CSX, Crown Castle tap primary market; DuPont eyes deal; Duke Energy flat; Chevron mixed

By Cristal Cody

Tupelo, Miss., April 26 – Two issuers tapped the investment-grade bond market on Wednesday with a third set to price in the upcoming session.

CSX Corp. sold $850 million of 10-year senior notes on Wednesday.

The deal caused concerns for one bond covenant watch group. Credit research firm Covenant Review said in a release the bonds “have an extremely limited liens covenant that only limits pledging the capital stock of CSX’s principal operating subsidiary CSXT.”

The bonds do not have a sale/leaseback covenant and do not offer guarantees or protection against structural subordination, the firm said.

In addition, the change-of-control provision “is missing several customary triggers, including the trigger for a sale of substantially all assets,” according to the release.

The bond deal also gives CSX a “free option to redeem the bonds at par within some time prior to their maturity,” Covenant Review said.

In other supply, Crown Castle International Corp. sold $350 million of 30-year senior notes.

Coming up on Thursday, E.I. du Pont de Nemours and Co. is expected to price up to $2 billion of three-year notes in two parts.

Looking at secondary market action on Wednesday, energy bonds were mostly unchanged on the day.

Duke Energy Ohio, Inc.’s 3.7% first mortgage bonds due June 15, 2046 traded flat.

Chevron Corp.’s senior notes (Aa2/AA-/) were flat to tighter in the secondary market.

The Markit CDX North American Investment Grade index ended the day mostly unchanged at a spread of 63 basis points.

CSX sells $850 million

CSX sold $850 million of 3.25% 10-year senior notes on Wednesday at 99.878 to yield 3.264%, according to an FWP filing with the Securities and Exchange Commission.

The notes (Baa1/BBB+/) priced with a spread of 95 bps over Treasuries.

J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and UBS Securities LLC were the bookrunners.

Proceeds will be used for general corporate purposes.

The rail-based transportation company is based in Jacksonville, Fla.

Crown Castle prices

Crown Castle International sold $350 million of 4.75% 30-year senior notes at 99.207 to yield 4.8% on Wednesday, according to an FWP filing with the SEC.

The notes (Baa3/BBB-/BBB-) priced with a spread of 180 bps over Treasuries.

The bookrunners were Credit Agricole Securities (USA) Inc., J.P. Morgan Securities, BofA Merrill Lynch, Morgan Stanley, SunTrust Robinson Humphrey, Inc., Barclays, Citigroup Global Markets Inc., Fifth Third Securities, Inc., Mizuho Securities USA LLC, MUFG, PNC Capital Markets LLC, RBC Capital Markets, LLC, SG Americas Securities, LLC, SMBC Nikko Securities America, Inc. and TD Securities (USA) LLC

Proceeds will be used for general corporate purposes, which may include the funding of acquisitions, including the proposed Wilcon acquisition, discretionary investments and the repayment or repurchase of outstanding debt.

Crown Castle announced on April 17 that it planned to acquire Wilcon, a Los Angeles-based regional fiber optic infrastructure network operator, for $600 million.

Houston-based Crown Castle provides shared wireless infrastructure to wireless carriers.

DuPont markets notes

E.I. DuPont de Nemours is expected to tap the primary market on Thursday with up to $2 billion of three-year senior notes (A3/A-/A) in fixed- and floating-rate tranches, according to a market source and a 424B3 filing with the SEC.

Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and J.P. Morgan Securities are the bookrunners.

Proceeds will be used for discretionary contributions to the company’s United States defined benefit pension plan.

The chemical company is based in Wilmington, Del.

Duke Energy steady

Duke Energy Ohio’s 3.7% first mortgage bonds due June 15, 2046 were unchanged on Wednesday at 101 bps bid, a market source said.

The bonds (A2/A/) priced in a $100 million reopening on March 22 at 93.462 to yield 4.085%, or a spread of 107 bps over Treasuries.

The company originally sold $250 million of the bonds at 99.301 to yield 3.739%, or 125 bps over Treasuries, in an offering on June 20, 2016.

The Charlotte, N.C.-based company generates, transmits, distributes and sells electricity and is a wholly owned subsidiary of Duke Energy Corp.

Chevron mixed

Chevron’s 2.498% notes due March 3, 2022 headed out unchanged on the day at 49 bps bid, according to a market source.

Chevron priced $700 million of the five-year notes on Feb. 28 at a Treasuries plus 60 bps spread.

The company’s 2.895% notes due March 3, 2024 firmed 3 bps to 67 bps bid in secondary trading.

Chevron sold $1 billion of the notes in the February offering at a spread of 70 bps over Treasuries.

The petroleum, chemical, mining, power and energy company is based in San Ramon, Calif.

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