Berkshire Hathaway, John Deere price; new issues tighten; credit spreads widen

By Cristal Cody and Aleesia Forni

Virginia Beach, Oct. 8 - A solid number of new deals priced on Tuesday, despite the government shutdown and heightened concern over the debt ceiling.

Berkshire Hathaway Finance Corp. came to market with $950 million of senior notes in two parts.

There was a $400 million add-on to its existing 0.95% notes due 2016, as well as $550 million of 2.9% notes due 2020.

In other primary action, John Deere Capital Corp. brought $750 million of notes due 2016 in fixed- and floating-rate tranches, both pricing at the tight end of talk.

There was $250 million of floaters sold at par to yield Libor plus 29 basis points and $500 million of 1.05% notes sold at Treasuries plus 42 bps.

Meanwhile, Duke Energy Corp. priced $400 million of 3.95% notes due 2023 at Treasuries plus 135 bps.

The session also saw a new issue from Mid-America Apartments LP. The company sold a $350 million issue of 4.3% notes due 2023 at 180 bps over Treasuries.

Issuance for Wednesday and Thursday is expected to be "similar to today," a market source said, though players continue to doubt the week will hit earlier expectations of $10 billion.

New issues traded better in the secondary market on Tuesday, while credit spreads headed out weaker, market sources said.

The Markit CDX North American Investment Grade series 21 index eased 2 bps to a spread of 84 bps.

Duke Energy's 3.95% notes firmed 5 bps in aftermarket trading, a trader said.

Berkshire Hathaway's two tranches traded 3 bps to 5 bps tighter as the session headed toward the close.

John Deere Capital's notes due 2016 tightened 5 bps after the issue priced earlier, a trader said.

Berkshire two-parter

Tuesday's primary saw Berkshire Hathaway sell $950 million of senior notes in two tranches, according to an informed source and an FWP filing with the Securities and Exchange Commission.

The sale included a $400 million add-on to the company's $600 million of 0.95% senior notes due Aug. 15, 2016.

Pricing was at 99.81 to yield 1.018%, or Treasuries plus 35 bps.

There was also $550 million of 2.9% senior notes due 2020 priced with a spread of Treasuries plus 90 bps.

The notes sold at 99.805 to yield 2.931%.

Berkshire Hathaway's 0.95% notes firmed to 32 bps bid, 30 bps offered in late afternoon trading, a source said. The tranche of 2.95% notes traded 5 bps better at 85 bps bid, 84 bps offered.

BofA Merrill Lynch, Goldman Sachs & Co., J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the joint bookrunners.

Proceeds will be used to pay at maturity the company's 4.625% senior notes due 2013.

The notes will be guaranteed by Berkshire Hathaway Inc., the Omaha-based holding company for various subsidiaries.

John Deere prices tight

John Deere Capital sold a $750 million issue of senior notes due 2016 in fixed- and floating-rate tranches on Tuesday, according to a market source and separate filings with the SEC.

Both tranches sold at the tight end of talk.

The company priced $250 million of three-year floaters at par to yield Libor plus 29 bps.

A $500 million issue of 1.05% senior notes due 2016 was sold with a spread of Treasuries plus 42 bps.

Pricing was at 99.873 to yield 1.093%.

John Deere Capital's notes due 2016 traded tighter going out at 37 bps bid, 32 bps offered, according to a trader.

The funding arm of agriculture and industrial equipment maker Deere & Co. is based in Moline, Ill.

Duke Energy sells $400 million

There was also a new issue from Duke Energy on Tuesday. The company sold $400 million of 3.95% senior notes (Baa1/BBB/BBB+) due 2023 with a spread of Treasuries plus 135 bps, according to a filing with the SEC.

Pricing was at 99.795 to yield 3.975%.

Duke Energy's notes tightened in the secondary market to 130 bps bid, 125 bps offered, a trader said.

BNP Paribas Securities Corp., Goldman Sachs and JPMorgan were the joint bookrunners.

Proceeds will be used for general corporate purposes.

The diversified energy company is based in Charlotte, N.C.

Mid-America new issue

Meanwhile, Mid-America Apartments priced $350 million of 4.3% senior notes due Oct. 15, 2023 (/BBB/) with a spread of Treasuries plus 180 bps, according to an FWP filed with the SEC on Tuesday.

The notes sold at 99.047 to yield 4.419%.

JPMorgan, Jefferies & Co., Wells Fargo Securities and UBS Securities Inc. were the joint bookrunners.

Proceeds will be used to repay borrowings under the company's revolving credit facility and for general corporate purposes.

Mid-America is a Memphis-based real estate investment trust.

Bank/brokerage CDS costs widen

Investment-grade bank and brokerage CDS levels widened, according to a market source.

Bank of America Corp.'s CDS costs widened 4 bps to 110 bps bid, 114 bps offered. Citigroup Inc.'s CDS costs eased 4 bps to 98 bps bid, 102 bps offered. JPMorgan Chase & Co.'s CDS costs closed 2 bps wider at 92 bps bid, 96 bps offered. Wells Fargo & Co.'s CDS costs eased 2 bps to 61 bps bid, 65 bps offered.

Merrill Lynch's CDS costs widened 5 bps to 103 bps bid, 113 bps offered. Morgan Stanley's CDS costs eased 5 bps to 137 bps bid, 142 bps offered. Goldman Sachs Group, Inc.'s CDS costs widened 6 bps to 132 bps bid, 136 bps offered.

Paul Deckelman contributed to this review

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