JPMorgan, Philip Morris, Medtronic, Nordea Bank price multi-part issues; bank paper firms

By Andrea Heisinger and Cristal Cody

New York, March 14 - The high-grade bond market had a healthy influx of new deals a day after the Federal Reserve held a meeting and released the results of stress tests on domestic banks.

JPMorgan Chase & Co. priced $2 billion of three-year paper in fixed- and floating-rate tranches after passing the stress test and announcing it would raise its quarterly dividend.

There were multi-tranche deals from Philip Morris International Inc., Medtronic, Inc. and Nordea Bank. International Lease Finance Corp. priced a $1.5 billion split-rated offering in two maturities.

A sovereign deal was priced by Bank Nederlandse Gemeenten. The financier of publicly owned organizations in the Netherlands sold $2.5 billion of three-year notes via Rule 144A.

The Philip Morris deal totaled $1.25 billion in two tranches with maturities in 2017 and 2042.

Medtronic sold $1.08 billion of paper in 10- and 30-year maturities.

Sweden's Nordea Bank had one of the largest offerings of the day at $2.75 billion done in two parts under Rule 144A and Regulation S. Both notes were priced tighter than guidance.

The preferred stock market saw a new $120 million deal of mandatorily redeemable preferreds from Kayne Anderson MLP Investment Co.

The day got a boost from the end of Tuesday when results of a stress test on banks were released early and it was revealed that most passed.

"Everything was flat equity-wise, but credit was tighter on the day," a syndicate source who worked on one of the day's offerings said. "It felt pretty good out there."

Issuance is expected to taper slightly on Thursday. Many issuers already hit the market either before the Federal Reserve Open Market Committee meeting on Tuesday or after on Wednesday.

The Markit CDX Series 17 North American Investment Grade index firmed 1 basis point to a spread of 91 bps.

Secondary trading was active and "went in waves" over the day, one trader said.

Medtronic's new tranches traded flat to 2 bps better, while Philip Morris' bonds stayed mostly wrapped around the issue price.

Telecom bonds traded about 5 bps better, while bank and financial paper overall firmed 5 bps to 15 bps after the Federal Reserve's stress test results.

Morgan Stanley's 5.5% notes due 2021 led the sector, trading 13 bps better at 358 bps bid, 348 bps offered, a trader said.

The new fixed-rate issue from JPMorgan was 2 bps wider in trading.

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

Banks were tighter. Bank of America's CDS costs firmed 12 bps to 223 bps bid, 233 bps offered. Citi's CDS costs traded 10 bps tighter at 195 bps bid, 205 bps offered. JPMorgan's CDS costs came in 1 bp to 94 bps bid, 99 bps offered.

Brokers also were better. Goldman Sachs' CDS costs tightened 10 bps to 215 bps bid, 225 bps offered. Merrill Lynch's CDS costs traded 10 bps better at 260 bps bid, 270 bps offered. Morgan Stanley's CDS costs firmed 7 bps to 290 bps bid, 300 bps offered.

Treasuries saw heavy selling on the day as investors moved out of safer-haven debt. The benchmark 10-year note yield climbed to 2.27% from 2.12%. The 30-year bond yield jumped to 3.4% from 3.27%.

Philip Morris' $1.25 billion

Philip Morris International priced $1.25 billion of senior notes (A2/A/) in two tranches, a source close to the deal said.

The $550 million of 1.625% five-year paper priced at Treasuries plus 68 bps. The notes were sold at the low end of guidance in the 70 bps area.

The second part was $700 million of 4.5% 30-year bonds sold at a spread of Treasuries plus 123 bps. These bonds also priced at the tight end of talk in the 125 bps area.

Barclays Capital Inc., Goldman Sachs & Co., J.P. Morgan Securities Inc. and RBS Securities Inc. were the bookrunners.

Proceeds are being added to the company's general funds.

Philip Morris last sold notes in a $1.5 billion deal with 10- and 30-year maturities on Nov. 8. The 4.375% 30-year bonds priced at 140 bps over Treasuries.

In the secondary market, the notes due 2017 traded at 67 bps bid, 64 bps offered, according to a trader.

The 30-year bonds were seen going out at 123 bps bid, 121 bps offered.

The holding company for tobacco product subsidiaries is based in New York.

JPMorgan sells short bonds

JPMorgan Chase sold $2 billion of notes (Aa3/A/) in two parts, a source away from the trade said.

There was a $500 million tranche of three-year floating-rate notes priced at par to yield Libor plus 105 bps.

The second part was $1.5 billion of 1.875% three-year notes sold at Treasuries plus 130 bps.

J.P. Morgan Securities ran the books.

JPMorgan last sold three-year notes as part of a $3.25 billion deal priced on Jan. 14, 2011. Those 2.05% three-year notes priced at 110 bps over Treasuries.

The fixed-rate notes due 2015 traded wider at 132 bps bid, 125 bps offered, a trader said.

The financial services company is based in New York.

Nordea prices tight

Nordea Bank sold $2.75 billion of notes (Aa2/AA-/) in two parts, a market source said.

There was roughly $6.25 billion of demand for the paper, the source said.

The $1 billion of 2.25% three-year notes priced at a spread of 175 bps over Treasuries. The tranche sold tighter than guidance in the 185 bps area, the source said.

A $1.75 billion tranche of 3.125% five-year paper sold at Treasuries plus 205 bps. The notes were priced tighter than talk in the 212.5 bps area.

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

Bank of America Merrill Lynch, Citigroup Global Markets Inc., Goldman Sachs and JPMorgan ran the books.

The financial services company is based in Stockholm.

Medtronic sells in two parts

Minneapolis-based Medtronic sold $1.08 billion of senior notes (A1/A+/) in two parts, a market source said.

The $675 million of 3.125% 10-year notes were sold at a spread of 90 bps over Treasuries.

A $400 million tranche of 4.5% 30-year bonds priced at Treasuries plus 110 bps.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc. and UBS Securities LLC ran the books.

Proceeds will be used for working capital and general corporate purposes including debt repayment.

Medtronic's notes due 2022 traded tighter at 88 bps bid, 83 bps offered, a trader said. The 30-year bonds traded flat at 110 bps bid, 105 bps offered.

The issuer is a medical technology company.

BNG's three years

Bank Nederlandse Gemeenten sold $2.5 billion of 1.375% three-year notes at a spread of mid-swaps plus 68 bps, or Treasuries plus 93.75 bps, a source close to the trade said.

The notes (Aaa/AAA/) were priced at the tight end of guidance in the mid-swaps plus 70 bps area, the source said.

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

Barclays, Citigroup and RBC ran the books.

The issuer provides financing for publicly owned organizations and is based in the Hague, the Netherlands.

ILFC's crossover deal

International Lease Finance sold $1.5 billion of split-rated senior notes (B1/BBB-/BB) in two parts, according to an FWP filing with the Securities and Exchange Commission.

The $750 million of 4.875% three-year paper priced at 99.65 to yield 5%.

A $750 million tranche of 5.875% seven-year notes sold at 99.288 to yield 6%.

Credit Suisse Securities (USA) LLC and JPMorgan were the active bookrunners. The passives were Barclays and Macquarie Capital (USA) Inc.

Proceeds are being used to repay amounts under a $750 million term loan due March 17, 2015 and for general corporate purposes including to repay debt and purchase aircraft.

No investment-grade trading was seen late afternoon in the two tranches.

The aircraft leasing company is based in Los Angeles.

Kayne's preferred deal

Kayne Anderson priced a $120 million offering of 4.25% series E mandatorily redeemable preferreds, according to a press release issued Wednesday.

Price talk was around 4.375%, according to a trader. The deal was originally announced earlier in Wednesday's session.

Given that the secondary market was the focus of the day in the preferred market, traders saw little goings-on in the gray market.

The preferreds must be redeemed on April 1, 2019. The company has the option to redeem the preferreds after the first anniversary of issuance at 102% of par plus accrued dividends.

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

Proceeds will be used to make investments in portfolio companies in accordance with the company's investment objectives and policies, to repay debt, to purchase up to $10 million of its series A mandatorily redeemable preferreds and for general corporate purposes.

Kayne Anderson is a non-diversified, closed-end management investment company based in Houston.

Stephanie N. Rotondo contributed to this review

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