Sysco prices to overwhelming demand; ING Bank, Nordic Investment Bank price; spreads ease

By Aleesia Forni

Virginia Beach, Sept. 23 – Sysco Corp. came to Tuesday’s high-grade bond primary market with a $5 billion offering of senior notes, meeting overwhelming demand from investors.

The new deal was swamped with orders, a source noted, attracting a book that was more than four times oversubscribed.

All six tranches of the deal sold at the tight end of price talk, which had firmed around 10 basis points to 15 bps from initial price talk.

“Very strong demand,” a source said of Sysco’s new issue.

Sysco’s new issue comes on the heels of another six-part offering priced by Roche Holding AG on Monday. The Swiss drugmaker sold the $5.75 billion of bonds to fund the acquisition of InterMune Inc.

Sysco also accessed the market to secure acquisition financing for its planned merger with USF Holding Corp., the parent company of US Foods, Inc.

In other primary happenings on Tuesday, ING Bank NV priced $1.5 billion of notes due 2019 in fixed- and floating-rate tranches, a market source said.

The session also saw Kommuninvest i Sverige AB issue $1 billion of five-year notes and Nordic Investment Bank price a $500 million offering of global notes due 2021.

Meanwhile, Landwirtschaftliche Rentenbank came out with price talk on Tuesday for a planned seven-year notes offering.

So far, this week has seen $18.51 billion of new issuance, already closing in on what was expected to be a $20 billion to $25 billion week.

The high-grade bond market’s tone was weaker to open Tuesday’s session, and spreads continued to ease over the session.

The Markit CDX North American Investment Grade series 22 index was 1 bp wider at a spread of 60 bps.

A trader noted that industrial paper was around 1 bp to 2 bps wider on the day.

Old Republic International Corp.’s recent $400 million of 4.875% senior notes traded flat compared to Monday’s close.

Sysco’s new bonds priced late in the day and were not seen in aftermarket trading, a trader said.

Sysco prices $5 billion

Sysco sold $5 billion of senior notes (A3/A-/) in six tranches on Tuesday to help fund its merger with USF Holding, the parent company of US Foods, a market source said.

The offering included $500 million of 1.45% three-year notes priced at Treasuries plus 42 bps, or 99.962 to yield 1.463%.

A $750 million tranche of 2.35% five-year notes priced at 99.864 to yield 2.379%, or Treasuries plus 62 bps.

There was also $750 million of 3% seven-year notes sold at 99.781 to yield 3.035%, or Treasuries plus 82 bps.

The company also sold $1.25 billion of 3.5% 10-year notes at Treasuries plus 102 bps. Pricing was at 99.616 to yield 3.546%.

A $750 million tranche of 4.35% notes due 2034 sold at 99.841 to yield 4.362%. The notes sold with a spread of Treasuries plus 112 bps.

Finally, $1 billion of 4.5% 30-year bonds sold at 98.992 to yield 4.562%, or Treasuries plus 132 bps.

All six tranches sold at the tight end of talk, which had firmed around 10 bps to 15 bps from earlier guidance.

Goldman Sachs & Co., J.P. Morgan Securities LLC, TD Securities and Wells Fargo Securities LLC were the bookrunners.

Proceeds will also be used to refinance US Foods’ debt, to unwind cash flow hedges, to repay commercial paper and to pay expected costs related to the merger.

Sysco is a Houston-based food service marketing and distribution company.

ING two-parter prices

The primary also saw ING Bank price $1.5 billion of senior notes in fixed- and floating-rate tranches due 2019, a market source said.

The company priced $350 million of five-year floating-rate notes with a coupon of Libor plus 69 bps.

There was also $1.15 billion of 2.5% five-year notes priced at Treasuries plus 85 bps.

The notes priced at the tight end of guidance, which was set in the low-90 bps area over Treasuries.

Pricing was done under Rule 144A and Regulation S.

BNP Paribas Securities Corp., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., HSBC Securities and ING Financial Markets LLC were the bookrunners.

The financial services company is based in Amsterdam.

Kommuninvest prices tight

Also on Tuesday, Kommuninvest priced $1 billion of 2% five-year notes (Aaa/AAA/AAA) at 99.97 to yield mid-swaps plus 4 bps, an informed source said.

The notes sold at the tight end of talk, set in the mid-swaps plus 5 bps area.

BofA Merrill Lynch, JPMorgan, Nomura and Skandinaviska Enskilda Banken AB were the bookrunners for the Rule 144A and Regulation S deal.

Kommuninvest offers funding to municipalities of Sweden and is based in Orebro.

NIB new issue

Nordic Investment Bank sold $500 million of 2.25% global notes (Aaa/AAA/) due Sept. 30, 2021 at 99.339 on Tuesday, according to a FWP filed with the Securities and Exchange Commission.

The bookrunners were Credit Agricole CIB, BofA Merrill Lynch and SEB Securities, Inc.

Proceeds will be used for financing selected loans to projects, which are considered to enhance the environment in NIB’s member countries.

The financier for five Nordic countries is based in Helsinki, Finland.

Rentenbank sets talk

In forward calendar news, Landwirtschaftliche Rentenbank set talk for its planned offering of seven-year notes in the area of mid-swaps plus 6 bps on Tuesday, an informed source said.

JPMorgan, Morgan Stanley, Nomura and RBC Capital Markets LLC are managing the sale.

Proceeds will be used to finance lending activities.

The German development agency for agribusiness is based in Frankfurt.

Old Republic bonds flat

Old Republic International’s recent $400 million of 4.875% senior notes (Baa3/BBB+/) traded flat compared to Monday’s close, a trader said.

The 10-year notes, which sold on Monday at Treasuries plus 237.5 bps, were quoted at 237 bps bid, 235 bps offered.

The upsized deal priced at 99.498 to yield 4.939%, with Morgan Stanley and Credit Suisse Securities (USA) LLC as the bookrunners.

The Chicago-based insurance holding company plans to use proceeds from the offering for general corporate purposes.

Bank/brokerage CDS costs rise

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

Bank of America Corp.’s CDS costs increased 2 bps to 66 bps bid, 71 bps offered. Citigroup Inc.’s CDS costs were also 2 bps higher at 64 bps bid, 69 bps offered. JPMorgan Chase & Co.’s CDS costs increased 2 bps to 55 bps bid, 58 bps offered. Wells Fargo & Co.’s CDS costs ended 2 bps higher 42 bps bid, 47 bps offered.

Merrill Lynch’s CDS costs were 2 bps higher at 68 bps bid, 73 bps offered. Morgan Stanley’s CDS costs ended 2 bps higher at 75 bps bid, 79 bps offered. Goldman Sachs Group, Inc.’s CDS costs increased 2 bps to 78 bps bid, 81 bps offered.

Paul Deckelman contributed to this review

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