ITC Holdings brings modest deal, DNA Alpha to sell pass-throughs; ITC notes trade better

By Aleesia Forni and Andrea Heisinger

New York, June 26 - ITC Holdings Corp. and DNA Alpha Ltd. each announced modest sales in Wednesday's market.

The day was marred slightly by another tepid auction of Treasury notes - this time at the five-year maturity. Both of the day's investment-grade sales were done after the auction, but did not affect pricing, sources said.

"It was not the best [tone] anyway," a source who worked on ITC's trade said.

The power company priced $550 million divided between notes due 2023 and 2043.

DNA Alpha announced an offering of $630 million of class A and B pass-through certificates. Pricing is expected on Thursday, a source close to the trade said.

The enhanced equipment trust certificates purchased during the transaction will be used to buy four new Airbus aircraft for delivery in 2013.

The week was projected to have $10 billion of issuance, but so far only about $2.2 billion has been priced.

"Bonds have been getting hammered," a syndicate source said. "I'd say it will be slow through the 4th [of July]."

Traders saw spreads in the high-grade secondary market mostly tighter early during Wednesday's session, though one source noted that the tone was "slightly weaker" near the day's close.

The Markit CDX North American Investment Grade index was 4 basis points tighter at a spread of 88 bps.

One market source saw the new issue from ITC trading better near the end of the session, while a trader at another desk quoted British Telecommunications plc's recent notes 13 bps better.

ITC's tranches

ITC Holdings sold $550 million of senior notes (Baa2/BBB/) in two tranches during the day's session, a market source said.

The trade included $250 million of 4.05% 10-year notes priced at a spread of Treasuries plus 155 bps.

A $300 million tranche of 5.3% 30-year bonds sold at a spread of 175 bps over Treasuries.

A trader quoted the 30-year bonds at 170 bps offered near the session's close.

The bookrunners were Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Wells Fargo Securities LLC, Barclays and J.P. Morgan Securities LLC.

Proceeds will be used to repay $267 million of 5.25% senior notes due July 15 and a $200 million term loan entered into in 2012. They may also be used for general corporate purposes including other debt repayment.

ITC was last in the U.S. bond market with a $200 million sale of 5.5% 10-year notes priced at 220 basis points over Treasuries on Dec. 8, 2009.

The power transmission company is based in Novi, Mich.

DNA preps pass-throughs

DNA Alpha is planning a $630 million sale of class A and B pass-through certificates, a market source said.

Pricing is expected Thursday, the source said after the close.

The trade includes $168 million of class A certificates (A3//) due Nov. 30, 2019 and $462 million of class B certificates (Baa3//) due May 30, 2023.

The bookrunners for the Rule 144A and Regulation S sale are Citigroup Global Markets Inc., Goldman Sachs & Co. and Morgan Stanley & Co. LLC.

Proceeds will be used to fund the purchase of enhanced equipment trust certificates which will then buy four new Airbus aircraft to be delivered in 2013.

The unit of aircraft leasing company Doric Nimrod Air Three Ltd. is based in Guernsey, the Channel Islands.

CAT gives terms

Caterpillar Financial Services Corp. reopened its issue of floating-rate medium-term notes, series G, due Feb. 26, 2016 to add $150 million, according to an FWP filing with the Securities and Exchange Commission.

The notes (A2/A/) have a coupon of Libor plus 24 bps and were priced at 99.501.

With the add on, the total issue size is $450 million, including $300 million priced on Feb. 25.

The bookrunner was J.P. Morgan Securities LLC.

The funding arm of heavy equipment maker Caterpillar is based in Nashville, Tenn.

British Telecom firms

British Telecommunications' new offering traded 13 bps tighter on Wednesday at 84 bps bid, 79 bps offered.

The company priced the $600 million issue of 1.625% three-year senior notes at Treasuries plus 100 bps on Tuesday.

British Telecommunications is a London-based internet and phone services company.

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