Ford sees success on return to IG market, Viacom prices, tightens in secondary market

By Aleesia Forni and Andrea Heisinger

New York, June 7 - Sales of investment-grade bonds showed no signs of slowing on Thursday as companies including American Express Credit Corp., Viacom Inc., Safeway Inc. and Ford Motor Credit Co. LLC tapped the market.

Ford Motor Credit was issuing in the high-grade market for the first time since 2005, a source said, after being bumped up from high-yield ratings by both Moody's and Fitch credit rating agencies. It remains rated junk by Standard & Poor's.

The financing arm of Ford Motor Co. sold $1.5 billion of five-year notes.

Viacom priced $400 million of notes due in 2015 and 2022 while Safeway sold $250 million of one-year floating-rate notes.

Viacom's 10-years were seen tighter late in the New York session.

American Express Credit offered $2 billion of paper with in two parts, each with three-year maturities.

Another deal came from Gulf South Pipeline Co., LP which priced $300 million of 10-year notes under Rule 144A and Regulation S.

Continuing the day's theme of financials tapping the market, Toyota Motor Credit Corp. priced two deals of $500 million each in one-year floating-rate notes.

There were two deals announced in the preferred stock market and one of them, from General Electric Capital Corp. priced. G.E. Capital sold $2.25 billion of hybrid noncumulative perpetual preferred stock at $100,000 per share.

American Financial Group Inc. announced a deal of $25-par notes.

Two days of solid offerings from higher-rated names left the door open for some BBB rated issuers and financials who had been waiting for market conditions to stabilize before pricing bonds.

"It was a good day," a syndicate source said. "A lot of financials [priced]."

By day's end, there was a glimmer of hope that issuance would continue coming into the primary market without companies getting scared off by headlines out of Europe.

"There's still an appetite for deals and they're coming in a good bit tighter from initial whisper," a market source said. "[It's a] good sign for future deals."

Ford back in high grade

Ford Motor Credit sold $1.5 billion of split-rated 3% five-year notes (Baa3/BB+/BBB-) to yield Treasuries plus 230 bps, a market source said.

The bonds priced in line with revised guidance in the 230 bps area, but tighter than initial talk of 262.5 bps over Treasuries, the source said.

There was much investor interest in the bonds due to the renewed investment-grade status, but not much from the high-yield side of the market, a source said.

A syndicate source said after the close that there was "just under $5 billion" on the books for the trade.

The Ford deal went okay, according to a trader who operates in the crossover space.

"They did it the way they always do it," said the trader. "They priced it on the screws. They came out with 2 3/8 talk, then tightened it down to 230."

There was very little interest in the deal among high-yield accounts, a hedge fund manager said.

Bookrunners were Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and RBC Capital Markets LLC.

Proceeds are being added to the company's general funds, and used for the purchase of receivables, for loans and in connection with the retirement of debt.

Ford Motor Credit was last in the market with five-year paper in a $1 billion deal on January 31. Those notes priced at par to yield 4.25%.

The new deal was trading at 229 bps bid, 226 bps offered, just after the close, the hedge fund manager said.

The financial services arm of Ford Motor Co. is based in Dearborn, Mich.

AmEx sells $2 billion

American Express Credit sold $2 billion of senior notes (A2/A-/A+) in two tranches, a syndicate source said.

The company sold $750 million of three-year floating-rate notes at par to yield three-month Libor plus 110 bps.

A second part was $1.25 billion of 1.75% three-year notes sold at a spread of Treasuries plus 140 bps.

Goldman Sachs & Co., J.P. Morgan Securities LLC and UBS Securities LLC were bookrunners.

The financial services company is based in New York City.

Viacom's new, reopened notes

Viacom sold an upsized $400 million of notes (Baa1/BBB+/BBB+) in two tranches, a source away from the deal said.

The offering was upsized from $300 million, the source said.

The company reopened its issue of 1.25% three-year notes to add $100 million. The notes were priced at a spread of Treasuries plus 87.5 bps.

Total issuance is $600 million including $500 million priced at 90 bps over Treasuries on February 23.

A $300 million tranche of 3.125% 10-year notes sold at 165 bps over Treasuries.

The 10-years were seen tighter at 158 bps bid, 155 bps offered at Thursday's close, according to a trader in New York.

Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC were active bookrunners.

Proceeds are being used for general corporate purposes of debt repayment including Viacom's commercial paper program and common stock share repurchase.

The entertainment company is based in New York City.

Gulf South's 10-years

Gulf South Pipeline priced $300 million of 4% 10-year bonds under Rule 144A and Regulation S, a market source said.

The notes (Baa1/BBB/BBB+) were priced at a spread of Treasuries plus 240 bps.

Bookrunners were Barclays Capital Inc. and J.P. Morgan Securities LLC.

The company was last in the market with a $500 million offering of notes in two parts on Aug. 14, 2007. The 6.3% 10-year notes from that deal were sold at 160 bps over Treasuries.

There was no secondary activity on the new notes as of late Thursday.

Gulf South, a Houston-based subsidiary of Boardwalk Pipeline Partners, LP, does interstate transport and storage of natural gas.

Safeway's $250 million deal

Safeway priced $250 million of floating-rate notes (Baa3/BBB/BBB-) due 2013 at par to yield Libor plus 150 bps, a market source said.

Active bookrunners were Barclays Capital Inc. and U.S. Bancorp Investments Inc. The passives were BNP Paribas Securities Corp. and Deutsche Bank Securities Inc.

Proceeds are being used to reduce debt under a U.S. commercial paper program and for other general corporate purposes.

Food and drug retailer Safeway was last in the market with a $800 deal of notes in two tranches on Nov. 30, 2011. The company is based in Pleasanton, Calif.

Toyota's floaters

Toyota Motor Credit priced two deals for $500 million each of one-year medium-term floating-rate notes (Aa3/AA-/) at par to yield Libor plus 10 bps, according to FWP filings with the Securities and Exchange Commission.

Toyota Financial Services Securities USA Corp. was agent for one sale while Citigroup Global Markets Inc. and J.P. Morgan Securities LLC handled the other offering.

The U.S. funding arm of auto maker Toyota is based in Torrance, Calif.

GE Capital prices hybrid

General Electric Capital sold $2.25 billion of series A fixed-to-floating rate noncumulative perpetual preferred stock at par, a market source said.

Dividends will be payable semi-annually at a fixed rate of 7.125% through June 15, 2022. The coupon will then convert to a floating rate equal to Libor plus 529.6 bps.

The stock will not be listed on any exchange.

A trader quoted the hybrids at 101 later in the day.

Barclays Capital Inc., Bank of America Merrill Lynch, Citigroup Global Markets Inc., Goldman Sachs & Co. and J.P. Morgan Securities LLC were bookrunners.

Proceeds will be used for general corporate purposes.

The investment company is based in Fairfield, Conn.

American Financial's $25-par notes

American Financial Group plans to sell $25-par senior notes, according to a prospectus filed with the SEC.

Price talk is 6.375% to 6.5%, according to a trader, and at least 6 million notes (Baa2/BBB+) will be issued.

Bank of America Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC are bookrunners.

The company intends to list the notes on the New York Stock Exchange.

Proceeds from the sale will be used with cash on hand to redeem $112.5 million of 7.5% senior notes due November 2033 and $86.25 million of 7.25% notes due January 2034. Any remaining proceeds will be used to partially redeem the company's 7.125% senior debentures due 2034, of which $115 million is outstanding.

Proceeds will also be used for general working capital purposes.

American Financial Group is a Cincinnati-based insurance company.

RBC notes tighten

In the secondary market, Royal Bank of Canada's notes due 2014 tightened on Thursday, trading 1 bps tighter at 73 bps bid.

The bank sold $1.25 billion 1.45% senior notes in October at a spread of Treasuries plus 105 bps.

The financial services company is based in Toronto.

Bank of Nova Scotia tightens

The secondary also saw Bank of Nova Scotia's bonds due 2017 tighten on Thursday, trading 9 bps tighter at 98 bps bid.

The Halifax, N.S.-based bank priced $1.25 billion of bonds at Treasuries plus 172 bps in January.

-Paul A. Harris and Stephanie N. Rotondo contributed to this review

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