BB&T sells in quiet primary, Express Scripts announces deal; trading thins; RBC bonds flat

By Andrea Heisinger and Cristal Cody

New York, April 25 - The primary high-grade market remained stagnant on Monday with BB&T Corp. tapping the market following a long weekend.

Some overseas markets were closed for the day and issuers weren't expected to flock to the market following three days off, sources said.

BB&T sold $1 billion of new paper in two parts. The sale was divided between three-year floating-rate notes and three-year fixed-rate notes.

There was "about $1.7 billion" total in interest for the deal, a source close to the sale said, adding that there was "more on the fixed-rate" notes.

Another sale is on tap from Express Scripts, Inc., which announced its intentions to sell senior notes in a press release.

Issuance is likely to be sporadic for the week. There's a range of $7 billion to $12 billion expected, according to sources late in the previous week, and the high end of that range is expected to come out only if market conditions are satisfactory.

"We could have some more tomorrow ahead of the [Federal Open Market Committee] meeting," a syndicate source said, referring to Wednesday's meeting and any subsequent policy announcements.

Most deals are expected to price on Tuesday or Thursday, or simply wait until the first week of May when more companies are out of earnings blackout.

"Volume is so light on everything," a trader said. "I don't expect corporate volume to be very much this week either."

Overall investment-grade Trace volume ended the day under $9 billion, a market source said.

The notes from BB&T were not immediately seen in secondary trading.

Royal Bank of Canada's bonds priced earlier in the month traded flat to slightly weaker, a trader said.

The Markit CDX Series 14 North American investment-grade index eased 1 basis point to a spread of 94 bps on Monday, according to Markit Group Ltd.

Treasuries ended Monday higher on extremely light volume. The 10-year Treasury note yield fell 4 basis points to 3.36%. The 30-year bond yield dropped 2 bps to 4.45%.

BB&T's two tranches

BB&T sold $1 billion of notes (A2/A/A+) in two parts, a source close to the sale said late in the day.

The $300 million of three-year floating-rate notes priced at par to yield Libor plus 70 bps. This was at the low end of guidance in the Libor plus 75 bps area.

A $700 million tranche of 2.05% three-year notes sold at a spread of Treasuries plus 95 bps. This was also at the tight end of talk in the 95 to 100 bps range.

Bookrunners were BB&T Capital Markets and Deutsche Bank Securities Inc.

Proceeds are being used for general corporate purposes.

The financial services company is based in Winton-Salem, N.C.

Express Scripts' upcoming

Express Scripts is planning a benchmark-size sale of senior notes within the next few weeks, according to a press release on Monday.

The timing depends on market conditions, among other factors. Proceeds will be used to repurchase common stock under a share repurchase program and for general corporate purposes.

The pharmaceutical benefits management company is based in St. Louis.

RBC weaker

In the secondary market, the notes that Royal Bank of Canada sold on April 12 traded slightly wider, a trader said.

The bank sold $850 million of the 2.875% fixed-rate notes due April 19, 2016 at Treasuries plus 73 bps.

In the secondary on Monday, a trader saw the notes offered at 74 bps.

RBC is a Toronto-based investment bank.

Bank, broker CDS firm

On Monday, a source said the costs of protecting holders of big-bank bonds against a possible event of default via a credit-default swap contract was 1 bp wider to even.

The CDS contract covering bonds of major brokerage houses was quoted 2 bps to 1 bp wider.

Stephanie Rotondo contributed to this review

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