Cardinal Health issues bonds; week’s supply tops $43 billion; spreads ease; bank paper firms

By Aleesia Forni and Cristal Cody

Virginia Beach, Nov. 7 – Cardinal Health Inc. sold a new offering of bonds on Friday, capping off a stellar week for the investment-grade bond market.

The company sold $1.2 billion of senior notes in three parts during the session around 15 basis points tight of initial price thoughts.

The new Cardinal Health deal pushes the week’s total new issuance to more than $43 billion, kicking off what is expected to be an active month for high-grade bonds.

With the shortened week due to the Veterans Day holiday, sources are calling for around $30 billion of supply for the week ahead.

Meanwhile, cash continued to flow into investment-grade bond funds, with Lipper reporting net inflows of $3.04 billion for the week ended Nov. 5.

This figure is up from last week’s $2.775 billion of inflows, bringing the year-to-date total inflows to more than $74 billion.

Investment-grade bonds were mixed and spreads weaker over the day, market sources said.

The Markit CDX North American Investment Grade series 23 index eased 1 bp to a spread of 66 bps.

Verizon Communications Inc.’s 4.15% notes due 2024 headed out 3 bps weaker, a market source said.

Bank and financial paper traded mostly better, according to a market source.

Bank of America Corp.’s 4% notes due 2024 firmed 3 bps, while Goldman Sachs Group Inc.’s 3.85% notes due 2024 tightened 2 bps in secondary trading.

Cardinal Health new issue

Cardinal Health sold $1.2 billion of senior notes in tranches due 2019, 2024 and 2044, according to a market source and an FWP filed with the Securities and Exchange Commission.

There was $450 million of 2.4% five-year notes priced at 99.813 to yield 2.44%, or Treasuries plus 85 bps.

The notes sold at the tight end of price talk.

A second tranche was $400 million of 3.5% 10-year notes priced at 99.483 to yield 3.562%, or Treasuries plus 125 bps.

Pricing was at the tight end of talk.

A third tranche was $350 million of 4.5% 30-year bonds priced at 98.43 to yield 4.597%, or Treasuries plus 155 bps.

The notes sold on top of talk.

Deutsche Bank Securities Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the bookrunners.

Cardinal Health intends to use the proceeds from the deal to fund the redemption of all of its outstanding 4% notes due June 15, 2015, 5.8% notes due Oct. 15, 2016, 5.85% notes due Dec. 15, 2017 and 6% notes due June 15, 2017.

The health-care services company is based in Dublin, Ohio.

Verizon eases

Verizon’s 4.15% notes due 2024 (Baa1/BBB+/A-) widened about 3 bps to 136 bps offered, a market source said on Friday.

Verizon sold $1.25 billion of the notes on March 10, 2014 at a spread of Treasuries plus 140 bps.

The telecommunications company is based in New York City.

Bank of America improves

Bank of America’s 4% notes due 2024 (Baa2/A-/A) firmed 3 bps to 125 bps offered, according to a market source.

Bank of America sold $2.75 billion of the notes on March 27, 2014 at Treasuries plus 137 bps.

The financial services company is based in Charlotte, N.C.

Goldman Sachs firms

Goldman Sachs’ 3.85% notes due 2024 (Baa1/A-/A) traded 2 bps tighter at 143 bps offered, according to a market source.

Goldman Sachs sold $2.25 billion of the notes on June 30 at Treasuries plus 135 bps.

The financial services company is based in New York City.

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