AT&T, Freeport, Wells Fargo, HSBC offer bonds in packed primary market; Goldman paper firms

By Andrea Heisinger and Cristal Cody

New York, Feb. 8 - The high-grade bond market was full of sales from high-quality corporates and financials like Aflac Inc., AT&T Inc., Wells Fargo & Co. and HSBC USA Inc. on Wednesday.

Other sales came from Freeport-McMoRan Copper & Gold Inc., BMC Software, Inc. and Enterprise Products Operating LLC.

AT&T priced bonds for the first time since its $5 billion deal in four tranches in August. The new sale totaled $3 billion of paper with maturities of three, five and 10 years. Terms were not available at press time for the sale, which was run by bookrunners BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. The deal was evenly divided among the three maturities.

International mining company Freeport-McMoRan's deal also totaled $3 billion and had three parts.

Wells Fargo priced $2 billion of three-year paper, and HSBC USA sold $1.5 billion of three-year notes.

Elsewhere in the market, supplemental insurance company Aflac priced $750 million of notes in five- and 10-year tranches.

BMC Software priced $500 million of 10-year notes, and midstream energy company Enterprise Products Operating sold $750 million of 30-year bonds that are guaranteed by its parent, Enterprise Products Partners, LP.

Germany's KfW sold $5 billion of five-year global notes early in the day.

Despite the successful number of deals priced for the day, sources were conservative when describing the tone.

"It was kind of stable but not really good," one syndicate source said at day's end. "I wouldn't call it great."

Another market source who assisted on a couple of the day's deals also wasn't enthusiastic about the day's tone in general but commented that "everything's been massively oversubscribed this week, so people want paper."

A second syndicate source said that "everything's a little bit tighter in the secondary, but we'll see what happens tomorrow."

Desks will be watching how the new crop of deals performs in trading, and it's unclear what Thursday's calendar looks like.

"I really don't know what we have for tomorrow, to be honest," the first syndicate source said.

Investment-grade bonds traded mostly unchanged on Wednesday in a continuation from Tuesday. The Markit CDX Series 17 North American Investment Grade index was flat at a spread of 95 basis points.

Bank and financial paper traded flat to about 10 bps better, depending on the name, sources said.

Goldman Sachs Group, Inc.'s 3.625% notes due 2016 were trading more than 20 bps tighter than less than two weeks ago, an informed source said.

Investment-grade bank and brokerage credit default swaps costs were little changed on the day.

Bank paper CDS costs were seen unchanged to 5 bps lower, indicating more confidence in the sector, a trader said. Brokerage paper CDS costs were flat.

Treasuries traded mostly flat in light activity on Wednesday after the government's auction of $24 billion of 10-year notes.

The benchmark 10-year note yield rose 1 bp to 1.98%. The 30-year bond yield was unchanged at 3.15%.

Freeport's $3 billion

Freeport-McMoRan Copper & Gold sold $3 billion of senior notes (Baa3/BBB/BBB) in three parts, a syndicate source said.

The $500 million of 1.4% three-year paper priced at a spread of 110 bps over Treasuries. This was at the tight end of guidance in the 112.5 bps area.

There was also a $500 million tranche of 2.15% five-year notes priced at Treasuries plus 135 bps. This was at the low end of talk in the 137.5 bps area.

Finally, there was $2 billion of 3.55% 10-year notes priced at a spread of 160 bps over Treasuries. This was at the tight end of talk in the 162.5 bps area.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC were the bookrunners.

Proceeds are being used to redeem a portion of outstanding 8.375% senior notes due 2017.

The mining company is based in Phoenix.

HSBC prices tight

HSBC USA priced $1.5 billion of 2.375% three-year senior paper (A1/A+/AA) at a spread of 210 bps over Treasuries, a source away from the offering said.

The paper sold at the tight end of guidance in the 215 bps area, the source said.

HSBC Securities (USA) Inc. was the bookrunner.

Proceeds are being used for general corporate purposes including investments in and advancements to subsidiaries, financing future acquisitions of financial institutions as well as banking and other assets.

The U.S. subsidiary of U.K.-based HSBC Holdings plc is based in New York.

Wells Fargo sells short bond

San Francisco-based financial services company Wells Fargo priced $2 billion of 1.25% three-year notes (A2/A+/AA-) to yield 100 bps over Treasuries, a source close to the trade said.

The source added that the deal was sold at the tight end of guidance in the 105 bps area.

"There was about $3 billion on the books," the source said.

Wells Fargo Securities LLC was the bookrunner.

Enterprise Partners' 30-year

Enterprise Products Operating sold $750 million of 4.85% 30-year senior bonds (Baa2/BBB/BBB-) to yield Treasuries plus 175 bps, an informed source said.

The deal was sold tighter than talk in the 200 bps area, the source said. The source added that there was about $3 billion on the books for the trade.

The active bookrunners were JPMorgan, RBS Securities Inc. and Wells Fargo.

Proceeds are being used to temporarily reduce borrowings under a multi-year revolving credit facility and for general corporate purposes.

The midstream energy company is based in Houston.

BMC prices $500 million

BMC Software priced $500 million of 4.25% 10-year senior notes (Baa2/BBB+/) to yield Treasuries plus 235 bps, a market source said.

Bank of America Merrill Lynch and JPMorgan were the bookrunners. Deutsche Bank Securities Inc. was passive.

Proceeds are being used for general corporate purposes, including common stock share repurchases and the acquisition of assets and businesses.

The IT management company is based in Houston.

Aflac sells two tranches

Aflac sold $750 million of senior notes (A3/A-/A-) in two tranches, a source away from the trade said.

A $400 million tranche of 2.65% five-year paper sold at a spread of Treasuries plus 185 bps.

There was also a $350 million tranche of 4% 10-year notes priced at Treasuries plus 205 bps.

Goldman Sachs & Co. and JPMorgan were the bookrunners.

Proceeds are being used to repay in full at maturity $347 million of the parent company's 1.87% Samurai notes due in June. Any remainder will be used for general corporate purposes, including capital contributions to subsidiaries if needed.

Aflac last priced bonds in a $750 million deal of five- and 30-year notes on Aug. 4, 2010. The 3.45% five-year notes from that deal were priced at 185 bps over Treasuries.

The holding company for supplemental health and life insurance subsidiaries is based in Columbus, Ga.

KfW's $5 billion

KfW sold $5 billion of 1.25% five-year global notes (Aaa/AAA/AAA) to yield mid-swaps plus 23 bps, or Treasuries plus 52.1 bps, according to an FWP filing with the Securities and Exchange Commission and a market source.

The bookrunners were Credit Suisse, HSBC Securities Inc. and Morgan Stanley & Co. LLC.

The German government-owned development bank is based in Frankfurt.

Goldman tightens

In the secondary market, Goldman's 3.625% notes due 2016 (A1/A/A+) traded at 277 bps over the day, a source said on Wednesday.

The note was quoted on Jan. 27 trading 35 bps tighter on the week at 295 bps bid, 280 bps offered.

Goldman sold $1.25 billion of the issue at a spread of 156 bps over Treasuries on April 28, 2011.

The financial services company is based in New York.

Paul Deckelman contributed to this report

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