Life Tech, Snap-on, Union Bank, Constellation tap primary; Snap-on notes firm, 'hard to find'

By Andrea Heisinger and Cristal Cody

New York, Dec. 9 - Union Bank NA, Snap-on Inc., Constellation Energy Group, Inc., Life Technologies Corp. and Caterpillar Financial Services Corp. all came forward with deals in the high-grade market. The largest sale of the day was an upsized one from Life Technologies in two tranches. The size was increased to $800 million from $600 million.

Snap-on was the first to price its deal of $250 million of seven-year notes.

San Francisco-based Union Bank sold $400 million of 2.125% three-year bank notes.

A $550 million deal of 10-year notes was priced by Constellation Energy.

There was an add-on deal of floating-rate notes from Caterpillar Financial Services. The company tacked on $150 million to the amount sold on Wednesday, bringing total issuance to $400 million.

The market was expected to be quieter for the day and it was - but only slightly.

"I would say it wasn't bad overall," a syndicate source said. "We saw some quality paper out there and a lot of people grabbing."

The Life Technologies issue was upsized by $200 million on demand. Snap-on's $250 million deal size never changed because the company put a do-not-grow clause on it, a source said.

Friday is expected to be quiet as companies wait until Monday to test the waters again.

"We're going to be quieter until the market snaps back a bit," a source said.

Overall investment-grade Trace volume rose about 4% to about $14 billion, a source said.

In the secondary market, Snap-on's notes were active, firming more than 10 basis points, traders said.

"They're doing well. Hard to find them," a trader said. "They're trading up, 167 bid."

Also in trading, Life Technologies' two tranches were stronger, a source said.

The Markit CDX Series 14 North American investment-grade index firmed 1 basis point to a spread of 88 bps, according to Markit Group Ltd.

Treasuries rallied with the longer end of the curve performing better on Thursday after two days of sell-offs after President Barack Obama announced plans to extend federal tax cuts.

The yield on the 10-year note fell to 3.2% from 3.27%. The 30-year bond yield dropped 5 bps to 4.4%.

Constellation's $550 million

Constellation Energy Group priced $550 million of 5.15% 10-year notes (Baa3/BBB-) to yield 195 bps over Treasuries, said a source close to the trade.

The notes were priced at the tight end of guidance in the 200 bps area.

Bookrunners were Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC and UBS Securities LLC.

Proceeds are being used to fund a portion of the purchase price for the expected acquisition of Boston Generating LLC's natural gas generating plant, to repay 7% notes due April 1, 2012 and to fund the minimum contribution to the company's pension plan. Any remainder will be used for general corporate purposes.

The energy generation and utility business is based in Baltimore.

Life Technologies upsizes

Life Technologies sold an upsized $800 million of split-rated senior notes (Ba1/BBB) in two parts, an informed source said.

The deal size was increased from $600 million.

A $400 million tranche of 3.5% five-year notes was priced at a spread of Treasuries plus 165 bps.

The second part was $400 million of 5% 10-year notes that sold at a spread of Treasuries plus 185 bps.

Bank of America Merrill Lynch and RBS Securities Inc. were active bookrunners.

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

In the secondary market, both tranches were slightly tighter, a source said.

The notes due 2015 were quoted at 163 bps bid, 159 bps offered, while the 10-year tranche was seen at 183 bps bid, 179 bps offered.

The biotechnology tools company is based in Carlsbad, Calif.

Snap-on sells seven-years

Wisconsin-based Snap-on priced $250 million of 4.25% seven-year notes (Baa1/A-) by mid-afternoon at a spread of Treasuries plus 170 bps, an informed source said.

The notes sold at the tight end of talk in the 175 bps area, the source said.

There was a "strong book" that the source estimated at five-times oversubscribed.

He noted, "They're a well-known name with investors [...] and let's just say it wasn't surprising" that the deal was so popular.

Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were bookrunners.

Proceeds will be used for general corporate purposes, including working capital, capital expenditures, repayment of all or a portion of $200 million of 6.25% senior notes maturing in August of 2011, financing of contract and financial receivables related to Snap-on Credit LLC and possible acquisitions.

Snap-On's notes were firmer in the secondary market, traders said. The notes later firmed more than 10 bps in afternoon trading to 158 bps bid, 155 bps offered, a source said.

The tool and equipment manufacturer is based in Kenosha, Wis.

Union Bank's $400 million

Union Bank sold $400 million of 2.125% three-year senior bank notes (A2/A+) at a spread of Treasuries plus 125 bps, a market source said late in the afternoon.

Bookrunners were Bank of America Merrill Lynch, Barclays Capital Inc. and Mitsubishi UFJ Securities (USA) Inc.

The commercial bank is based in San Francisco.

CAT Financial adds on

Caterpillar Financial Services added $150 million to its issue of two-year medium-term floating-rate notes, according to an FWP with the Securities and Exchange Commission.

The notes (A2/A/A) priced at par to yield Libor plus 18 bps.

Citigroup Global Markets Inc. and RBC Capital Markets Corp. were agents.

The notes are being added to the $250 million already priced, bringing total issuance to $400 million.

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

HSBC's reopened notes

HSBC Finance Corp. reopened an issue of 6.676% senior subordinated notes due 2021 to add $1 billion, according to an 8-K filing with the SEC.

The notes (Baa1/BBB+) have a spread of Treasuries plus 380 bps.

Total issuance includes the original issue of more than $1.9 billion that settled on Dec. 3.

The financing arm of HSBC is based in London.

Toyota's floater terms

Toyota Motor Credit Corp. priced $250 million of one-year medium-term floating-rate notes, according to FWPs with the Securities and Exchange Commission.

The notes (Aa2/AA) priced at par to yield Federal Funds plus 25 bps.

Agents were RBC Capital Markets Corp., Toyota Financial Services Securities USA Corp., UBS Securities LLC and Williams Capital Group LP.

The U.S. funding arm of Toyota Financial Services is based in Torrance, Calif.

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