GE Capital, Daimler, MetLife units sell debt in 'good' backdrop; volume jumps; new deals firm

By Andrea Heisinger and Cristal Cody

New York, Jan. 4 - Financial names made up the bulk of new investment-grade bond issuance for the second day in a row on Wednesday despite high new issue concessions.

General Electric Capital Corp., Daimler Finance North America LLC and MetLife Global Funding I each tapped the market following the previous day's successful deal from Citigroup Inc.

GE Capital priced $4 billion of paper in three tranches, while MetLife Global sold $750 million of three-year notes in the private placement market.

Daimler Finance N.A. priced $1.65 billion of notes in three tranches via Rule 144A with strong demand.

Worries about sovereign debt - specifically Spain - didn't rattle the market enough for issuers to completely stand down, but it may have delayed some deals, a source said.

Spain is reportedly looking into applying for loans from a European Union bailout fund to aid in restructuring its banks.

"I don't think anyone was too concerned about that today," a syndicate source said, referring to issuers.

The number of deals from the financial sector at the top of the year isn't atypical, especially considering that many names were shut out of the market for the last part of 2011.

"The backdrop was good, so they went for it," a source who worked on the Daimler Finance sale said.

"I think a lot [of issuers] wanted to get financing out of the way early."

Overall trading volume jumped to more than $14 billion on Wednesday from $9 billion the previous day.

In the secondary market, GE Capital's new short-dated tranches firmed 2 basis points to 3 bps.

MetLife's new notes also traded better, going out about 2 bps tighter.

While the new issues traded stronger, bonds mostly were flat to slightly weaker on the day.

The Markit CDX Series 17 North American investment-grade index eased 1 bp to a spread of 119 bps.

Investment-grade bank and brokerage credit default swaps costs ended higher on Wednesday.

Bank paper CDS costs traded 2 bps to 10 bps higher. Brokerage company paper CDS costs were 5 bps wider across the board.

Treasuries ended better, but still down on the day, with yields up 3 bps to 5 bps on the longer end of the curve. The 10-year note yield rose 3 bps to 1.98% from 1.95%. The 30-year bond yield rose to 3.03% from 2.98%.

GE Capital in three parts

General Electric Capital sold $4 billion of notes (Aa2/AA+) in three parts, a source close to the trade said.

A $2 billion tranche of 2.15% three-year debt sold at Treasuries plus 180 bps.

The second part was $1 billion of 2.9% five-year notes priced at a spread of 205 bps over Treasuries.

GE Capital also reopened its issue of 4.65% paper due 2021 to add $1 billion. The new debt priced at Treasuries plus 240 bps.

Total issuance is $2.75 billion, including $1 billion sold on Oct. 12 at 247 bps over Treasuries.

All of the tranches were sold in line with guidance.

Bookrunners were Bank of America Merrill Lynch, Barclays Capital Inc., Citigroup Global Markets Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC.

Proceeds are being used for general corporate purposes.

In the secondary market, the three-year notes traded tighter at 177 bps bid, 174 bps offered, a trader said.

The notes due 2017 came in 2 bps to 203 bps bid, 200 bps offered.

The tranche of 10-year notes was not immediately seen in trading.

The funding arm of General Electric Co. is based in Fairfield, Conn.

Daimler prices $1.65 billion

Daimler Finance North America priced $1.65 billion of debt (A3/BBB+/A-) in three tranches, a source said.

There was about $2.5 billion on the books for the trade, the source said.

A $400 million tranche of floating-rate notes due 2013 priced at par to yield Libor plus 133 bps. The tranche is non-callable.

The second part was $650 million of 2.3% three-year paper priced at a spread of Treasuries plus 195 bps.

The $600 million of 2.95% five-year notes sold at 210 bps over Treasuries.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., Societe Generale, Mizuho Securities USA Inc. and RBS Securities Inc. were bookrunners.

The deal was done under Rule 144A and Regulation S.

Daimler Finance NA was last in the market with a $1.9 billion deal in three tranches on March 21, 2011. The 1.95% three-year notes from that deal were sold at 85 bps and the 3% five-year paper at 100 bps.

The subsidiary of automaker Daimler AG is based in Stuttgart, Germany.

MetLife's private sale

MetLife Global Funding sold $750 million of 2% three-year paper to yield Treasuries plus 167 bps, a market source said.

The spread was inside price talk in the 170 bps area, the source said.

The notes (Aa3/AA-) were sold under Rule 144A and Regulation S.

Bookrunners were Barclays Capital Inc., Deutsche Bank Securities Inc. and UBS Securities LLC.

This unit of MetLife was last in the market with a $1.5 billion sale in three parts on Jan. 4, 2011. The 2% three-year notes from that deal were priced at 100 bps over Treasuries.

In afternoon trading, MetLife's notes due 2015 firmed to 165 bps bid, according to a trader.

The funding arm of Metropolitan Life Insurance Co. is based in New York City.

Paul Deckelman contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.