Illinois Tool Works brings $1.1 billion notes; Fidelity National prices $400 million of debt

By Sheri Kasprzak and Aleesia Forni

New York, Aug. 21 - It was a busy day for new investment-grade issues, and activity was led by a $1.1 billion offering from Illinois Tool Works Inc.

The 3.9% notes (A1/A+/) were sold through joint bookrunners Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Inc.

In other primary action Tuesday, Fidelity National Financial Inc. sold $400 million of notes, said a pricing sheet.

These notes (Baa3/BBB-/) were sold through joint bookrunners Bank of America Merrill Lynch, Barclays Capital Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

The Illinois Tool Works notes are due Sept. 1, 2042 and were priced at a spread of Treasuries plus 105 basis points. They were priced at 99.038 to yield 3.955%, said a term sheet.

The 30-years were seen 2 bps wider at 107 bps bid, 106 bps offered, a trader said late in the session.

The notes are callable any time before March 1, 2042 at Treasuries plus 15 bps and on or after March 1, 2042 at par plus interest.

Proceeds will be used to repay short-term debt and for other general corporate purposes.

Based in Glenview, Ill., Illinois Tool Works manufactures industrial products and equipment.

Fidelity National notes

The notes from Fidelity are due Sept. 1, 2022, and have a 5.5% coupon priced at 99.513 to yield 5.564%. The notes were priced at a spread of Treasuries plus 375 basis points.

One trader saw the notes 10 bps tighter at 365 bps bid near the end of the session.

The notes feature a make-whole call at Treasuries plus 50 bps.

"This issuance enhances our longer-term liquidity profile and continues our strategy of conservatively managing our balance sheet and liquidity position," Fidelity chief executive officer George P. Scanlon said in a statement.

"The proceeds provide the flexibility to fund the March 2013 debt maturity and leave our balance sheet with no longer-term debt maturing until May 2017."

Proceeds will be used to fund the repayment at or before maturity of $236.5 million of the company's 5.25% unsecured notes due March 2013. The remainder will be used for general corporate purposes.

Based in Jacksonville, Fla., Fidelity is a title insurance underwriter.

Bank/broker CDS costs down

Investment-grade bank and brokerage credit default swaps costs declined on Tuesday.

Bank of America's CDS costs tightened 3 bps to 212 bps bid, 217 bps offered. Citi's CDS costs also tightened 3 bps to 212 bps bid, 217 bps offered. J.P. Morgan's CDS costs declined 2 bps to 114 bps bid, 119 bps offered. Wells Fargo's CDS costs were 2 bps tighter at 81 bps bid, 86 bps offered.

Brokers tightened. Merrill Lynch's CDS costs were 2 bps tighter at 227 bps bid, 237 bps offered. Morgan Stanley's CDS costs declined 8 bps to 304 bid, 314 bps offered. Goldman Sachs' CDS costs tightened 5 bps to 240 bps bid, 250 bps offered.

Meanwhile, the Markit CDX Series 18 North American Investment Grade index was 1 bps wider from Monday's close at a spread of 99 bps.

A secondary source said it seemed as though the new deals were "moving with no problem" despite the "thinly-staffed desks."

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