Legg Mason, Cardinal Health, Rowan, NextEra Energy tap weak market; Murphy Oil notes tighten

By Andrea Heisinger and Cristal Cody

New York, May 16 - Activity in the high-grade primary market continued on Wednesday with offerings from Legg Mason, Inc., Cardinal Health, Inc., Rowan Cos., Inc. and NextEra Energy Capital Holdings, Inc.

There was also a sovereign deal of $3.5 billion of three-year notes from the Province of Ontario.

Legg Mason had the largest sale of the day, $650 million of seven-year senior notes priced under Rule 144A and Regulation S.

Cardinal Health priced $500 million of senior notes split evenly between 2017 and 2022 maturities.

NextEra priced $350 million of three-year debentures in a remarketing.

Contract drilling company Rowan priced $500 million of 10-year paper guaranteed by its parent company.

The bond market saw a slight rally in Treasuries in the afternoon following the release of minutes from April's Federal Reserve Federal Open Market Committee meeting that showed there was some concern about U.S. fiscal policy and the economy in general.

"Eh, whatever," a syndicate source said at day's end after being asked about any impact on the high-grade market after the announcement.

"The market's weak, and it has been. Not a lot of investors want in right now."

Regardless, deals in the past two days have seen plenty of demand, with most oversubscribed.

More deals are expected on Thursday despite the weak tone.

"We have a couple small ones looking," a source said. "Nothing too huge."

Bonds continued to trade wider on Wednesday. The Markit CDX Series 18 North American Investment Grade index eased 2 basis points to a spread of 119 bps.

Some new issues traded better in the secondary market. Murphy Oil Corp.'s that notes priced on Tuesday firmed nearly 20 bps on Wednesday, a source said.

Treasuries ended mixed. The benchmark 10-year note yield rose 3 bps to 1.76%. The 30-year bond yield fell 1 bp to 2.90%.

Legg sells seven-year

Legg Mason sold $650 million of 5.5% seven-year senior notes (Baa1/BBB+/BBB+) to yield Treasuries plus 450 bps, an informed source said.

The notes were priced in line with guidance in the "mid-to-high 400s," the source said. There was about $1.35 billion on the books.

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

The bookrunners were Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC.

Proceeds are being used to repurchase $1.25 billion of 2.5% contingent convertible senior notes due 2015.

The asset management company is based in Baltimore.

Cardinal Health's $500 million

Cardinal Health priced $500 million of senior notes (Baa2/A-/BBB+) in two tranches, a market source said.

The $250 million of 1.9% five-year notes priced at a spread of Treasuries plus 120 bps.

A second part was $250 million of 3.2% 10-year bonds sold at 145 bps over Treasuries.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC and Morgan Stanley were the bookrunners.

Proceeds are being used to repay 5.65% notes due June 15, 2012 at maturity, and any remainder will be used for general corporate purposes including repayment of $300 million 5.5% notes due 2013.

The health-care services company is based in Dublin, Ohio.

Rowan offers 10-year

Rowan priced $500 million of 4.875% 10-year senior notes (Baa3/BBB-/) to yield Treasuries plus 320 bps, an informed source said.

The bookrunners were Citigroup, RBC Capital Markets LLC and Wells Fargo Securities LLC.

Proceeds are being used to replenish cash recently applied to repay some secured notes guaranteed by MarAd and for general corporate purposes, including repayment in full of remaining secured notes.

The deal is guaranteed by Rowan Cos. plc.

Rowan, a contract drilling services company, is based in Houston.

NextEra's remarketing

NextEra Energy Capital Holdings sold $350 million of series C debentures due 2014 in a remarketing, according to an FWP filing with the Securities and Exchange Commission.

The debentures (Baa1/BBB+/A-) were priced at a spread of 115 bps over Treasuries.

The remarketing is for equity units initially consisting of corporate units sold by NextEra Energy, Inc., formerly known as FPL Group Inc.

Credit Suisse Securities (USA) LLC was the remarketing agent.

Proceeds are being used to purchase a Treasury portfolio then pledged to secure purchase contract obligations of holders of corporate units.

The deal is guaranteed by NextEra Energy, Inc., a utility company based in Juno Beach. Fla.

Ontario's short bonds

The Province of Ontario sold $3.5 billion of 0.95% three-year bonds (/AA-/) at a spread of Treasuries plus 57 bps, or mid-swaps plus 21 bps, according to an FWP filing with the SEC.

The underwriters were CIBC World Markets Corp., Citigroup, Deutsche Bank Securities Inc., Morgan Stanley & Co. International plc, BMO Capital Markets Corp., National Bank Financial Inc., RBC Capital Markets, Scotia Capital (USA) Inc. and TD Securities (USA) LLC.

The issuer is based in Toronto.

Murphy Oil firms

In the secondary market, Murphy Oil's 4% senior notes due 2022 traded tighter at 207 bps bid, a bond source said on Wednesday.

The company sold $500 million of the 10-year notes (Baa3/BBB/) at a spread of Treasuries plus 225 bps on Tuesday.

The oil and gas exploration and production company is based in El Dorado, Ark.

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