Primary pauses amidst FOMC minutes release; Bank of America paper, Apple tightens

By Aleesia Forni and Cristal Cody

Virginia Beach, March 18 – TransCanada PipeLines Ltd. priced an offering of bonds on Wednesday, as other potential issuers kept to the sidelines amidst the release of the Federal Open Market Committee statement.

TransCanada came to market with a $750 million offering of 4.6% senior notes due 2045.

Away from TransCanada’s deal, the primary market was unsurprisingly empty of new issuance as the market focused on the release of the Federal Reserve’s statement following the conclusion of its two-day policy meeting.

In its statement, The Fed removed language that it would be “patient” in raising interest rates, adding that a rates hike would be appropriate “when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.”

Sources expect another bout of supply before the week’s close following the statement, though the total is unlikely to hit earlier predictions of $25 billion to $30 billion.

So far this week, the investment-grade bond market has hosted $11.9 billion of new issuance, bringing March’s total supply so far to a staggering $124 billion.

High-grade bonds were mixed on the day while credit spreads improved following the Fed’s statement, sources said.

Bank of America Corp.’s 4% notes due 2025 tightened 5 basis points in the secondary market.

Goldman Sachs Group Inc.’s 3.5% senior notes due 2025 traded flat.

Apple Inc.’s 2.5% notes due 2025 firmed 3 bps.

Microsoft Corp.’s 2.7% notes due 2025 widened 4 bps during the session.

The Markit CDX North American Investment Grade series 23 index firmed 1 bp to a spread of 64 bps.

TransCanada PipeLines offering

TransCanada sold $750 million of 4.6% 30-year senior notes (A3/A-/) on Wednesday at par, according to a filing with the Securities and Exchange Commission.

E-Sun Commercial Bank Ltd. was the bookrunner.

An application has been made to the Taipei Exchange, formerly known as GreTai Securities Market, for listing of the notes.

Proceeds will be used for general corporate purposes and to repay short-term debt.

The natural gas and oil pipeline and storage company is based in Calgary, Alta.

Bank of America improves

Bank of America’s 4% notes due 2025 tightened 5 bps to 194 bps bid in Wednesday’s session, according to a market source.

The company sold $2.5 billion of the notes (Baa2/A-/A) on Jan. 16 at Treasuries plus 225 bps.

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

Goldman unchanged

Goldman Sachs’ 3.5% notes due 2025 were flat at 149 bps bid in afternoon trading, according to a source.

Goldman sold $1.7 billion of the notes (Baa1/A-/A) on Jan. 20 at Treasuries plus 170 bps.

The financial services company is based in New York City.

Apple firms

Apple’s 2.5% notes due 2025 firmed 3 bps to 81 bps bid, a source said.

Apple sold $1.5 billion of the notes (Aa1/AA+/) on Feb. 2 at Treasuries plus 85 bps.

The computer and mobile communications device company is based in Cupertino, Calif.

Microsoft eases

Microsoft’s 2.7% notes due 2025 eased 4 bps to 73 bps bid on Wednesday, a market source said.

Microsoft sold $2.25 billion of the notes (Aaa/AAA/) on Feb. 9 at Treasuries plus 75 bps.

The computer software company is based in Redmond, Wash.

Bank/broker CDS costs lower

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

Bank of America’s CDS costs declined 2 bps to 64 bps bid, 67 bps offered. Citigroup Inc.’s CDS costs were 1 bp lower at 72 bps bid, 75 bps offered. JPMorgan Chase & Co.’s CDS costs fell 2 bps to 62 bps bid, 65 bps offered. Wells Fargo & Co.’s CDS costs were down 2 bps to 39 bps bid, 42 bps offered.

Merrill Lynch’s CDS costs were flat at 68 bps bid, 72 bps offered. Morgan Stanley’s CDS costs fell were also flat at 72 bps bid, 77 bps offered. Goldman Sachs Group’s CDS were unchanged at 81 bps bid, 84 bps offered.

Paul Deckelman contributed to this review.

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