EQT prices lone high-grade deal; market quiets for FOMC; spreads weaker; EQT, Tyco firm

By Cristal Cody and Aleesia Forni

Virginia Beach, July 29 – Primary activity was subdued on Tuesday as the Federal Reserve’s Federal Open Market Committee kicked off the first day of its two-day meeting.

The quieter session did see a new bond offering from EQT Midstream Partners LP during the session, with the company pricing a $500 million issue of 10-year senior notes.

Around $4 billion of investment-grade paper has priced so far this week.

“We weren’t expecting too much [primary market] action,” a source said of the week’s issuance.

Sources had expected around $15 billion of supply this week.

Meanwhile, the preferred market saw Northern Trust Corp. price a $400 million offering of series C noncumulative perpetual preferred stock.

“It doesn’t look like there is any selling group,” a trader said at mid-morning, seeing paper trading at $24.90 in the gray market. He remarked that the deal’s decent performance thus far was due to there being “no other deals, and it’s a good name.”

“They don’t have any other debt, so institutional buyers are snatching it up,” he said.

Meanwhile, Eagle Bancorp Inc. said it was selling at least $55 million of subordinated notes due 2024.

New York City-based Morgan Stanley tapped the Canadian market on Tuesday with a C$750 million offering of 3.125% seven-year senior notes, an informed source said.

The series F global medium-term notes due Aug. 5, 2021 (Baa2/A-/DBRS: A) priced with a spread of 143 basis points versus the interpolated Government of Canada bond curve.

Investment-grade bond spreads ended mostly softer on the day, according to market sources.

In the secondary market, EQT Midstream’s 4% notes due 2024 traded 1 bp tighter on the bid side, a trader said.

Tyco Electronics Group SA’s senior notes (Baa1/A-/A-) brought in Monday’s session remained firm, according to a trader.

EQT prices $500 million

Tuesday’s primary saw EQT Midstream Partners price $500 million of 4% senior notes (BBB-/BBB-/Ba1) due 2024 at the tight end of talk with a spread of Treasuries plus 160 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.422 to yield 4.071%.

EQT Midstream’s 4% notes due 2024 firmed to 159 bps bid, 157 bps offered in the secondary market, a trader said late afternoon.

Deutsche Bank Securities Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, Mitsubishi UFJ Securities (USA) Inc., BNP Paribas Securities Corp., SunTrust Robinson Humphrey Inc. and U.S. Bancorp Investments Inc. were the joint bookrunners.

Proceeds from the offering will be used to repay amounts outstanding under the company’s credit facility and for general partnership purposes.

EQT is an energy company based in Pittsburg.

Northern Trust’s preferreds

Northern Trust priced $400 million of 5.85% series C noncumulative perpetual preferred stock (expected ratings: Baa2/A-) at par of $25.00 on Tuesday, a market source reported.

The preferreds will be issued as depositary shares representing a 1/1,000th interest.

Morgan Stanley & Co. LLC, BofA Merrill Lynch and Wells Fargo Securities LLC are the joint bookrunners.

Dividends will be payable on the first day of January, April, July and October. The preferreds become redeemable on or after Oct. 1, 2019 at par plus accrued dividends.

The company can also redeem the issue in whole prior to that date upon a regulatory capital treatment event.

Proceeds will be used for general corporate purposes.

Northern Trust is a Chicago-based financial holding company.

Eagle Banco sub notes

Eagle Bancorp is offering $55 million of subordinated notes due Sept. 1, 2024, according to a prospectus filed with the SEC on Tuesday.

Sandler O’Neill + Partners LP is the bookrunner.

Interest will be payable on the first of March and September, beginning March 1, 2015. The company can redeem the notes in the event of a tax law change, a regulatory capital treatment change or if the company is required to register as an investment company.

The redemption price is par plus accrued interest.

The notes will not be listed on any exchange.

Proceeds will be used to fund the cash consideration portion of its merger with Virginia Heritage and for general corporate purposes. If the merger does not go through, the company will use the funds to redeem its 8.5% subordinated notes due 2021 and its series B noncumulative preferred stock issued to the U.S. Department of the Treasury.

Eagle Bancorp is a Bethesda, Md.-based bank holding company.

Tyco firms

Tyco Electronics Group’s 3.45% notes due 2024 tightened to 93 bps offered, a trader said.

The company sold $250 million of the 10-year notes on Monday at a spread of Treasuries plus 100 bps.

The tranche of 2.35% notes due 2019 were seen on Trace in the 60 bps area.

Tyco priced $250 million of the five-year notes at Treasuries plus 65 bps in the previous session.

The electronic component manufacturer is based in Luxembourg.

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage CDS prices were higher on Tuesday, according to a market source.

Bank of America Corp.’s CDS costs ended 2 bps wider at 72 bps bid, 75 bps offered. Citigroup Inc.’s CDS costs eased 2 bps to 68 bps bid, 72 bps offered. JPMorgan Chase & Co.’s CDS costs rose 2 bps to 58 bps bid, 61 bps offered. Wells Fargo & Co.’s CDS costs widened 1 bp to 48 bps bid, 52 bps offered.

Merrill Lynch’s CDS costs closed 2 bps wider at 76 bps bid, 79 bps offered. Morgan Stanley’s CDS costs ended 2 bps wider at 73 bps bid, 77 bps offered. Goldman Sachs Group, Inc.’s CDS costs were also 1 bp higher at 78 bps bid, 82 bps offered.

Paul Deckelman contributed to this review.

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