AstraZeneca does $6 billion deal; Canadian Railway, Burlington Northern trade mostly flat

By Aleesia Forni and Cristal Cody

Virginia Beach, Nov. 10 – Investment-grade primary activity quieted ahead of the Veterans Day holiday, with only two issuers bringing a combined $7 billion of bonds to market.

The session did see AstraZeneca plc sell $6 billion of senior notes in a five-part offering to help fund its acquisition of ZS Pharma.

All tranches of the new issue came at the tight end of price guidance and between 10 basis points and 15 bps inside initial thoughts.

Meanwhile, KfW priced a $1 billion global note at the tight end of talk.

Combined with Monday’s blowout session, this week has already hosted roughly $22.5 billion of new issuance, closing in on what was predicted to be a $25 billion to $30 billion week.

McDonald’s Corp.’s senior notes (A3/BBB+/BBB+) headed out flat to tighter after Standard & Poor’s downgraded the company’s rating by one notch based on a shareholder capital return plan.

Canadian Pacific Railway Co.’s 2.9% notes due 2025 traded about 1 bp softer with little response in the secondary market to reports the company has contacted Norfolk Southern Corp. for a possible acquisition.

Burlington Northern Santa Fe LLC’s debentures (A3/BBB+) traded flat to about 1 bp weaker over the session.

The Markit CDX North American Investment Grade 25 index ended mostly unchanged at a spread of 81 bps.

AstraZeneca sells five-parter

AstraZeneca sold $6 billion of senior notes (A2/A) in five parts during Tuesday’s session, according to an informed source.

The company priced $1 billion of 1.75% three-year notes at 55 bps over Treasuries.

Also, $400 million of three-year floaters priced at par to yield Libor plus 53 bps.

A $1.6 billion tranche of 2.375% five-year notes priced with a 75 bps spread over Treasuries.

The company also sold a $2 billion 3.375% 10-year note at Treasuries plus 115 bps.

Finally, $1 billion of 4.375% 30-year bonds sold at Treasuries plus 135 bps.

All tranches came at the tight side of price guidance.

Barclays, BofA Merrill Lynch, HSBC Securities (USA) LLC and Morgan Stanley & Co. LLC are running the books.

Proceeds will be used to fund the acquisition of ZS Pharma, to repay commercial paper and for general corporate purposes.

The biopharmaceutical company is based in London.

KfW global notes price

KfW sold $1 billion of 1.875% five-year global notes (Aaa/AAA/AAA) at mid-swaps plus 25 bps on Tuesday, according to a market source and an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.79 with a spread of 20.75 bps over Treasuries.

The issue sold at the tight end of the mid-swaps plus 27 bps area talk.

The bookrunners are BofA Merrill Lynch, Goldman Sachs & Co. and Morgan Stanley.

The German government-owned development bank is based in Frankfurt.

McDonald’s bonds mixed

McDonald’s 2.2% notes due 2020 firmed 3 bps to 83 bps bid in the secondary market, a source said.

The company sold $700 million of the notes on May 18 at Treasuries plus 70 bps.

McDonald’s 4.6% notes due 2045 were flat at 183 bps bid on Tuesday.

The bonds priced in a $600 million tranche in the May 18 sale at Treasuries plus 155 bps.

The fast food chain is based in Oak Brook, Ill.

Canadian Pacific eases

Canadian Pacific Railway’s 2.9% notes due 2025 eased about 1 bp to 126 bps bid on Tuesday, a market source said.

The company sold $700 million of the notes (Baa1/ BBB+/) on Jan. 28, 2015 at a spread of Treasuries plus 112.5 bps.

Canadian Pacific Railway is a railroad operator based in Calgary, Alta.

Burlington Northern eyed

Burlington Northern’s 3.65% debentures due 2025 were unchanged at 125 bps bid in the secondary market, a source said.

The company sold $350 million of the bonds on Aug. 13 at a spread of Treasuries plus 148 bps.

The tranche of 4.7% debentures due 2045 eased 1 bp to 166 bps bid.

Burlington Northern priced the $650 million tranche in the Aug. 13 sale at Treasuries plus 185 bps.

The holding company for railroad transportation subsidiaries is based in Fort Worth, Texas.

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