High-grade issuance slows; Scotiabank, APT Pipelines price; Realty Income tightens in trading

By Aleesia Forni and Andrea Heisinger

New York, Oct. 3 - The issuance pipeline slowed on Wednesday following two robust days of multi-billion-dollar deals.

Bank of Nova Scotia sold $1.35 billion of three-year notes, and Australia's APT Pipelines Ltd. sold $750 million of bonds due 2022 under Rule 144A and Regulation S.

New offerings continued to come out of the preferred stock market as Affiliated Managers Group Inc. sold $125 million of $25-par 10-year notes.

Spreads on bank bonds were a little better on the day, a syndicate source said, but supply waned.

"I think the pipeline's shut down a little bit," she said. "We're watching how things perform [in trading]."

More than $17 billion has already priced this week, exceeding the low end of the $15 billion to $20 billion of supply expected for the week.

"Probably not much for tomorrow," a market source said late in the day.

While yields and borrowing costs remain low, jobs data comes out on Friday, and some are also waiting to see the outcome of the presidential debate Wednesday night, the market source said.

The Markit CDX Series 18 North American Investment Grade index tightened 2 basis point to a spread of 96 bps on Wednesday.

In the secondary market, General Electric Co.'s new notes were among the day's most active issues, according to a market source.

One trader saw the notes trading at about the same levels on Wednesday as Tuesday.

The 10-year tranche was quoted at 91 bps bid, 89 bps offered, while the 30-year bonds traded at 108 bps bid, 106 bps offered.

The $3 billion tranche of 2.7% 10-year notes sold at a spread of 110 bps over Treasuries on Monday, and a $2 billion tranche of 4.125% 30-year bonds was priced with a spread of Treasuries plus 135 bps.

The technology and financial services company is based in Fairfield, Conn.

In other trading, Realty Income Corp.'s five-year notes and 10-year notes firmed 5 bps and 2 bps, respectively.

Tuesday's $1.5 billion five-year issue from Toyota Motor Credit Corp. was also active on the day, trading 2 bps tighter on Wednesday.

Scotiabank sells $1.35 billion

The Bank of Nova Scotia was in the U.S. market with a $1.35 billion sale of 0.75% three-year senior notes priced at Treasuries plus 45 bps, an informed source said.

The notes (Aa1/AA-/AA-) were sold tighter than guidance in the range of 50 bps to 54 bps over Treasuries, the source said.

Bank of America Merrill Lynch, Barclays, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Scotia Capital Markets USA Inc. were the bookrunners.

Toronto-based Bank of Nova Scotia is a financial services company.

APT prices tight

APT Pipelines priced $750 million of 3.875% 10-year notes to yield Treasuries plus 237.5 bps, a market source told Prospect News.

The notes (Baa2/BBB/) had guidance in the range of 250 bps to 262.5 bps over Treasuries and sold tighter than that range.

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

The bookrunners were Citigroup and Morgan Stanley & Co. LLC.

The natural gas pipeline infrastructure operator is based in Sydney, Australia.

Affiliated's $25-par deal

Affiliated Managers Group brought $125 million of 5.25% $25-par 10-year senior notes, a market source said.

Price talk was 5.25%.

"It's looking OK," a trader said, seeing a $24.70 bid for paper in the gray market ahead of pricing. "I like the structure of it. That thing should hang in there pretty well."

The new issue will be listed on the New York Stock Exchange.

Bank of America Merrill Lynch, Citigroup and Wells Fargo Securities LLC were the bookrunners.

The Prides Crossing, Mass.-based asset management company will use proceeds to pay down a revolving credit facility.

Toyota Motor Credit tightens

Toyota Motor Credit's $1.5 billion of 1.25% five-year senior notes traded at 63 bps bid, 70 bps offered on Wednesday.

The notes priced on Tuesday at a spread of Treasuries plus 65 bps.

The funding arm of Toyota is based in Torrance, Calif.

Realty Income firms

Realty Income's $350 million 2% notes due January 2018 traded 5 bps tighter at 135 bps bid, 130 bps offered, a trader said.

The notes sold with a spread of Treasuries plus 140 basis points on Tuesday.

The $450 million tranche of 3.25% 10-year notes were quoted at 168 bps bid, 166 bps offered after pricing with a spread of 170 bps over Treasuries.

The real estate investment trust for retail and commercial properties is based in Escondido, Calif.

Stephanie N. Rotondo contributed to this review

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