Deal surge continues; Citigroup, John Deere, Wells Fargo among issuers; Marriott, Deere firm

By Andrea Heisinger and Cristal Cody

New York, Feb. 22 - The flow of deals into the investment-grade bond market continued on Wednesday. Citigroup Inc., John Deere Capital Corp., Sumitomo Mitsui Banking Corp., Marriott International, Inc. and Alexandria Real Estate Equities Inc. all sold bonds.

Citigroup followed up a $2.5 billion deal from January with a $1.25 billion trade of three-year notes. It was joined in the market by Wells Fargo & Co. with a $1.25 billion issue of five-year floating-rate notes.

John Deere priced $1.5 billion of notes in three parts including two-year floating-rate notes and five- and 10-year paper. All of the tranches sold at the tight end of guidance.

Sumitomo Mitsui Banking sold $1.5 billion of 10-year subordinated notes under Rule 144A and Regulation S. The financial issuer was also in the market in early January with a $1.5 billion offering of notes in three tranches.

Marriott increased the size of its offering from $350 million to $400 million of seven-year paper. It was the lodging company's first bond sale since 2007.

The Alexandria Real Estate Equities trade totaled $550 million of 10-year notes. The deal size was increased from $500 million.

There was also a sovereign deal from the European Investment Bank. It priced $3.5 billion of three-year global bonds.

The market tone wasn't considerably different from Tuesday.

"Nothing stuck out," a syndicate source who worked on one of Wednesday's trades said.

A market source later said that the tone wasn't significantly different from the previous day.

"Maybe it was momentum," the source said. "I think people saw how everything went [on Tuesday] and were more ready to go."

About five corporate issuers tapped the market on Tuesday following the long Presidents Day weekend, during which a bailout package for Greece was also agreed on.

Overall trading volume neared $10 billion by late afternoon on Wednesday.

Marriott's notes due 2019 traded about 8 basis points better in the secondary market.

John Deere's 10-year tranche tightened about 4 bps in trading.

Citigroup's notes due 2015 traded flat to 3 bps wider, traders said.

The Markit CDX Series 17 North American Investment Grade index was unchanged on the day at a spread of 98 bps.

Treasuries traded higher on Wednesday on Greek bailout skepticism. The benchmark 10-year Treasury note yield dropped 6 bps to 2.00%. The 30-year bond yield fell to 3.15% from 3.21%.

John Deere adds tranche

John Deere Capital sold $1.5 billion of notes (A2/A/) in three tranches after a floating-rate note was added to the trade, an informed source said.

The $500 million of floaters due 2014 priced at par to yield Libor plus 17 bps. The tranche was sold at the low end of talk in the Libor plus 20 bps area.

A $500 million tranche of 1.4% five-year notes priced at a spread of Treasuries plus 55 bps. These notes also priced at the tight end of guidance in the 58 bps area.

Finally, there was a $500 million tranche of 2.75% 10-year paper sold at 77 bps over Treasuries. The paper priced at the tight end of guidance in the 80 bps area.

Bank of America Merrill Lynch, Citigroup Global Markets Inc. and Goldman Sachs & Co. were the bookrunners.

John Deere Capital was last in the market with a $1.1 billion sale of notes in two parts on Nov. 29. The 2% five-year paper from that deal priced at 110 bps over Treasuries.

In secondary trading, the notes due 2017 traded at 54 bps bid, 50 bps offered, a trader said.

The notes due 2022 were quoted better at 74 bps bid, 70 bps offered and going out tighter at 73 bps bid, traders said.

The manufacturer and distributor of John Deere agricultural and industrial equipment is based in Moline, Ill.

Citi prices $1.25 billion

Citigroup priced $1.25 billion of 2.65% three-year notes (A3/A-/A) at a spread of 230 bps over Treasuries, a source close to the deal said.

The paper was priced at a level lower than whispered talk in the low 240 bps area and tight to revised guidance in the 235 bps area, the source said.

There was roughly $3.5 billion on the books.

Citigroup was the bookrunner.

Proceeds are being used for general corporate purposes.

Citigroup's notes were seen trading flat at 230 bps bid, 228 bps offered and later wider at 233 bps bid, traders said.

The financial services company is based in New York.

Alexandria sells $550 million

Alexandria Real Estate Equities sold a slightly upsized $550 million of 4.6% 10-year senior notes (Baa2/BBB-/) to yield Treasuries plus 260 bps, a source close to the trade said.

The deal was priced at the tight end of guidance in the 265 bps area.

Bank of America Merrill Lynch, Citigroup, Goldman Sachs and J.P. Morgan Securities LLC were the active bookrunners.

Proceeds will be used to prepay the outstanding balance of $250 million in a 2012 unsecured term loan and to reduce borrowings under an unsecured line of credit.

The deal is guaranteed by Alexandria Real Estate Equities LP.

The issuer is a real estate investment trust for properties with life science laboratory space. It is based in Pasadena, Calif.

Wells Fargo's floaters

Wells Fargo priced $1.25 billion of five-year medium-term floating-rate notes at par to yield Libor plus 110 bps, according to a 424B2 filing with the Securities and Exchange Commission.

Wells Fargo Securities LLC was the bookrunner.

The financial services company is based in San Francisco.

Marriott upsizes

Marriott International tapped the market for an upsized $400 million of 3% seven-year series K senior notes (Baa2/BBB/BBB) to yield Treasuries plus 175 bps, an informed source said.

The size of the trade was increased from $350 million, the source said.

Bank of America Merrill Lynch and JPMorgan ran the books.

Proceeds are being used for general corporate purposes, including working capital, capital expenditures, acquisitions, to repurchase stock or to repay outstanding commercial paper borrowings.

Marriott last priced bonds in a $400 million issue of 5.625% notes due 2013 on Oct. 16, 2007 at Treasuries plus 135 bps.

In the secondary market, Marriott's notes due 2019 firmed to 167 bps bid, 165 bps offered, a trader said.

Another trader saw the notes at 168 bps bid, 163 bps offered.

The lodging company is based in Bethesda, Md.

Sumitomo sells privately

Sumitomo Mitsui Banking priced $1.5 billion of 4.85% 10-year subordinated notes (Aa3/A+/) to yield 285 bps over Treasuries, a source away from the deal said.

The trade priced tighter than initial talk in the 300 bps area.

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

The bookrunners were Barclays Capital Inc., Citigroup, Goldman Sachs, SMBC Nikko Capital Markets Ltd. and UBS Securities LLC.

Sumitomo Mitsui Banking was last in the market with a $1.6 billion sale of notes in three tranches on Jan. 6.

The subsidiary of Sumitomo Mitsui Financial Group is based in Tokyo.

EIB's short bond

The European Investment Bank sold $3.5 billion of 1.125% three-year global bonds (Aaa/AAA) at a spread of 40 bps over mid-swaps, or 70.7 bps over Treasuries, a market source said.

Barclays, Deutsche Bank Securities Inc. and Goldman Sachs were the bookrunners.

The lender to the European Union is based in Kirchberg, Luxembourg.

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