to 119 bps offered in secondary trading, a market source said.

JPMorgan sold $2 billion of the notes on May 6 at 110 bps plus Treasuries.

The financial services company is based in New York City.

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