BofA, Monsanto, L-Bank close volatile week; JPMorgan widens; Valspar better; bonds mixed

By Aleesia Forni and Cristal Cody

Virginia Beach, Jan. 16 – Bank of America Corp., Monsanto Co. and Landeskreditbank Baden-Wurttemberg-Forderbank (L-Bank) priced new deals on Friday, closing out a volatile week for high-grade bonds.

Bank of America priced $2.5 billion of subordinated notes at the tight end of price talk.

L-Bank came to market with a $1 billion offering of notes due 2017.

Monsanto issued $365 million of 30-year bonds, which will be listed on the Gre Tai Securities Market.

Friday’s uncharacteristically active session brings the week’s total supply to $32.95 billion, surpassing what was predicted to be a $30 billion week.

Meanwhile, Lipper reported inflows of $1.491 billion into corporate investment-grade bond funds for the week ended Jan. 14.

The total fell from last week’s inflows of $2.972 billion, bringing the year-to-date total inflows to $4.463 billion.

Investment-grade credit spreads improved, while corporate bonds were mixed on Friday ahead of the long holiday weekend, market sources said.

Bank of America’s new 4% notes due 2025 were not active in the secondary market, a trader said.

JPMorgan Chase & Co.’s paper (A3/A/A+) stayed weak following the company’s $6.15 billion two-tranche offering on Thursday, according to market sources.

Valspar Corp.’s senior notes (Baa2/BBB/) brought on Thursday tightened in secondary trading, according to a trader.

Bonds were mixed over the session, with bank paper slightly weaker in sympathy with the widening in JPMorgan’s paper, sources said.

“Everything else might be unchanged to a little bit tighter,” a trader said. “The CDX is about a basis point tighter.”

The Markit CDX North American Investment Grade series 23 index firmed 1 bp to a spread of 72 bps on Friday.

BofA prices tight

Bank of America priced $2.5 billion of subordinated medium-term notes (Baa3/BBB+/), series L, due 2025 on Friday at Treasuries plus 225 bps, the tight end of price talk, according to an informed source.

BofA Merrill Lynch is the bookrunner.

Proceeds will be used for general corporate purposes.

Bank of America is a financial services company based in Charlotte, N.C.

L-Bank offering

L-Bank priced $1 billion of 0.625% notes due 2017 at mid-swaps plus 1 bp, according to an informed source.

The notes (Aaa/AAA/) priced at 99.8 to yield 0.725%.

The bookrunners were Barclays, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and UniCredit.

The financial services provider is based in Karlsruhe, Germany.

Monsanto new issue

Monsanto priced $365 million of 4.3% senior notes (//A-) due 2045 on Friday at par, according to an FWP filed with the Securities and Exchange Commission.

Proceeds from the sale will be used for general corporate purposes.

E. Sun Commercial Bank Ltd. and MasterLink Securities Corp. are the managers.

This offering is expected to be sold to professional institutional investors in Taiwan, with application to be made to list the notes on the Gre Tai Securities Market.

The company provides agricultural products for farmers and is based in St. Louis.

JPMorgan widens

JPMorgan Chase’s 2.25% notes due 2020 traded early Friday at 109 bps offered before widening to the 112 bps, 113 bps offered area late afternoon, a trader said.

The issue priced on Thursday in a $2.5 billion offering at Treasuries plus 110 bps.

JPMorgan Chase’s tranche of 3.125% notes due 2025 widened to 149 bps offered in trading over the morning, the trader said.

The company sold $2.5 billion of the notes at Treasuries plus 145 bps in Thursday’s offering.

JPMorgan’s existing paper also traded wider on Friday, a market source said.

The 3.625% senior notes due 2024 widened 5 bps to 147 bps offered, the source said.

JPMorgan sold $2 billion of the notes on May 6, 2014 at Treasuries plus 110 bps.

The financial services company is based in New York City.

Valspar firms

A small lot of Valspar’s 3.3% notes due 2025 were quoted tighter early Friday at 146 bps offered, a trader said.

The company sold $250 million of the 10-year notes on Thursday at Treasuries plus 155 bps.

Valspar’s tranche of 4.4% notes due 2045 were offered over the day at 201 bps, the trader said.

The issue priced in a $250 million offering on Thursday at Treasuries plus 205 bps.

Valspar is a coating and paint manufacturer based in Minneapolis.

Bank/brokerage CDS costs higher

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

Bank of America’s CDS costs were 3 bps higher at 77 bps bid, 82 bps offered. Citigroup Inc.’s CDS costs increased 4 bps to 88 bps bid, 93 bps offered. JPMorgan’s CDS costs were up 2 bps at 76 bps bid, 81 bps offered. Wells Fargo & Co.’s CDS costs ended 2 bps higher at 54 bps bid, 59 bps offered.

Merrill Lynch’s CDS costs were 3 bps higher at 80 bps bid, 84 bps offered. Morgan Stanley’s CDS costs ended 2 bps higher at 89 bps bid, 94 bps offered. Goldman Sachs Group, Inc.’s CDS costs rose 3 bps to 96 bps bid, 101 bps offered.

Paul Deckelman contributed to this review.

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