Primary springs to life with AIG, BNG, Westpac deals; spreads continue to widen in secondary

By Aleesia Forni

Virginia Beach, July 7 – American International Group Inc., Bank Nederlandse Gemeenten NV, Westpac Banking Corp. and CBS Corp. sold bonds on Tuesday, ending the primary drought the investment-grade market has seen in recent sessions.

AIG nabbed an order book that was more than two times oversubscribed for its new $2.5 billion three-tranche offering.

Also on Tuesday, Bank Nederlandse Gemeenten sold an upsized $850 million offering of two-year floaters in line with price talk.

Westpac Banking and CBS were each in the market with upsized $800 million offerings.

The session also hosted Florida Gas Transmission Co. LLC, which priced $500 million of 10-year senior notes around 10 basis points tight of initial talk.

More than $5.4 billion of supply priced during the trading day in the primary’s first signs of life since June 26.

Meanwhile, spreads in the high-grade secondary market continued to leak wider on Tuesday.

The Markit CDX North American Investment Grade series 23 index was flat at a spread of 71 bps.

Bank and financial paper was about 1 bp to 2 bps wider overall on the day, a market source said.

In the secondary market, Bank of America Corp.’s 4% notes due 2025 widened 6 bps, while JPMorgan Chase & Co.’s 3.125% notes due 2025 eased 10 bps, and Morgan Stanley’s 2.65% notes due 2020 widened 8 bps in trading.

AIG new issue

American International Group sold $2.5 billion of senior notes (Baa1/A-/BBB+) in three tranches on Tuesday, all at the tight end of price guidance, according to an informed source.

The sale includes $1.25 billion of 3.75% 10-year notes priced at 99.653 to yield 3.792%, or Treasuries plus 155 bps.

A $500 million tranche of 4.7% 20-year bonds priced at 99.397 to yield 4.747%. The notes sold with a spread of Treasuries plus 170 bps.

Finally, $750 million of 4.8% 30-year notes sold at Treasuries plus 180 bps. Pricing was at 99.261 to yield 4.847%.

BNP Paribas Securities Corp., BofA Merrill Lynch, U.S. Bancorp Investments Inc., HSBC Securities (USA) Inc., Lloyds Securities, Mizuho Securities USA Inc., RBC Capital Markets LLC and RBS Securities Inc. were the bookrunners.

Proceeds will be used to fund a tender offer.

The insurance company is based in New York City.

BNG upsizes

Bank Nederlandse Gemeenten priced an upsized $850 million offering of two-year floating-rate notes (Aaa/AA+) in line with price talk at par to yield Libor plus 7 bps on Tuesday, according to a market source.

BofA Merrill Lynch and TD Securities were the bookrunners.

The local government funding agency is based in the Hague, the Netherlands.

Westpac covered bond

In other primary happenings, Westpac Banking sold an upsized $800 million floating-rate covered bond (Aaa/AAA) due 2018 at par to yield Libor plus 30 bps on Tuesday, a market source said.

The bond sold in line with price talk.

HSBC Securities and RBC Capital Markets were the bookrunners for the Rule 144A, Regulation S deal.

The banking organization is based in Sydney, Australia.

CBS brings $800 million

CBS was also in Tuesday’s market with an upsized $800 million offering of 4% 10.5-year senior notes that priced at Treasuries plus 200 bps, according to an FWP filed with the Securities and Exchange Commission.

The notes (Baa2/BBB/BBB), which are guaranteed by CBS Operations Inc., priced at 99.188 to yield 4.215%.

BNP Paribas Securities, BofA Merrill Lynch, Mizuho Securities, Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC and RBC Capital Markets were the joint bookrunners for the sale.

The New York-based broadcasting company plans to use proceeds from the offering for general corporate purposes.

Florida Gas prices tight

Florida Gas Transmission priced $500 million of 4.35% 10-year senior notes on Tuesday at Treasuries plus 215 bps, a market source said.

Pricing was at 99.775 to yield 4.378%.

The notes (Baa2/BBB) sold at the tight end of guidance set in the Treasuries plus 220 bps area. Initial talk was set in the area of 225 bps over Treasuries.

J.P. Morgan Securities LLC, Mizuho Securities and UBS Securities LLC are the bookrunners for the Rule 144A and Regulation S deal.

The Houston-based natural gas pipeline company plans to use the proceeds to repay debt and for general corporate purposes.

Bank of America eases

In the secondary market, Bank of America’s 4% notes due 2025 eased 6 bps to 200 bps bid over the session, a market source said.

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.

JPMorgan soft

JPMorgan Chase’s 3.125% notes due 2025 headed out 10 bps weaker at 124 bps bid on Tuesday, according to a market source.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Jan. 16 at Treasuries plus 145 bps.

The financial services company is based in New York City.

Morgan Stanley widens

Morgan Stanley’s 2.65% notes due 2020 widened 8 bps to 107 bps offered in the secondary market, a source said.

Morgan Stanley sold $2.5 billion of the notes on Jan. 22 at Treasuries plus 130 bps.

The financial services company is based in New York City.

Bank/broker CDSs flat to higher

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

Bank of America’s CDS costs rose 1 bp to 73 bps bid, 76 bps offered. Citigroup Inc.’s CDS costs were flat at 83 bps bid, 87 bps offered. JPMorgan Chase’s CDS costs were also flat at 71 bps bid, 75 bps offered. Wells Fargo & Co.’s CDS costs remained at 53 bps bid, 58 bps offered.

Merrill Lynch’s CDS costs were 1 bp higher at 76 bps bid, 79 bps offered. Morgan Stanley’s CDS costs ended flat at 83 bps bid, 87 bps offered. Goldman Sachs Group, Inc.’s CDS costs were flat at 92 bps bid, 95 bps offered.

Paul Deckelman contributed to this review.

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