Molson Coors taps market to fund acquisition, BB&T does preferreds; Coors firms 5 to 9 bps

By Andrea Heisinger and Cristal Cody

New York, April 26 - There was slightly more life in the high-grade bond market on Thursday with a large, multi-tranche offering from Molson Coors Brewing Co. pricing.

The $1.9 billion deal was priced late in the day in three tranches. Proceeds will be used to help fund the acquisition of StarBev Holdings. The company had not issued bonds since at least 2007, a source said.

"It's been a while," he said. There was more than $6 billion in orders for the offering as of early afternoon.

Also in high-grade new issue activity, Zions Bancorporation reopened its notes due 2017 to add $100 million. The sale was done via online auction. The total issue size is now $400 million.

BB&T Corp. sold $500 million of perpetual noncumulative preferred stock in a deal that was announced on Wednesday and upsized at pricing from the initial minimum size of $200 million.

The primary has had little issuance throughout the week save for a couple of sovereign sales and one corporate offering from General Electric Capital Corp. Weak market tone and a two-day Federal Reserve Federal Open Market Committee meeting kept some issues from getting the green light.

There is economic data coming out Friday meaning the primary side of the market will be quiet.

"I think if anyone wanted to [issue] they already did," a market source said. "People are waiting it out. Next week could be busier, we're hearing."

A syndicate source said at the end of the day that "futures are down, Spain was downgraded - none of that helps although no one can say they didn't see it coming."

In trading bonds were stronger on the day. The Markit CDX Series 18 North American investment-grade index firmed 2 basis points to a spread of 96 bps.

Molson Coors' three tranches of bonds traded 5 bps to 9 bps better in the secondary market.

Investment-grade bank and brokerage credit default swaps costs were unchanged to off slightly, a source said.

Banks were mixed. Bank of America's CDS costs eased 2 bps to 263 bps bid, 273 bps offered. Citi's CDS costs were unchanged at 241 bps bid, 246 bps offered. J.P. Morgan's CDS costs were flat at 106 bps bid, 111 bps offered. Wells Fargo's CDS costs also were unchanged at 88 bps bid, 93 bps offered.

Brokers were mixed. Merrill Lynch's CDS costs firmed 2 bps to 283 bps bid, 293 bps offered. Morgan Stanley's CDS costs ended unchanged at 375 bps bid, 380 bps offered. Goldman Sachs' CDS costs traded flat at 279 bps bid, 284 bps offered.

Treasuries were stronger on Thursday. The benchmark 10-year note dropped 4 bps to 1.94%. The 30-year bond yield fell 3 bps to 3.12%.

Molson Coors sells $1.9 billion

Molson Coors Brewing sold $1.9 billion of senior notes (Baa2/BBB-/BBB) in three maturities late on Thursday in the U.S. market, a source said.

A source away from the trade said: "The Molson Coors deal is going very well, so that's probably a good barometer for the market."

The $300 million of 2% five-year notes priced at a spread of Treasuries plus 125 basis points. The notes sold at the tight end of talk for a spread in the 130 bps area, the source said.

A second tranche of $500 million in 3.5% 10-year paper sold at a spread of 160 bps over Treasuries. The tranche was priced at the low end of guidance for a spread in the 165 bps area.

Finally, there was $1.1 billion of 5% 30-year bonds sold at a spread of Treasuries plus 190 bps. The bonds were also priced at the tight end of guidance set at the 195 bps area.

Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC were active bookrunners. Passives were Bank of America Merrill Lynch, Barclays Capital Inc., J.P. Morgan Securities LLC, UBS Securities LLC and Wells Fargo Securities LLC.

Proceeds are being used to help fund the $3.54 billion acquisition of StarBev Holdings from StarBev LP.

The notes have a mandatory call feature at 101 if the acquisition is not done by November 2.

In the secondary market, the notes due 2017 traded 5 bps tighter at 120 bps bid, 116 bps offered. The tranche of notes due 2022 were quoted 8 bps better at 152 bps bid, 148 bps offered.

The long bonds firmed 9 bps to 181 bps bid, 177 bps offered.

Molson Coors is a beer brewer based in Denver and Montreal.

Zions Bank reopens

Zions Bancorporation reopened its issue of 4.5% senior notes due in March of 2017 via an online auction to add $100 million, according to an FWP filing with the Securities and Exchange Commission.

The notes (/BBB-/BBB-) were sold at 100.249 to yield 4.442%.

Total issuance is $400 million including $300 million previously sold.

Deutsche Bank Securities Inc. ran the books.

Proceeds are being used for general corporate purposes, possibly including the partial redemption of remaining series D preferred stock held by the U.S. Treasury or the redemption of the bank's senior floating-rate notes due June 21.

The financial services holding company is based in Salt Lake City.

BB&T prices preferreds

BB&T priced $500 million of 5.85% series D noncumulative perpetual preferreds, according to a prospectus filed with the SEC.

The preferreds will be issued as depositary shares representing a 1/1,000th interest. There is a $75 million overallotment option.

Price talk was 5.9% to 5.95%, according to a trader, but was later revised. The deal was also upsized from $200 million.

The public offering price is $25 per share, though underwriters will receive a 72.95 cent-discount.

BB&T will apply to list the new preferred shares on the New York Stock Exchange under the ticker symbol "BBTPD."

Bank of America Merrill Lynch, BB&T Capital Markets, Deutsche Bank Securities Inc. and Wells Fargo Securities LLC were bookrunners.

Proceeds will be used for general corporate purposes.

BB&T is a Winston-Salem, N.C.-based financial holding company.

Stephanie N. Rotondo contributed to this review

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