Bristol-Myers brings deal for M&A; Australian financials price; bank paper spreads tighten

By Aleesia Forni and Andrea Heisinger

New York, July 26 - A huge deal from Bristol-Myers Squibb Co. was the talk of the high-grade bond market on Thursday. ANZ National International Ltd. and National Australia Bank were also in the market.

Bristol-Myers sold $2 billion in three tranches - its first time in the U.S. bond market since 2008. The pharmaceutical company was looking for capital to put toward the acquisition of Amylin Pharmaceuticals Inc.

Second-quarter earnings for Bristol-Myers were released on Wednesday, meeting analyst expectations as net income dropped to $645 million from $902 million in the same period a year ago. The drop in earnings was attributed to two of the company's name-brand drugs becoming available as generics.

ANZ priced $750 million of three-year notes, and National Australia Bank priced $1.75 billion of paper in two tranches.

The terms of the ANZ sale were not available at press time, though a trader saw the three-year notes at 153 basis points bid near the end of New York's session.

The Bristol-Myers deal added to the week's roster of multi-tranche sales.

Orders for the trade were "slightly skewed to the 30[-year bonds], but not by much," said a source who worked on the trade.

"It was a good order book, good outcome," she said.

The offering was only part of the financing for the Amylin acquisition that also included cash on hand, and there wasn't much consideration given to increasing the issue.

"Since it was an acquisition, they knew how much they needed [to price]," the source said.

Friday is expected to have little to no market activity following two days of large deals.

"It should be quiet, like most Fridays have been lately," a market source said.

The Markit CDX Series 18 North American Investment Grade index tightened 5 bps to a spread of 115 bps on Thursday.

Spreads on bank paper were seen "basically tighter" on Thursday, one source said.

Bristol-Myers prices tight

Bristol-Myers Squibb priced $2 billion of senior notes (A2/A+/A) in three tranches, a source close to the trade said.

There was about $15 billion of demand on the books "at the top," the source said, but in the end the demand was roughly $10 billion. There were drops once prices ratcheted in by more than 20 bps in some of the tranches.

The $750 million of 0.875% five-year notes priced at a spread of Treasuries plus 48 bps. The tranche sold tighter than talk in the 70 bps area.

In the gray market, the notes traded at 41 bps offered, a market source said.

A $750 million tranche of 2% 10-year notes sold at 73 bps over Treasuries. The notes were priced tighter than guidance in the 95 bps area.

A trader saw the notes at 66 bps offered in the gray market before widening to 68 bps offered later in the day.

The third part was $500 million of 3.25% 30-year bonds priced at 95 bps over Treasuries. The spread was tighter than talk in the 120 bps area.

The 30-year tranche was seen at 90 bps offered in the gray market.

The bookrunners for the five-year notes were Bank of America Merrill Lynch, Barclays Capital Inc. and Citigroup Global Markets Inc. Those for the 10-year tranche were Citigroup, Deutsche Bank Securities Inc. and Wells Fargo Securities LLC. The 30-year bonds were handled by Citigroup and J.P. Morgan Securities LLC.

Proceeds are being used to help finance the acquisition of Amylin Pharmaceuticals and for general corporate purposes.

Bristol-Myers was last in the market with a $1.6 billion deal in two tranches on April 28, 2008. The 5.45% 10-year notes from that deal priced at 165 bps over Treasuries as did the 6.125% 30-year bonds.

Bristol-Myers is a biopharmaceutical company based in New York.

NAB's $1.75 billion

National Australia Bank priced $1.75 billion of senior notes (Aa2/AA-/) in two tranches, a syndicate source said.

A $500 million tranche of three-year floating-rate notes priced at par to yield Libor plus 113 bps.

The second part was $1.25 billion of 1.6% three-year notes sold at a spread of Treasuries plus 133 bps.

HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC and National Australia Bank ran the books.

The bank and financial services company is based in Melbourne.

Citi firms

In other trading, Citigroup Inc.'s 6.375% notes due 2014 tightened 6 bps from Wednesday's levels to 221 bps bid.

The bank priced $2.5 billion of the five-year notes at Treasuries plus 380 bps on Aug. 5, 2009.

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