Amgen, Discovery, Beam do multi-tranche sales as tone rebounds; Beam tightens; banks improve

By Andrea Heisinger and Cristal Cody

New York, May 10 - The high-grade market tone recovered enough on Thursday for issuers including Amgen Inc., Discovery Communications, LLC and Beam Inc. to sell bonds.

The rush of deals came a day after the primary sat empty as an uneasy tone took over on headlines out of the euro zone and a falling equity market.

Florida Power & Light Co. sold an upsized $600 million of mortgage bonds, and Bank of New York Mellon Corp. priced $500.1 million of five-year senior notes in a remarketing.

Southern California Edison Co. unit SCE Trust I announced and priced an upsized $475 million of perpetual cumulative trust preferred securities.

Amgen had the largest offering of the day with $3 billion in three parts. The company was last in the market selling $6 billion of paper in four tranches in November.

The terms of the deal were not available at press time. A source said the maximum size of the trade was $3.6 billion, but the company decided to only do $3 billion.

Discovery Communications priced $1 billion of notes in two parts, and Beam sold $600 million of bonds, also in two tranches.

The floodgates opened after equities were up to start the day and the tone firmed, sources said.

"We had some people sitting on things, and they didn't want to wait," a syndicate source said.

A source said that the stop-and-go issuance seen so far in May could continue.

"You never can tell," the source said. "It's all on headlines or Greece or whatever."

Friday is looking quiet, although it's possible there could be a trade or two, syndicate sources said.

The Markit CDX Series 18 North American Investment Grade index ended the day unchanged at a spread of 103 basis points.

The new issues traded mostly stronger in the secondary market.

"We've had a fairly active day," a trader said.

Beam's bonds tightened 4 bps to 7 bps, while Discovery Communications' two tranches traded flat to 3 bps better.

Florida Power & Light's bonds traded mostly at issue price. "Pretty expensive name," a trader said.

Bank and financial paper traded tighter on the day.

Morgan Stanley's 5.5% notes due 2021 tightened 10 bps on Thursday.

"They're inside 398 [bps]. Yesterday morning they were 408, so a little narrowing," a trader said. "Nothing sufficient, but it's still in the right direction. Given some of the headlines out of Europe and Greece and the stock market selling off, it seems like financial bonds held up pretty well."

Investment-grade bank and brokerage credit default swap costs traded unchanged to lower.

Bank of America's CDS costs firmed 3 bps to 267 bps bid, 273 bps offered. Citi's CDS costs traded flat at 225 bps bid, 231 bps offered. JPMorgan's CDS costs fell 3 bps to 105 bps bid, 110 bps offered. Wells Fargo's CDS costs were flat at 93 bps bid, 98 bps offered.

On the brokerage side, Merrill Lynch's CDS costs were seen unchanged at 280 bps bid, 290 bps offered. Morgan Stanley's CDS costs fell 3 bps to 382 bps bid, 388 bps offered. Goldman Sachs' CDS costs ended flat at 282 bps bid, 288 bps offered.

Treasuries ended the day lower. The benchmark 10-year note yield rose 1 bp to 1.83%, and the 30-year bond climbed 2 bps to 3.04%.

Discovery's $1 billion deal

Discovery Communications priced $1 billion of senior notes (Baa2/BBB/BBB) in two tranches, a market source said.

The $500 million of 3.3%10-year notes priced at a spread of Treasuries plus 155 bps. The tranche sold at the tight end of guidance in the 160 bps area, plus or minus 5 bps.

A $500 million tranche of 4.95% 30-year bonds sold at 195 bps over Treasuries. The bonds were also priced at the low end of guidance in the 200 bps area, plus or minus 5 bps.

The active bookrunners were Bank of America Merrill Lynch, J.P. Morgan Securities LLC and RBS Securities Inc.

Proceeds are being used for general corporate purposes including to acquire companies or businesses, to repay and refinance debt, for working capital, for capital expenditures and to repurchase stock.

The deal is guaranteed by Discovery Communications, Inc.

In trading late afternoon, Discovery Communications' notes due 2022 firmed to 152 bps bid, a trader said.

The 30-year bonds traded flat at 195 bps bid.

The non-fiction media and entertainment company is based in Silver Spring, Md.

Beam sells for acquisition

Premium spirits company Beam sold $600 million of notes (Baa2/BBB-/BBB) in two parts, an informed source said.

The $300 million of 1.875% five-year notes sold at a spread of Treasuries plus 115 bps. The paper sold at the tight end of guidance in the 120 bps area.

A second tranche of $300 million of 3.25% 10-year paper priced at a spread of 150 bps over Treasuries. This tranche also was priced at the low end of talk in the 155 bps area.

Barclays Capital Inc., Bank of America Merrill Lynch and Credit Suisse Securities (USA) LLC were the bookrunners.

Proceeds are being used to finance a portion of the $605 million purchase price of Pinnacle vodka and Calico Jack rum from White Rock Distilleries, Inc.

There is a mandatory call at 101 if the acquisition is not done by Oct. 31.

In the secondary market, Beam's notes due 2017 tightened to 108 bps bid, a trader said.

The notes due 2022 also firmed in the secondary market, going out at 146 bps bid.

Beam is based in Deerfield, Ill.

FPL upsizes

Florida Power & Light priced an upsized $600 million of 4.05% 30-year first mortgage bonds (Aa3/A/AA-) at a spread of 100 bps over Treasuries, a source away from the trade said.

The deal size was increased from $400 million.

Bank of America Merrill Lynch, Credit Suisse, JPMorgan, Mitsubishi UFJ Securities (USA) Inc., RBC Capital Markets LLC and RBS Securities were the bookrunners.

Proceeds are being added to the company's general funds and used to repay a portion of outstanding commercial paper and for other general corporate purposes.

In the secondary market, Florida Power & Light's bonds were seen at 98 bps offered, a trader said.

The electric subsidiary of NextEra Energy Inc. is based in Juno Beach, Fla.

BNY's remarketing

Bank of New York Mellon sold $500.1 million of 1.969% five-year senior notes in a remarketing, according to an FWP filing with the Securities and Exchange Commission and a press release.

The coupon is 6.044% until the settlement of the remarketing on May 21.

The notes (Aa3/A+/) were priced at 100.4624 to yield 1.872% with a spread of Treasuries plus 110 bps.

The notes will be purchased by delivery of $500.1 million of remarketable 6.044% junior subordinated notes due 2043 purchased from Mellon Capital IV for $512.84 million.

Credit Suisse, Deutsche Bank Securities Inc. and JPMorgan were the bookrunners and selling security holders.

Proceeds will be received by the selling security holders for their own accounts.

The financial services company is based in New York.

SoCal unit's trust preferreds

SCE Trust I, a unit of Southern California Edison, which is guarantor, announced and priced an upsized $475 million of 5.625% perpetual cumulative trust preference securities at par of $25, a market source said.

The trust preferreds were sold at the tight end of guidance, which was initially in the 5.75% area and later revised to 5.625% to 5.75%. The size of the offering was increased from $400 million.

The securities were quoted at $24.90 in the gray market ahead of pricing.

"I think they're going to price at 5.625%," the trader said. "I don't think they'll push more than that. They're being priced well. The deal's doing very well."

The company has applied to list the securities on the New York Stock Exchange under the ticker "SCE PR F."

Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, RBC Capital Markets and UBS Securities LLC were the bookrunners.

Proceeds are being used to repay commercial paper borrowings and/or for general corporate purposes.

Southern California Edison is an electric utility based in Rosemead, Calif.

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