Dell, Home Depot start week with big trades; trading slows after heavy week, Sanofi active

By Andrea Heisinger

New York, March 28 - Home Depot, Inc. and Dell Inc. were the headline high-grade issuers for Monday. Nearly all of the other issuers priced deals under Rule 144A and came from a mix of sectors.

Both Home Depot and Dell last sold bonds on Sept. 7, 2010.

Two of the day's sales added a three-year floating-rate tranche when the deal was launched, including Banque PSA Finance. The other to do so was Dell.

Banque PSA priced $1.25 billion of notes in four parts under Rule 144A.

A sale in the financial sector came from Westpac Banking Corp. The Australian bank priced $1.4 billion of three-year floaters in the early evening.

Keyspan Gas East Corp. priced a benchmark $500 million of 30-year bonds under Rule 144A. The bonds sold at the tight end of guidance.

Wells Operating Partnership II LP sold $250 million of guaranteed seven-year notes under Rule 144A. These notes are backed by Wells Real Estate Investment Trust II Inc.

New York Life Global Funding also priced a small deal that was upsized to $300 million from $250 million of three-year floating-rate notes.

Also in the market is Kommunalbanken Norway with a $250 million sale of AAA rated three-year notes. It was unclear if the sale led by Merrill Lynch, Pierce, Fenner & Smith Inc., RBC Capital Markets Corp. and UBS Securities LLC had priced as of press time.

"Today the market seemed OK," a source said. "I would think there will be more tomorrow since there's investor demand out there."

There aren't any megadeals expected for the week as Dell and Home Depot have priced and issuance is expected to drop off after Wednesday with employment numbers and month-end at the end of the week.

Trading was on the light side for the day, a market source said. Overall investment-grade Trace volume was about $7.4 billion.

The new Home Depot bonds were seen trading wrapped around where they priced while two of the Dell notes were only slightly better in the gray market. The new Keyspan East Gas bond due 2041 was offered slightly better than where it priced.

Bonds priced on March 22 as part of the $7 billion deal from Sanofi-aventis SA were seen active early in the day although a trader said it could just be hangover from Friday.

"There wasn't much going on out there," one source said, adding that it was an inevitable slow down from the previous week.

Home Depot's $2 billion deal

Home Depot priced $2 billion of senior notes (Baa1/BBB+/BBB+) in two parts, a source away from the sale said before the close.

The $1 billion of 4.4% 10-year notes sold at a spread of Treasuries plus 97 bps. The notes were sold at the tight end of guidance in the 100 bps area.

A second tranche of $1 billion of 5.95% 30-year bonds priced at a spread of 147 bps over Treasuries. This was at the low end of guidance in the 150 bps area.

Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Inc. were bookrunners.

Proceeds are being used to replace cash funds used to repay $1 billion of 5.2% notes that matured on March 1, and any remainder will be used to repurchase common stock.

"Creating strong shareholder value is a priority, and we are committed to returning capital to our shareholders in the form of dividends and share repurchases," said Frank Blake, chairman and CEO of Home Depot.

"[Last year] was the first year of positive sales growth since 2006 and our business continues to stabilize. As such, we elected to take advantage of the attractive interest rate environment and raise incremental debt capital to be used for share repurchases."

The Atlanta-based home improvement retailer last priced bonds in a $1 billion deal in two parts on Sept. 7, 2010. The 3.95% 10-year notes from that sale were sold at a much-steeper spread of 135 bps, and the 5.4% 30-year bonds were priced at 175 bps.

The 4.4% tranche due 2021 was quoted slightly tighter at a bid of 96 bps and offer of 94 bps. The 5.95% bond due 2041 struggled to make gains and was seen a bit wider a bid of 148 bps and offered at 146 bps. Later, the securities were offered at the same level as pricing, 147 bps, a source said.

Dell sells $1.5 billion

Dell sold $1.5 billion of senior notes (A2/A-/A) in four parts late in the day, an informed source said.

The sale was originally in three tranches and a three-year floating-rate note was added at the launch.

There was demand for the short floater, said the informed source. The total sale had "north of $2.5 billion" on the books, the source said.

The added $300 million tranche of three-year floating-rate notes priced at par to yield Libor plus 60 bps. It was sold in line with talk in the Libor plus 60 bps area.

The $400 million of 2.1% three-year notes sold at a spread of Treasuries plus 85 bps. This was in line with guidance in the 85 bps area and a launch at 85 bps.

A third part was $400 million of 3.1% five-year notes priced at a 95 bps spread over Treasuries. The notes sold at the tight end of talk in the 95 to 100 bps range.

The final tranche was $400 million of 4.625% 10-year notes priced at a spread of Treasuries plus 125 bps. Talk was in the 125 to 130 bps range and the notes priced at the tight end of that.

BNP Paribas Securities Corp., Deutsche Bank Securities Inc., UBS Securities LLC and Wells Fargo Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes.

Dell last priced bonds in a $1.5 billion deal in three parts on Sept. 7, 2010. The 1.4% three-year notes from that sale sold at 70 bps over Treasuries and the 2.3% five-year notes at 90 bps.

The bonds priced too late to be traded, but a market source saw two of the tranches in the gray market.

The 3.1% notes due 2016 were quoted at an offer of 93 bps after pricing at 95 bps over Treasuries.

The tranche of 4.625% notes due 2021 were offered at 123 bps after selling at 125 bps.

The computer and technology company is based in Round Rock, Texas.

Banque PSA's four tranches

Banque PSA Finance sold $1.25 billion of notes (Baa1/BBB) in four parts late in the day, said a source who worked on the deal.

A $450 million tranche of three-year floating-rate notes was added when the sale launched. The notes were priced at par to yield Libor plus 190 bps.

The $300 million of 3.375% three-year notes sold at Treasuries plus 215 bps.

A $250 million tranche of 4.375% five-year notes priced at 225 bps over Treasuries.

The final part was $250 million of 5.75% 10-year notes priced at a 237.5 bps over Treasuries spread.

The notes were priced under Rule 144A.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Inc. were bookrunners.

Proceeds are being used for general corporates purposes.

The unit of PSA Peugeot Citroen Group is based in Paris.

Westpac's late sale

Westpac Banking priced $1.4 billion of three-year floating-rate notes at par in early evening to yield Libor plus 73 bps, a market source said.

The notes (Aa1/AA) were priced under Rule 144A.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Westpac Securities were bookrunners.

Proceeds are going to general corporate purposes.

The bank and financial services company is based in Sydney, Australia.

NY Life arm sells short bond

New York Life Global Funding sold an upsized $300 million of three-year floating-rate notes at par to yield Libor plus 26 bps, said a source who worked on the trade.

The size was increased from $250 million.

The notes (Aaa/AAA) were sold under Rule 144A.

Barclays Capital Inc. and Deutsche Bank Securities Inc. were bookrunners.

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

Keyspan Gas sells 30-years

Keyspan Gas East sold a benchmark $500 million of 5.819% 30-year bonds (A3/A) under Rule 144A at Treasuries plus 130 bps, said a source close to the sale.

The bonds sold at the tight end of guidance in the range of 130 to 135 bps.

Bookrunners were Barclays Capital Inc., RBC Capital Markets Corp., Societe Generale and TD Securities (USA) Inc.

The bonds were quoted slightly better after pricing. A trader said they were bid at 129 bps and offered at 126 bps after selling at 130 bps over Treasuries.

The utility is based in Hicksville, N.Y.

Wells Operating's notes

Wells Operating Partnership sold $250 million of 5.875% guaranteed seven-year notes (Baa3/BBB-) at a spread of 313 bps over Treasuries, a market source said.

The deal was priced under Rule 144A.

Bookrunners were J.P. Morgan Securities LLC and Morgan Stanley & Co, Inc.

The proceeds are being used to repay a portion of outstanding debt.

The sale is guaranteed by Wells Real Estate Investment Trust II Inc.

The units of Wells Real Estate Funds are based in Norcross, Ga.

Sanofi bonds remain tighter

Three fixed-rate notes from the $7 billion, six-part Sanofi-aventis sale on March 22 were tighter nearly a week after pricing, a trader said.

Two of the tranches due 2021 and 2016 were among the day's most active as of early afternoon, a source said.

The 1.625% notes due 2014 were quoted between 9 and 12 bps better than the 55 bps over Treasuries price.

The 2.625% notes due 2016 were sold at 70 bps and quoted 2 to 6 bps better while the 4% notes due 2021 were a few basis points better on the offer side from the price of 80 bps.

The pharmaceutical company is based in Paris.

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