Mylan, Caterpillar, BB&T continue high-grade primary rush; new issues trade flat to tighter

By Cristal Cody and Aleesia Forni

Virginia Beach, Nov. 19 - The rush of new deals entering the high-grade primary continued on Tuesday, as issuers including Mylan Inc. and Caterpillar Financial Services Corp. came to market.

Mylan priced the day's largest deal in a $2 billion four-part issue.

The sale included a $500 million tranche of 1.35% three-year notes priced at Treasuries plus 80 basis points and $500 million of 2.55% notes due 2019 sold at 125 bps over Treasuries.

There was also $500 million of 4.2% 10-year notes priced at Treasuries plus 155 bps and $500 million of 5.4% notes due 2043 priced at Treasuries plus 165 bps.

Caterpillar Financial Services also hit Tuesday's primary, selling $1 billion of notes in three tranches.

The company sold $250 million of two-year floaters at par to yield Libor plus 12 bps and $500 million of 1% three-year notes at Treasuries plus 45 bps.

There was also $250 million of 3.75% 10-year notes sold at 105 bps over Treasuries.

Meanwhile, Monongahela Power Co. brought a $1 billion issue of first mortgage bonds on Tuesday in two parts, according to a market source.

The sale included a $400 million tranche of 4.1% notes due 2024 sold at Treasuries plus 140 bps.

A second part was $600 million of 5.4% 30-year bonds priced at 160 bps over Treasuries.

Both tranches sold at the tight end of talk.

BB&T Corp. came to the day's primary with an $875 million issue of three-year notes in two tranches, according to a syndicate source.

The bank priced $375 million of floating-rate notes due 2016 at par to yield Libor plus 43 bps and $500 million of three-year notes at Treasuries plus 52 bps.

Sempra Energy was also in Tuesday's market with $500 million of 10-year 4.05% senior notes.

The company sold the notes with a spread of Treasuries plus 137.5 bps.

In other primary action, Western Union Co. sold a $250 million issue of 3.35% senior notes at Treasuries plus 200 bps.

National Rural Utilities Cooperative Finance Corp. made its way to the primary to sell a $250 million issue of floating-rate senior notes at par to yield Libor plus 30 bps.

There was also a $250 million three-year deal from Pricoa Global Funding, though details were not available at press time.

"Issuance conditions are great," a syndicate source said of the rush of new deals so far this week. "Demand is still very strong."

The continued solid demand for recent deals will most likely keep the high-grade primary market busy for the remainder of the week.

High-grade bonds traded weaker to slightly better overall on the day, according to market sources.

The Markit CDX North American Investment Grade series 21 index eased 1 bps to a spread of 72 bps.

In the secondary market, Mylan's 4.2% notes due 2023 traded flat, while the tranche of long bonds firmed 5 bps, a trader said.

The 4.05% notes due 2023 that Sempra Energy priced traded about 1½ bps tighter, a trader said.

In other new issue trading, Western Union's 3.35% notes due 2019 firmed 8 bps on the offered side, a market source said.

Caterpillar Financial's 3.75% notes due 2023 firmed 2 bps in late afternoon trading.

Mylan new deal

Mylan priced $2 billion of senior notes (Baa3/BBB-/) in four equal tranches on Tuesday, according to a syndicate source.

The deal included $500 million of 1.35% notes due 2016 sold with a spread of Treasuries plus 80 bps, or 99.941, to yield 1.37%.

A second tranche was $500 million of 2.55% notes due 2019 priced at 125 bps over Treasuries.

The issue sold at 99.754 to yield 2.6%.

There was also $500 million of 4.2% 10-year notes priced at Treasuries plus 155 bps.

Pricing was at 99.612 to yield 4.248%.

Finally, $500 million of 5.4% notes due 2043 was sold with a spread of Treasuries plus 165 bps, or 99.382, to yield 5.442%.

In late secondary trading, Mylan's 4.2% notes were flat at 155 bps bid, 152 bps offered, a trader said. The tranche of 5.4% notes tightened to 160 bps bid, 157 bps offered.

BofA Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Goldman Sachs & Co. and Morgan Stanley & Co. LLC were the bookrunners.

The company plans to use proceeds from the offering to fund its acquisition of the Agila Specialties business from Strides Arcolab Ltd.

Proceeds will also be used for general corporate purposes, including the repayment of short-term borrowings and funding the buyback of the company's common stock of up to $500 million.

Mylan was last in the U.S. bond market with a $1.15 billion sale of three- and five-year notes on June 18.

The $500 million tranche of 1.8% three-year notes sold at 99.925, while the $650 million of 2.6% five-year notes priced at 99.791.

The generic and specialty pharmaceutical company is based in Canonsburg, Pa.

Caterpillar sells $1 billion

Caterpillar Financial Services came to market on Tuesday to price $1 billion of notes in three tranches, according to an informed source and three separate FWP filing with the Securities and Exchange Commission.

The deal included $250 million of floating-rate notes due 2015 sold at par to yield Libor plus 12 bps.

A $500 million tranche of 1% three-year notes priced with a spread of Treasuries plus 45 bps, or 99.921, to yield 1.027%.

There was also $250 million of 3.75% notes sold at 105 bps over Treasuries. Pricing was at 99.918 to yield 3.76%.

Both fixed-rate tranches priced at the tight end of talk.

Caterpillar Financial's 3.75% notes tightened to 103 bps bid, 100 bps offered in the secondary market, a trader said.

Proceeds will be used for general corporate purposes.

Citigroup Global Markets, Goldman Sachs and BofA Merrill Lynch were the joint bookrunners.

The funding arm of heavy equipment maker Caterpillar is based in Nashville.

Monongahela mortgage bonds

Also on Tuesday, Monongahela Power priced $1 billion of first mortgage bonds in two parts, according to a market source.

The company sold $400 million of 4.1% notes due 2024 with a spread of Treasuries plus 140 bps.

There was also $600 million of 5.4% 30-year bonds priced at 160 bps over Treasuries.

Both tranches sold at the tight end of talk.

Proceeds will be used to repay debt.

The notes were sold under Rule 144A and Regulation S.

Morgan Stanley, JPMorgan, RBS Securities Inc., Wells Fargo Securities LLC, Scotiabank, Credit Suisse Securities (USA), Keybanc Capital Markets LLC, Mitsubishi UFJ Securities (USA) Inc. and U.S. Bancorp Investments Inc. were the bookrunners.

The electric subsidiary of Allegheny Energy Inc. is based in Greensburg, Pa.

BB&T sells two-parter

BB&T sold $875 million three-year notes (A1/A/A+) in two tranches on Tuesday, according to a syndicate source.

The deal included $375 million of floaters due 2016 priced at par to yield Libor plus 43 bps.

There was also $500 million of three-year notes sold with a spread of Treasuries plus 52 bps, or 99.876, to yield 1.095%.

The notes sold at the tight end of talk.

BB&T Capital Markets, Deutsche Bank Securities Inc. and Citigroup Global Markets were the joint bookrunners.

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

Sempra brings $500 million

Sempra Energy came to Tuesday's market to sell a $500 million issue of senior notes due 2023 (Baa1/BBB+/BBB+) with a spread of Treasuries plus 137.5 bps, according to an informed source and an FWP filed with the SEC.

Sempra Energy's 4.05% notes firmed to 136 bps bid, 134 bps offered in aftermarket trading, according to a trader.

BofA Merrill Lynch, RBC Capital Markets Inc., Wells Fargo Securities, Goldman Sachs and UBS Securities LLC were the joint bookrunners.

The company plans to use the proceeds to repay commercial paper.

The holding company for utility subsidiaries is based in San Diego.

Western Union new deal

The session also saw Western Union price $250 million of 3.35% senior notes with a spread of Treasuries plus 200 bps, according to a syndicate source and an FWP filing with the SEC.

The notes (Baa2//BBB+) priced at 99.96 to yield 3.358%.

Western Union's 3.35% notes due 2019 headed out stronger at 192 bps offered in the secondary market, a trader said.

The bookrunners were JPMorgan, Citigroup Global Markets and BofA Merrill Lynch.

Proceeds will be used for general corporate purposes.

The money movement and payment services company is based in Englewood, Colo.

National Rural brings floaters

National Rural Utilities priced a $250 million issue of floating-rate senior notes (A2/A/) on Tuesday, according to an FWP filed with the SEC.

The notes sold at par to yield Libor plus 30 bps.

SunTrust Robinson Humphrey Inc. was the agent.

The market lender for electric cooperatives is based in Herndon, Va.

Bank/brokerage CDS costs flat

Investment-grade bank and brokerage CDS prices were mostly unchanged on Tuesday, according to a market source.

Bank of America Corp.'s CDS costs firmed 1 bp to 90 bps bid, 94 bps offered. Citigroup Inc.'s CDS costs were unchanged at 87 bps bid, 92 bps offered. JPMorgan Chase & Co.'s CDS costs declined 1 bp to 80 bps bid, 83 bps offered. Wells Fargo & Co.'s CDS costs were flat at 49 bps bid, 53 bps offered.

Merrill Lynch's CDS costs ended unchanged at 90 bps bid, 95 bps offered. Morgan Stanley's CDS costs closed flat at 104 bps bid, 108 bps offered. Goldman Sachs Group, Inc.'s CDS costs were unchanged at 108 bps bid, 112 bps offered.

Paul Deckelman contributed to this review.

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