SABMiller, Berkshire, AIG sell deals in busy primary; secondary market sees second light day

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 6 - It was another day with a packed primary market on Tuesday, as Berkshire Hathaway Finance Corp., American International Group Inc. and SABMiller Holdings Inc. each brought billion-dollar high-grade bond deals.

"Still seeing lots of investor demand for large corporate names," one syndicate source said after the session's close on Tuesday.

SABMiller tapped Tuesday's market for the day's largest deal, selling $1.1 billion of five-year senior notes in two parts, according to a source away from the trade.

There was $750 million of 2.2% notes due 2018 priced with a spread of Treasuries plus 87 basis points.

The company also sold $350 million of floating-rate notes due 2018 priced at par to yield Libor plus 69 bps.

In other primary action, Berkshire Hathaway priced $1 billion of notes in two tranches during the session.

The company sold $600 million of 0.95% three-year notes at a spread of Treasuries plus 37 bps and $400 million of 2% notes due 2018 priced at Treasuries plus 65 bps.

A source said the deal's book was roughly three times oversubscribed.

AIG came to market with a $1 billion issue of 3.375% seven-year senior notes sold at 135 bps over Treasuries.

The session's primary also saw a $450 million three-part issue of first mortgage bonds from Laclede Gas Co.

The company sold $100 million of 2% five-year notes at Treasuries plus 70 bps.

There was also a $250 million tranche of 3.4% 10-year notes priced with a spread of Treasuries plus 80 bps and a $100 million tranche of 4.625% 30-year bonds priced at Treasuries plus 95 bps.

Meanwhile, NextEra Energy Capital Holdings Inc. sold $402,434,000 of 1.339% series D debentures on Tuesday in a remarketing, according to an FWP filing with the Securities and Exchange Commission.

The debentures will be due Sept. 1, 2015 and were sold with a spread of Treasuries plus 85 bps.

Looking ahead, one market source said he is expecting yet another "busy day" for Wednesday's primary.

More than $8 billion of investment-grade bonds have been sold as of Tuesday. Sources had predicted a roughly $20 billion of new issuance for the week.

Tuesday's secondary market saw investment-grade bonds trade slightly weaker in thin activity, according to market sources.

The Markit CDX Series 20 North American Investment Grade index eased 2 bps to a spread of 75 bps.

Secondary market sources reported another quiet trading session on Tuesday.

"There has been low activity again today," a trader said.

SABMiller prices $1.1 billion

Tuesday's primary saw London-based SABMiller price $1.1 billion of five-year senior notes in two parts, according to a source away from the trade.

There was $750 million of 2.2% notes due 2018 priced with a spread of Treasuries plus 87 bps. The notes sold at 99.753 to yield 2.253%.

A second part was $350 million of floating-rate notes due 2018 priced at par to yield Libor plus 69 bps.

Bookrunners were Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Mizuho Securities and Mitsubishi UFJ Securities.

Proceeds will be used for general corporate purposes, including repayment of debt.

Berkshire's senior notes

Meanwhile, Berkshire Hathaway Finance priced $1 billion of senior notes in two tranches on Tuesday, according to a syndicate source and an FWP filing with the SEC.

The company sold $600 million of 0.95% three-year notes at a spread of Treasuries plus 37 bps.

The notes priced at 99.947 to yield 0.968%.

There was also $400 million of 2% notes due 2018 priced at Treasuries plus 65 bps, or 99.82, to yield 2.038%.

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

Proceeds will be used to redeem the company's 5% senior notes due 2013.

Berkshire Hathaway was last in the market with $1 billion of senior notes in two tranches on May 8.

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

AIG prices tight

AIG also came to Tuesday's primary with a $1 billion deal, selling 3.375% seven-year senior notes at 135 bps over Treasuries, according to an FWP filing with the SEC.

The notes priced at 99.975 to yield 3.379%.

The notes were talked at 137.5 bps over Treasuries.

Citigroup Global Markets, HSBC Securities (USA) Inc., U.S. Bancorp Investments Inc. and Wells Fargo Securities are the joint bookrunners.

The company plans to use the proceeds from the offering for general corporate purposes, including the repayment of debt.

AIG was last in the market in August 2012 selling $250 million of 2.375% three-year subordinated notes to yield Treasuries plus 200 bps.

The insurance company is based in New York City.

Laclede Gas's three-parter

In other primary news, Laclede Gas priced $450 million of first mortgage bonds in three parts on Tuesday, according to a syndicate source and an FWP filing with the SEC.

The company sold $100 million of 2% five-year notes at 99.622 to yield 2.08%, or Treasuries plus 70 bps.

There was also a $250 million tranche of 3.4% 10-year notes priced with a spread of Treasuries plus 80 bps. The notes sold at 99.697 to yield 3.463%.

Laclede sold $100 million of 4.625% 30-year bonds at Treasuries plus 95 bps. The securities priced at 99.373 to yield 4.664%.

Wells Fargo Securities was the bookrunner.

The company plans to use the proceeds, together with cash on hand, to fund its acquisition of MGE and New England Gas and for general corporate purposes.

The subsidiary of Laclede Group, Inc. is based in St. Louis.

NextEra's series D debentures

NextEra Energy sold on Tuesday $402,434,000 of 1.339% series D debentures due Sept. 1, 2015 with a spread of Treasuries plus 85 bps on Tuesday in a remarketing, according to an FWP filing with the SEC.

The notes priced at 100.365 to yield 1.159%.

Credit Suisse Securities (USA) LLC was the remarketing agent.

The debentures were originally issued by NextEra Energy Capital Holdings Inc. in September 2010 as components of equity units sold by parent company NexEra Energy Inc.

The company does not intend to list the debentures on a securities exchange.

The debentures will be guaranteed by NextEra Energy Inc.

Based in Juno Beach, Fla., NextEra is the parent company of Florida Power & Light Co.

Discover Bank tightens

In the secondary market, Discover Bank's 4.2% notes due 2023 came in 5 bps after pricing on Monday and traded in the same area at 155 bps bid, 151 bps offered on Tuesday, a trader said.

Discover Bank (Baa3/BBB/BBB) sold $500 million of the notes at 160 bps plus Treasuries.

The issuer of the Discover credit card and unit of Discover Financial Services is based in Chicago.

Bank/brokerage CDS costs flat

Investment-grade bank and brokerage credit default swap costs closed unchanged across the board on Tuesday, a market source said.

Bank of America Corp.'s CDS costs were flat at 106 bps bid, 111 bps offered. Citigroup Inc.'s CDS costs closed unchanged at 100 bps bid, 105 bps offered. JPMorgan Chase & Co.'s CDS costs ended at 75 bps bid, 79 bps offered. Wells Fargo & Co.'s CDS costs were unchanged at 62 bps bid, 67 bps offered.

Merrill Lynch's CDS costs closed flat at 94 bps bid, 104 bps offered. Morgan Stanley's CDS costs went out unchanged at 134 bps bid, 139 bps offered. Goldman Sachs Group, Inc.'s CDS costs were seen flat at 125 bps bid, 130 bps offered.

Paul Deckelman contributed to this review

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