Flowserve, AvalonBay, Ameren unit among days' pared-down deals; bank, financial paper tighter

By Aleesia Forni and Andrea Heisinger

New York, Sept. 6 - Bond issuance in the high-grade market was more measured on Thursday following two days that overflowed with offerings.

The sales for Thursday were mostly less than $500 million in size.

In the day's largest corporate deal, Flowserve Corp. priced $500 million of 10-year senior notes.

Union Electric Co., doing business as Ameren Missouri, priced $485 million of 30-year senior secured bonds.

There was an upsized $450 million sale of 10-year medium-term notes from AvalonBay Communities, Inc. The deal size was increased slightly from $400 million.

Air Products & Chemicals, Inc. sold $400 million of five-year bonds. The sale had a do-not-grow provision on it.

Canada's Cards II Trust priced $1 billion of five-year credit card receivables-backed floating-rate notes.

Terms were given for Belgium's offering of $1.25 billion of three-year bonds done on Wednesday.

The reason the first half of the short week was so jammed with new deals was Thursday's meeting of the European Central Bank, during which measures were expected to be announced to stem the tide of the euro zone debt crisis.

A government bond-buying measure was announced - with the hope of defending other vulnerable euro zone countries from the same problems Greece has faced.

The calendar for the week is likely mostly done, sources said, with the maximum of the $20 billion to $25 billion of expected corporate sales already met.

"I mean, someone could price something tomorrow - it's always possible - but jobs numbers come out," a source said.

Employment numbers for August are set to be released on Friday morning.

Otherwise, the secondary market will need to absorb the huge amount of bond sales that came to the market for the week.

"We're all really tired," a source said. "It was a good week, but a break would be nice."

The Markit CDX Series 18 North American Investment Grade index widened 1 bps to a spread of 101 bps on Thursday.

Avalon Bay's 10-years were 4 basis points tighter late in the day, while the five-year issue from Air Products was quoted at 52 bps offered.

Flowserve's 10-years were seen at 176 bps offered near the end of the session.

In other trading, the new 10-year notes from General Electric Capital Corp. were seen "about 8 [bps] tighter."

Bank and financial paper was about 15 bps tighter.

Trading volumes were "strong," at $13.8 billion, a trader said, on a day that was "not bad at all for a pre-employment Thursday.

Flowserve's $500 million

Flowserve priced $500 million of 3.5% 10-year senior notes (Baa3/BBB-/BBB-) at a spread of 187.5 bps over Treasuries, a source close to the trade said.

The sale was done tighter than guidance in the 212.5 bps area with a margin of plus or minus 12.5 bps, the source said.

The notes were quoted at 176 bps offered.

There was upwards of $4 billion on the books for the offering, the source said.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC and Wells Fargo Securities LLC were active bookrunners.

Proceeds are being partly used to repay a bridge loan, with any remainder for general corporate purposes, including repayment of all or a portion of a revolving credit facility and repurchase of common stock.

The deal is guaranteed by domestic subsidiaries that guarantee the company's primary bank credit facility.

The flow control systems manufacturer is based in Irving, Texas.

Union Electric's secureds

Union Electric, doing business as Ameren Missouri, sold $485 million of 3.9% 30-year senior secured bonds (A3/BBB+/A) to yield 115 bps over Treasuries, a market source away from the trade said.

Bookrunners were Bank of America Merrill Lynch, Barclays, BNP Paribas Securities Corp. and Mitsubishi UFJ Securities (USA) Inc.

Proceeds, along with cash on hand, are being used to provide funds required to complete a tender offer, including the payment of interest on the purchased debt as well as fees and expenses.

The public utility holding company and unit of Ameren Corp. is based in St. Louis.

AvalonBay's 10-years

AvalonBay Communities sold an upsized $450 million of 2.95% 10-year notes (Baa1/BBB+/) to yield Treasuries plus 130 bps, a market source said.

The notes traded at 126 bps bid, 124 bps offered.

The size of the trade was increased from $400 million.

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

Proceeds are being used for working capital, capital expenditures and for other general corporate purposes.

AvalonBay was last in the U.S. bond market with a $250 million deal of 3.95% notes due 2021 on Nov. 9, 2010 that priced at 137.5 bps over Treasuries.

The manager and developer of apartment communities is based in Arlington, Va.

Air Products' $400 million

Air Products & Chemicals sold $400 million of 1.2% five-year senior notes (A2/A/) to yield Treasuries plus 55 bps, a syndicate source said.

A trader saw the notes at 176 bps offered late in the day.

Bank of America Merrill Lynch and Morgan Stanley & Co. LLC were bookrunners.

Proceeds are being used for general corporate purposes, including repayment of a portion of commercial paper incurred in connection with the acquisition of Indura.

The industrial gas and chemical maker is based in Allentown, Pa.

Cards II sells floaters

Canada's Cards II Trust priced a U.S. dollar-denominated offering of $1 billion of five-year credit card receivables-backed floating-rate notes (Aaa/AAA/) at par to yield one-month Libor plus 45 bps, a bond source said.

The series 2012-4 class A notes have a weighted average life of 1.9 years.

The class A notes priced under Rule 144A and Regulation S.

Cards II Trust also sold a Canadian dollar-denominated tranche of series 2012-4 class B notes that was not sold publicly.

CIBC World Markets Inc., Bank of America Merrill Lynch and HSBC Capital (Canada) Inc. were the bookrunners.

Proceeds will be used by the trust to finance the purchase of an undivided co-ownership interest in the receivables of certain credit card accounts designated by Canadian Imperial Bank of Commerce.

Cards II Trust owns interests in credit card receivables originated and serviced by Canadian Imperial Bank of Commerce.

Belgium sells short bond

Belgium sold $1.25 billion of 0.875% three-year bonds (Aa3/AA/AA) at a spread of mid-swaps plus 50 bps, or Treasuries plus 65.7 bps, a market source said.

The sale was done in line with guidance in the mid-swaps plus 50 bps area.

Credit Agricole Securities and J.P. Morgan Securities LLC were bookrunners.

The issuer's based in Brussels.

Louis Dreyfus prices hybrids

Louis Dreyfus Commodities BV sold $350 million of 8.25% perpetual hybrid capital securities at par, according to a press release.

It was the issuer's first transaction in the capital markets and was done as a private placement, according to the release, which also stated that the deal was more than three times oversubscribed. The deal primarily targeted Asian and Swiss investors, according to the release.

The securities are not rated.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and HSBC Securities (USA) Inc. were bookrunners.

"This transaction will enable LDC to increase its financial flexibility as well as diversify its sources of funding to support its growth strategy," Serge Schoen, chief executive officer of Louis Dreyfus Commodities, said in the release.

"It constitutes a landmark transaction in the long history of LDC as it marks our entry on the capital markets, and we have been pleased by the level of interest from the investor community as it reflects investors' confidence in the strengths of LDC's business model and credit profile."

The global agri-commodities portfolio managers is based in Amsterdam, the Netherlands.

Cristal Cody contributed to this review

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