Target, Energy Transfer Partners, NY Life, Allstate among day's deals; Allstate, Target firm

By Andrea Heisinger and Cristal Cody

New York, Jan. 9 - Corporate names took over the investment-grade bond market on Monday, reversing the previous week's trend of domination by the financial sector.

Target Corp., Energy Transfer Partners, LP, France Telecom SA, Allstate Corp., New York Life Global Funding, Toyota Motor Credit Corp. and Virginia Electric & Power Co. were among the names pricing debt.

Retailer Target priced $2.5 billion of notes with floating -and fixed-rate coupons.

It was joined in the large multi-tranche offerings by Energy Transfer Partners, which sold $2 billion of debt with 10- and-30-year maturities. The company is using proceeds, along with borrowings under a revolving credit facility, to fund the cash portion of the purchase price of Citrus Corp.

Full terms of the deal run by J.P. Morgan Securities LLC, UBS Securities LLC, Credit Suisse Securities (USA) LLC and Wells Fargo Securities LLC were not available at press time.

Toyota Motor Credit was in the market with a $2 billion sale split evenly between five- and 10-year notes.

France Telecom sold $900 million of 30-year bonds by late afternoon. The debt was sold at the tight end of guidance.

One of the quickest sales of the day was the $450 million deal of 10-year paper by Virginia Electric.

NY Life sold an upsized $500 million of three-year paper. The deal size was increased from $300 million.

Insurance company Allstate priced $500 million of 30-year bonds in short order.

There was a preferred stock sale announced by PS Business Parks. The perpetual shares are expected to price on Tuesday.

Issuers decided to jump into the market early in the week after warnings from France and Germany's governments towards Greece to sort out its debt worries. This could mean the rescue package for the struggling country from the European Union could come undone later in the week.

"Everyone just wanted to beat the European headlines," a market source said, adding that Tuesday could also be active as those with financing needs jump in while market conditions remain favorable.

New issue concessions also remained high, meaning that the day's deals were attractive to investors. Both the Target and Toyota sales were more than three times oversubscribed.

The Markit CDX Series 17 North American investment-grade index firmed 1 basis point to a spread of 119 bps on Monday.

Allstate's new bonds traded nearly 15 bps better in the secondary market.

Target's 10-year notes traded about 3 bps better, as did New York Life Global Funding's new three-year notes.

No activity was seen on Toyota Motor Credit's two tranches.

France Telecom's bonds traded about 1 bp weaker,

Overall trading volume fell to under $11 billion on Monday.

Investment-grade bank and brokerage credit default swaps costs were mostly unchanged.

Bank paper CDS costs and brokerage company paper CDS costs traded between 5 bps higher and 5 bps lower, a source said.

Treasuries were mixed. The benchmark 10-year Treasury note yield fell 1 bp to 1.95%, while the 30-year bond yield rose 1 bp to 3.02%.

Target's $2.5 billion deal

Target priced $2.5 billion of debt (A2/A+/A-) in two parts, market sources said.

The sale went well with about $6.5 billion total on the books, a syndicate source close to the trade said.

"It was definitely skewed toward the floaters," the source added in explanation of why the floating-rate tranche was larger. That $1.5 billion tranche of one-year floaters sold at par to yield Libor plus 3 bps.

Active bookrunners for the notes were Citigroup Global Markets Inc. and Goldman Sachs & Co.

The second part was $1 billion of 2.9% 10-year paper priced a spread of Treasuries plus 102 bps.

Active bookrunners were Bank of America, Citigroup and Goldman Sachs.

Proceeds are being used for general corporate purposes, including the purchase of a note issued by Target Credit Card Owner Trust 2008-1 to JPMN II Inc.

Target last sold $1 billion of notes in two tranches on July 13, 2011.

In the secondary market, Target's 10-year notes were quoted better at 99 bps bid, 97 bps offered, according to traders.

The notes were seen earlier in the gray markets at 98 bps offered.

The discount retail chain is based in Minneapolis, Minn.

TMCC's two tranches

Toyota Motor Credit sold a benchmark $2 billion of paper (Aa3/AA-/) in two tranches, a syndicate source said.

A source who worked on the deal said that it "went very well" and that there was roughly $4.5 billion on the books.

The $1 billion of 2.05% five-year debt priced at a spread of Treasuries plus 125 bps.

There was also a $1 billion tranche of 3.3% 10-year notes sold at 140 bps over Treasuries.

Bookrunners were Citigroup Global Markets, Bank of America Merrill Lynch, RBC Capital Markets LLC and UBS Securities LLC.

The U.S. financing arm of Toyota is based in Torrance, Calif.

France Telecom prices tight

France Telecom priced $900 million of 5.375% 30-year bonds (A3/A-/A-) to yield Treasuries plus 240 bps, a market source said.

The paper came in at the tight end of talk in the 245 bps area.

Bank of America Merrill Lynch, BNP Paribas Securities Corp., HSBC Securities (USA) Inc. and Morgan Stanley & Co., LLC were bookrunners.

Proceeds are being used for general corporate purposes.

France Telecom last priced paper in a $2 billion deal in two parts on Sept. 7.

The company's 30-year bonds edged wider in secondary trading to 241 bps bid, 235 bps offered.

Earlier in the gray markets, another trader quoted the bonds at 236 bps bid, 233 bps offered.

The telecommunications company is based in Paris.

Allstate's $500 million

Allstate sold $500 million of 5.2% 30-year senior debt (A3/A-/BBB+) to yield 225 bps over Treasuries, a market source said.

J.P. Morgan Securities LLC and Goldman Sachs & Co. were active bookrunners.

Proceeds are being used for general corporate purposes, including the repayment of $350 million of 6.125% senior notes due Feb. 15, 2012 and for the repurchase of common stock through open-market purchases.

Allstate's 30-year bonds traded in by late afternoon to 211 bps bid, 209 bps offered, traders said.

The insurance company is based in Northbrook, Ill.

Virginia Electric's 10-years

Virginia Electric & Power sold $450 million of 4.95% 10-year senior notes, 2012 series A, (Baa1/A-/A-) to yield 105 bps over Treasuries, according to an FWP with the Securities and Exchange Commission.

Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC and UBS Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes and to repay short-term debt.

The electric utility is based in Richmond, Va.

NY Life upsizes

New York Life Global Funding sold an upsized $500 million of 1.3% three-year notes in the Rule 144A and Regulation S market, a source said.

The deal size was increased from $300 million, the source said.

The notes (Aaa/AA+/AAA) were priced at Treasuries plus 98 bps.

Bookrunners were Barclays Capital Inc., Credit Suisse Securities (USA) LLC and UBS Securities LLC.

New York Life's new three-year notes traded tighter at 95 bps bid, 92 bps offered going out, a trader said.

Another trader saw the notes at 93 bps offered.

The funding arm of insurance company New York Life is based in New York City.

PS Business brings new deal

PS Business Parks intends to sell at least $100 million of series S cumulative redeemable perpetual preferred shares, according to a prospectus filed with the SEC.

Price talk is around 6.5%, according to a market source. He noted that it was a "small deal with a small selling group."

He saw a $24.80 trade in the gray market, remarking that the deal was 'doing pretty well."

Another trader saw markets ranging between $24.75 and $24.90.

A third market source quoted the issue at $24.75 bid, $24.85 offered.

Pricing is expected on Tuesday.

The shares will be issued as depositary shares representing 1/1,000th of a share, with a liquidation preference of $25 per share.

Bank of America Merrill Lynch, Morgan Stanley & Co. Inc and Wells Fargo Securities LLC are the joint bookrunners.

Proceeds will be used for general corporate purposes, including the repayment of outstanding debt, the redemption of preferred securities and the acquisition of commercial properties.

Perhaps not coincidentally, the company then announced the redemption of all of its outstanding 7.375% series O cumulative preferreds. The redemption will take place on Feb. 13 and will be paid at par plus accrued dividends from Jan. 1.

The Glendale, Calif.-based real estate investment trust plans to list the preferreds on the New York Stock Exchange under the ticker symbol "PSBPS."

Paul Deckelman and Stephanie N. Rotondo contributed to this review

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