United Community sells fixed-to-floating notes; oil, energy bonds mostly better

By Aleesia Forni and Cristal Cody

Virginia Beach, July 31 – The investment-grade bond market closed a busy month of July on a quiet note on Friday.

The primary hosted United Community Banks Inc., which priced $85 million of senior fixed-to-floating notes.

This week’s roughly $22 billion of supply pushes the month of July’s high-grade total to a solid $155.34 billion, bringing the year-to-date total to more than $909 billion, according to Prospect News data.

Also this week, Lipper reported outflows of $1.262 billion from corporate investment-grade funds, bringing the year-to-date inflows to $28.84 billion.

This follows last week’s $889 million of inflows.

Players predict the pace to continue going forward, with around $25 billion to $30 billion of new investment-grade paper expected to price to kick off the month of August.

“It’s going to be a very busy month,” one market source noted.

Oil and energy bonds traded mostly tighter in Friday’s session after widening over the last part of July.

Exxon Mobil Corp.’s 2.709% notes due 2025 firmed 2 basis points.

Marathon Oil Corp.’s senior notes (Baa1/BBB/) were1 bp weaker to 3 bps better in the secondary market.

ConocoPhillips Co.’s senior notes (A1/A/) traded flat to 1 bp tighter on Friday.

The Markit CDX North American Investment Grade index firmed 1 bp over the day to a spread of 70 bps.

United Community new issue

United Community Banks priced $85 million of senior fixed-to-floating-rate notes (Kroll: BBB) in tranches due 2022 and 2027, according to two separate FWP filings with the Securities and Exchange Commission.

The sale includes $50 million of notes due Feb. 14, 2022 priced at par that carry a coupon of 5% from Aug. 14, 2015 to Aug. 14, 2020, then at a rate equal to Libor plus 381.4 bps.

There is also $35 million of notes due Feb. 14, 2027 priced at par that, from Aug. 14, 2015 to Aug. 14, 2025, carry a coupon at 5.5%. After that date, the coupon will be at a rate equal to Libor plus 371 bps.

U.S. Bancorp Investments Inc. is the bookrunner.

Proceeds will be used to fund the company’s acquisition of Palmetto Bancshares, Inc. and its subsidiary Palmetto Bank, and for general corporate purposes, which may include the potential repayment or redemption of trust preferred securities and other debt and acquisitions.

The bank holding company is based in Blairsville, Ga.

Exxon Mobil firms

Exxon Mobil’s 2.709% notes due 2025 firmed 2 bps to 88 bps bid on Friday, a market source said.

Exxon Mobil sold $1.75 billion of the notes (Aaa/AAA/) on March 3 at Treasuries plus 58 bps.

The oil and gas company is based in Irving, Texas.

Marathon Oil mixed

Marathon Oil’s 3.85% notes due 2025 eased 1 bp to 209 bps bid in secondary trading, a market source said.

The company sold $900 million of the notes on June 1 at Treasuries plus 170 bps.

Marathon Oil’s 5.2% bonds due 2045 firmed 3 bps during the session to 262 bps bid.

Marathon Oil sold $500 million of the bonds in the June 1 offering at a spread of Treasuries plus 225 bps.

The energy company is based in Houston.

ConocoPhillips flat to tighter

ConocoPhillips’ 2.2% notes due 2020 were unchanged at 74 bps bid, according to a market source.

ConocoPhillips sold $500 million of the notes on May 13 at Treasuries plus 65 bps.

The company’s 3.35% notes due 2025 firmed 1 bp to 135 bps bid.

ConocoPhillips priced $500 million of the notes in the May 13 offering at Treasuries plus 110 bps.

The energy company is based in Houston.

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