Cisco Systems, British American Tobacco price; Bank of America firms; AT&T eases

By Aleesia Forni and Cristal Cody

Virginia Beach, June 10 – Cisco Systems, Inc. and B.A.T. International Finance plc were each in the market with five-part new issues on Wednesday during a stronger session for investment-grade bonds.

Tranches of Cisco Systems’ $5 billion new issue sold between 10 basis points to 20 bps tight of initial price thoughts.

British American Tobacco sold all five parts of its new $4.5 billion offering of notes at the tight end of guidance.

Wednesday’s session also hosted a new issue from Germany’s Erste Abwicklungsanstalt.

The agency priced a $500 million offering of two-year notes at the tight end of price talk.

The slower primary pace on Wednesday follows a busy start to the week and brings its total supply to more than $32.2 billion, already surpassing what was predicted to be a $25 billion to $30 billion week.

Bank and financial paper was mixed in secondary trading.

Bank of America Corp.’s 4% notes due 2025 firmed 5 bps over the session.

Citigroup Inc.’s 3.3% senior notes due 2025 widened 5 bps.

AT&T Inc.’s 3.4% notes due 2025 eased 3 bps in afternoon trading.

Verizon Communications Inc.’s bonds, which have widened since the company announced in May it will acquire AOL Inc. for $4.4 billion, were unchanged.

Credit spreads improved over the session after steadily leaking wider since late in the previous week.

The Markit CDX North American Investment Grade series 23 index firmed 2 bps to a spread of 66 bps on Wednesday.

Cisco Systems prices tight

Cisco Systems priced $5 billion of senior notes (A1/AA-/) in five tranches on Wednesday, according to an informed source.

The company offered $1.6 billion of 1.65% three-year notes with a spread of Treasuries plus 55 bps.

Pricing was at 99.983 to yield 1.656%.

The notes were guided in the Treasuries plus 60 bps area, having tightened from initial talk set in the Treasuries plus 65 bps area.

A $900 million issue of three-year floating-rate notes priced at par to yield Libor plus 31 bps.

The notes sold at the tight end of the Libor plus 36 bps area guidance. Initial talk was set in the Libor plus 44 bps area.

A $1.5 billion tranche of 2.45% five-year notes priced at 99.865 to yield 2.479%, or Treasuries plus 70 bps.

Pricing was at the tight end of guidance set in the Treasuries plus 75 bps area, having tightened from the Treasuries plus 80 bps area initial talk.

There was also a $500 million 3% seven-year note priced at Treasuries plus 88 bps. The notes sold at 99.463 to yield 3.086%.

Guidance was set in the Treasuries plus 90 bps area, which firmed from initial talk set in the Treasuries plus 105 bps area.

Finally, $500 million of 3.5% 10-year notes priced at 99.733 to yield 3.532%, or Treasuries plus 105 bps.

The notes sold at the tight end of the Treasuries plus 110 bps area price guidance. Initial talk was set in the area of Treasuries plus 125 bps.

The joint bookrunners are Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., Morgan Stanley & Co. LLC, Wells Fargo Securities LLC, BofA Merrill Lynch and J.P. Morgan Securities LLC.

Proceeds will be used for general corporate purposes, including to return capital to shareholders through the repurchase of shares of common stock and cash dividends.

Based in San Jose, Calif., Cisco produces internet protocol-based networking and other communications and information technology products.

B.A.T. International new issue

Also on Wednesday, B.A.T. International Finance priced $4.5 billion of senior notes in five tranches, a market source said.

The issuer priced $750 million of 1.85% three-year notes at Treasuries plus 75 bps, and a $500 million three-year floating-rate note priced at par to yield Libor plus 51 bps.

There was also a $1.25 billion 2.75% five-year note priced with a spread of Treasuries plus 100 bps, $500 million of 3.5% seven-year notes at 130 bps over Treasuries, and a $1.5 billion tranche of 3.95% 10-year notes priced at Treasuries plus 150 bps.

All tranches sold at the tight end of price guidance.

The bookrunners were Citigroup Global Markets, Deutsche Bank Securities Inc., HSBC Securities and JPMorgan.

The tobacco company is based in London.

EAA prices

Rounding out the day’s new deals, Germany’s Erste Abwicklungsanstalt priced on Wednesday a $500 million issue of 1% two-year notes (Aa1/AA-/AAA) at mid-swaps plus 7 bps, according to a market source.

The notes sold at the tight end of price talk set in the mid-swaps plus 8 bps area.

Pricing was at 99.896 to yield 1.053%.

Barclays, BofA Merrill Lynch, Daiwa Securities and HSBC Securities were the joint bookrunners.

The public law agency is charged with winding up portfolios transferred to it and is based in Dusseldorf.

Bank of America firms

Bank of America’s 4% notes due 2025 headed out 5 bps better at 194 bps bid, according to a market source.

Bank of America 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.

Citigroup weaker

Citigroup’s 3.3% senior notes due 2025 traded 5 bps wider at 143 bps bid, a market source said.

Citigroup sold $1.5 billion of the notes (Baa2/A-/A) on April 22 at Treasuries plus 135 bps.

The investment bank is based in New York.

AT&T widens

AT&T’s 3.4% notes due 2025 eased 3 bps to 165 bps bid on Wednesday, according to a market source.

The company sold $5 billion of the notes (/BBB+/A-) on April 23 at a spread of Treasuries plus 150 bps.

The telecommunications company is based in Dallas.

Verizon unchanged

Verizon’s 3.5% notes due 2024 were unchanged at 148 bps bid, according to a market source.

The company sold $2.5 billion of the notes (Baa1/BBB+/A-) on Oct. 22, 2014 at Treasuries plus 135 bps.

The telecommunications company is based in New York City.

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