HCP, Scana issue high-grade bonds as banks continue Q4 earnings; new deals firm 5-6 bps

By Andrea Heisinger and Cristal Cody

New York, Jan. 18 - After a drought of deals to start the week, there were high-grade bond sales from HCP, Inc. and Scana Corp. on Wednesday.

A $370 million addition to Tuesday's sale from Toyota Motor Credit Corp. was also announced.

Real estate investment trust HCP priced an upsized $450 million of seven-year debt. The deal size was increased from $350 million.

There was also a $250 million sale of 10-year notes from electric company Scana. The offering carried a do-not-grow provision, a source said.

Fourth-quarter earnings announcements from big banks continued with Goldman Sachs Group Inc. posting a 58% drop in what it made compared to the same period in 2010. Like other banks such as Citigroup Inc., the cause was partly a slowdown in capital markets at the end of 2011. Goldman made $1.1 billion in Q4, or $1.84 per share.

On the preferred stock side of the market there were deals from Stifel Financial Corp. and U.S. Bancorp.

Stifel sold $175 million of 6.7% 10-year senior notes at par of $25.00, while U.S. Bank priced $1 billion of 6.5% fixed-to-floating rate perpetual preferred shares.

The market "felt a little better" than it did on Tuesday, one source said. Talks over the bailout of Greece continued on Wednesday, but as there was no outcome, it didn't affect the market, they said.

Issuers are expected to come out again on Thursday after the success of both the HCP and Scana deals.

"I would imagine we'll see something," a syndicate source said. "We've been talking to a couple of people, but nothing solid. The tone could change."

The Markit CDX Series 17 North American investment-grade index ended the day 3 basis points tighter at a spread of 110 bps.

In secondary trading, HCP's new notes due 2019 traded 5 bps to 6 bps better and Scana's new notes due 2022 firmed 5 bps, traders said.

Overall trading volume jumped to nearly $14 billion on Wednesday from $10 billion the previous day.

Treasuries sold off and yields rose 4 bps to 5 bps on the long end of the curve. The 10-year note yield rose to 1.89% from 1.85%. The yield on the 30-year bond climbed 5 bps to 2.95%.

HCP upsizes

HCP sold an upsized $450 million of 3.75% seven-year senior notes (Baa2/BBB/BBB+) to yield Treasuries plus 250 bps, a source close to the trade said.

The debt was sold at the tight end of price guidance in the 250 bps to 260 bps range. The deal size was increased from $350 million.

Demand was about $3 billion, a source said.

Citigroup Global Markets Inc., RBS Securities Inc. and UBS Securities LLC were the bookrunners.

Proceeds are being used to repay borrowings under a revolving credit facility and for general corporate purposes.

HCP last priced debt in a $2.4 billion deal in four tranches on Jan. 19, 2011.

HCP's new notes due 2019 firmed to 244 bps bid, 241 bps offered in late afternoon secondary trading, a trader said.

Another trader saw the notes at 245 bps bid, 240 bps offered.

The real estate investment trust for health care properties is based in Long Beach, Calif.

Scana's 10-year

Scana sold $250 million of 4.125% 10-year medium-term notes (Baa3/BBB/BBB+) to yield Treasuries plus 235 bps, according to an FWP filing with the Securities and Exchange Commission.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC and TD Securities (USA) LLC were the bookrunners.

Proceeds will be used to repay at maturity $250 million of notes due on Feb. 1, 2012.

Scana's new notes traded tighter at 230 bps bid, 228 bps offered and later 1 bp tighter on the offer side at 230 bps bid, 227 bps offered, traders said.

The electric generation, transmission and distribution company is based in Cayce, S.C.

U.S. Bancorp deal pops

U.S. Bancorp sold just over $1 billion of fixed-to-floating series F noncumulative perpetual preferred shares, according to a regulatory filing.

Price talk was around 6.625%, a trader said. The deal fixed at 6.5%.

"It was priced really tight," he said. "There's no syndicate on it, nobody can get shares."

He saw the issue trading at $25.10 in the gray market.

The shares will be issued as depositary shares representing 1/1,000th of an interest in the series F shares. Liquidation preference is $25,000 per preferred share.

The dividend rate will be fixed until Jan. 15, 2022, at which time the dividend will be based on Libor plus a spread of 446.8 bps.

Morgan Stanley & Co. Inc., Goldman Sachs & Co. and U.S. Bancorp Investments Inc. are the bookrunners.

Proceeds will be used for general corporate purposes, including the redemption of certain callable trust preferreds. Pending such use, the company has the right to temporarily invest the funds or use it to pay down short-term debt.

The bank is based in Minneapolis.

Stifel sells baby bonds

Stifel Financial announced plans for a deal, which - like U.S. Bancorp - came after the market closed.

The St. Louis-based firm issued $175 million of 6.7% $25.00-par senior notes due 2022, according to a regulatory filing. A trader said price talk was 6.75%.

"It's going pretty well," he said, seeing a less 10 bid for the paper in the gray market.

The notes will be issued in denominations of $25.00.

Stifel, Nicolaus & Co. Inc., Bank of America Merrill Lynch, Morgan Stanley and UBS Securities are the bookrunners.

Proceeds will be used for general corporate purposes.

Stephanie N. Rotondo contributed to this review

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