Daimler prices tight; Broadcom, Fannie Mae also bring deals; spreads soften; Broadcom eases

By Cristal Cody and Aleesia Forni

Virginia Beach, July 24 – Daimler Finance North America LLC and Broadcom Corp. came to the high-grade primary market with new bond offerings on Thursday.

Daimler came to market with a $2.5 billion offering of senior notes in four tranches, with all fixed-rate tranches pricing at the tight end of talk.

The deal was met with solid demand, a source said, seeing an orderbook that was more than two times oversubscribed.

Meanwhile, Broadcom priced $600 million of senior notes in two tranches due 2024 and 2034.

The session also saw Fannie Mae issue $3 billion of five-year Benchmark Notes, pricing in line with talk.

So far this week, the investment-grade primary market has seen roughly $18 billion of supply, topping what sources had predicted to be around a $15 billion week.

Investment-grade bond spreads headed out less than ½ a basis point weaker on the day, a market source said.

The Markit CDX North American Investment Grade series 22 index was unchanged at a spread of 59 bps.

Market activity continues to be light, with one source dubbing the week the “peak vacation season.”

Broadcom’s 3.5% notes due 2024 traded 1 bp wider on the bid side in aftermarket trading, according to a trader.

Daimler Finance’s notes priced late afternoon and were not seen in the secondary market, the trader said.

Daimler prices tight

The investment-grade primary market saw Daimler Finance North America issue a $2.5 billion offering of senior notes (A3/A-/A-) in four tranches at the tight end of talk, a market source said.

The sale included $350 million of floaters due 2017 priced at par to yield Libor plus 34 bps.

A $1.15 billion tranche of 1.375% three-year notes sold at 99.655 to yield 1.493%, or Treasuries plus 50 bps.

There was also $500 million of 2.25% five-year notes sold with a spread of Treasuries plus 60 bps.

The notes sold at 99.736 to yield 2.305%.

A $500 million tranche of 3.25% 10-year notes priced at 99.039 to yield 3.364%, or Treasuries plus 85 bps.

The bookrunners were BofA Merrill Lynch, HSBC Securities and Mizuho Securities.

The financing unit of Daimler AG is based in Stuttgart, Germany.

Broadcom two-parter

Broadcom was also in Thursday’s market, pricing $600 million of senior notes in tranches due 2024 and 2034, according to a market source and an FWP filed with the Securities and Exchange Commission.

The $350 million of 3.5% 10-year notes priced at 99.615 to yield 3.546%, or Treasuries plus 103 bps.

Pricing was at the tight end of talk, which was set in the area of Treasuries plus 105 bps.

There was also $250 million of 4.5% 20-year notes sold at 99.4 to yield 4.546%, or Treasuries plus 125 bps.

The notes sold in line with talk.

Broadcom’s 3.5% notes due 2024 headed out in aftermarket trading at 104 bps bid, 100 bps offered, a trader said.

J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the bookrunners.

Proceeds from the offering will be used for general corporate purposes, including the potential redemption of up to $400 million of the company’s 2.375% senior notes due 2015.

The company makes semiconductors for wired and wireless communication and is based in Irvine, Calif.

Fannie Mae sells Benchmark Notes

In a deal announced earlier this week, Fannie Mae priced $3 billion of 1.75% Benchmark Notes due Sept. 12, 2019 at Treasuries plus 17.5 bps, according to a market source and a company release.

Pricing was in line with talk.

The notes sold at 99.437 to yield 1.866%.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Nomura Securities International Inc. were the joint lead managers.

By region, 9.8% of investors were from Asia, 1.5% were from Europe, and 88.2% were from the United States.

Fund managers picked up 55.5% of the offering, commercial banks subscribed for 17.8%, central banks purchased 10.4%, state and local governments picked up 8.6% and insurance companies bought 7.7%.

The government-backed mortgage lender is based in Washington, D.C.

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