High-grade primary pace slows as AT&T, Lloyds price; new Tyco notes tighten in secondary

By Aleesia Forni

Virginia Beach, Nov. 20 - The pace of issuance in the high-grade primary market slowed on Wednesday, with five issuers bringing $3.8 billion of new deals to the market.

Supply was down on the day compared to back-to-back sessions that saw issuers rush to the market to start the week and price roughly $20 billion of new paper.

The largest deal of the day was priced by AT&T Inc.

The company sold $2 billion of notes due 2018 in two parts during the session.

There was $1.6 billion of 2.375% notes sold at Treasuries plus 100 basis points and $400 million of floaters priced at par to yield Libor plus 91 bps.

Meanwhile, Lloyds Bank plc brought a $1 billion sale of 2.3% senior notes to market with a spread of Treasuries plus 100 bps.

Tyco Electronics Group SA was also in the primary selling an upsized $325 million issue of 2.375% senior notes due 2018 at Treasuries plus 115 bps.

In other primary action, Camden Property Trust priced a $250 million issue of 4.25% 10-year senior notes at Treasuries plus 150 bps.

Domtar Corp. sold $250 million of 6.75% long 30-year notes with a spread of Treasuries plus 287.5 bps.

The session also saw the release of the minutes from the Federal Reserve's last meeting, stating that the bond purchasing program could be cut back in the coming months.

Yields on the 10-year Treasury note reached 2.8% on Wednesday, compared to 2.0% seen by a trader earlier during the session.

"Fed minutes made people nervous, so we'll see what happens," a market source said.

New issues traded mostly stronger in late afternoon secondary trading, while bond spreads overall held mostly flat, market sources said.

Tyco's 2.375% notes tightened more than 10 bps in aftermarket trading, a source said.

AT&T's 2.35% notes firmed 3 bps on the offered side in late day trading, a source said.

Domtar's 6.75% senior notes also firmed on the offered side in the secondary market.

In other trading, BB&T Corp.'s 1.05% notes due 2016 headed out 1 bp better from where the notes priced on Tuesday, a trader said.

The Markit CDX North American Investment Grade series 21 index closed unchanged at a spread of 73 bps.

AT&T sells fixed and floaters

AT&T priced $2 billion of notes in two five-year tranches on Wednesday, according to a syndicate source and an FWP filed with the Securities and Exchange Commission.

The deal included $1.6 billion of 2.375% global notes due 2018 priced with a spread of Treasuries plus 100 bps, or par.

A second tranche was $400 million of floaters priced at par to yield Libor plus 91 bps.

Both tranches priced at the tight end of talk.

In the secondary market, AT&T's 2.35% notes traded tighter on the offered side at 97 bps, a trader said.

Proceeds will be used for general corporate purposes.

Citigroup Global Markets Inc. and Mizuho Securities USA Inc. were the joint bookrunners.

The telecommunications company is based in Dallas.

Lloyds prices tight

Also on Wednesday, Lloyds Bank sold $1 billion of 2.3% senior notes (A2/A/A) at Treasuries plus 100 bps, according to a syndicate source and an FWP filed with the SEC.

Pricing was at 99.84 to yield 2.334%.

Goldman Sachs & Co., J.P. Morgan Securities LLC, Lloyds Securities Inc., Morgan Stanley & Co. LLC and UBS Securities LLC were the joint bookrunners.

The notes sold at the tight end of talk.

Proceeds will be used for general corporate purposes.

The notes will be fully and unconditionally guaranteed by Lloyds Banking Group plc.

The retail bank is based in London.

Tyco upsizes

Tyco Electronics came to Wednesday's primary market to price an upsized $325 million issue of 2.375% senior notes due 2018 at Treasuries plus 115 bps, according to a market source and an FWP filing with the SEC.

The notes (Baa2/BBB+/BBB+) priced at 99.493 to yield 2.482%.

Pricing was at the tight end of talk.

Tyco's 2.375% notes firmed to 104 bps bid, 101 bps offered in the secondary market late in the day, a trader said.

Citigroup Global Markets, BofA Merrill Lynch and Deutsche Bank Securities Inc. were the joint bookrunners.

Proceeds will be used for general corporate purposes, which may include the repayment of outstanding debt.

The notes will be fully and unconditionally guaranteed by TE Connectivity Ltd.

Tyco is a Luxembourg maker of electronic components.

Camden 10-years

Camden Property Trust sold $250 million of 4.25% 10-year senior notes on Wednesday with a spread of Treasuries plus 150 bps, according to a market source and an FWP filed with the SEC.

Credit Suisse Securities (USA) LLC, Deutsche Bank Securities, SunTrust Robinson Humphrey Inc. and U.S. Bancorp Investments Inc. were the joint bookrunners.

Proceeds will be used to purchase the company's $200 million of 5.375% senior notes due December 15, 2013.

The company will also use proceeds to repay any outstanding balance on its unsecured line of credit and other short-term borrowings and for general corporate purposes.

Camden was last in the market with $350 million of 2.95% 10-year notes priced at Treasuries plus 147 bps on Dec. 4, 2012.

The real estate investment trust for apartment communities is based in Houston.

Domtar new deal

Domtar priced $250 million of 6.75% senior notes due 2044 with a spread of Treasuries plus 287.5 bps, according to a market source.

The notes (Baa3/BBB-/) priced at 99.719 to yield 6.773%.

The notes sold in line with talk.

Domtar's 6.75% senior notes headed out at 283 bps offered in the secondary market, a trader said.

Proceeds will be used for general corporate purposes, including working capital, capital expenditures, investments in subsidiaries, acquisitions and refinancing of debt, including commercial paper and other short-term indebtedness.

JPMorgan, Deutsche Bank Securities and Morgan Stanley were the joint bookrunners.

The fiber-based product maker is based in Montreal.

BB&T wrapped around issuance

BB&T's 1.05% notes due 2016 (A1/A/A+) traded at 51 bps bid, 47 bps offered, a trader said.

The company sold $500 million of the three- year notes with a spread of Treasuries plus 52 bps on Tuesday as part of a two-part offering.

The financial services company is based in Winston-Salem, N.C.

Bank/brokerage CDS costs down

Investment-grade bank and brokerage CDS prices declined on Wednesday, according to a market source.

Bank of America Corp.'s CDS costs tightened 3 bps to 88 bps bid, 91 bps offered. Citigroup Inc.'s CDS costs declined 1 bp to 86 bps bid, 89 bps offered. JPMorgan Chase & Co.'s CDS costs firmed 2 bps to 78 bps bid, 81 bps offered. Wells Fargo & Co.'s CDS costs tightened 1 bp to 49 bps bid, 53 bps offered.

Merrill Lynch's CDS costs firmed 2 bps to 88 bps bid, 93 bps offered. Morgan Stanley's CDS costs declined 1 bp to 104 bps bid, 108 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 1 bp to 108 bps bid, 111 bps offered.

Paul Deckelman contributed to this review.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.