Lockheed Martin prices $7 billion notes for acquisition financing; Citigroup bonds ease

By Aleesia Forni

New York, Nov. 16 – Lockheed Martin Corp. joined a pair of utilities in the investment-grade bond primary market on Monday.

A reported $8.6 billion of supply priced during a strong session for investment-grade bonds despite broader market weakness.

Lockheed Martin attracted an order book that was more than four times oversubscribed for its new $7 billion deal, which will be used to repay $6 billion of debt issued to help fund the acquisition of Sikorsky Aircraft Corp.

Tranches of the six-part sale sold more than 20 basis points tighter than initial price thoughts.

Also on Monday, Duke Energy Corp. sold $1 billion of senior notes in two tranches, while Florida Power & Light Co. priced $600 million of first mortgage bonds at the tight end of talk.

Sources are calling for around $25 billion to $30 billion to price during the final full week of the month.

In the secondary market, Citigroup Inc.’s 4.45% subordinated notes due 2027 traded slightly wider.

The Markit CDX North American Investment Grade 25 index leaked 1 basis point wider over the morning to a spread of 84 bps.

Lockheed sells $7 billion

Lockheed Martin priced a $7 billion six-tranche offering of senior notes (Baa1/BBB+/BBB+) on Monday, according to a market source.

A $750 million 1.85% tranche of three-year notes sold at 99.829 to yield 1.909%, or Treasuries plus 72 bps.

Pricing came at the tight side of the Treasuries plus 75 bps area guidance and tighter than the Treasuries plus 95 bps area talk.

A $1.25 billion 2.5% tranche of five-year notes sold at 99.641 to yield 2.577% with a spread of Treasuries plus 92 bps.

Guidance was set in the Treasuries plus 95 bps area, having tightened from talk in the Treasuries plus 115 bps area.

And $500 million of 3.1% notes due 2023 priced with a 117 bps spread over Treasuries. The note sold at 99.361 to yield 3.2%.

The notes were guided in the Treasuries plus 120 bps area. Initially, talk was in the Treasuries plus 140 bps area.

A $2 billion 3.55% tranche of notes due 2026 sold at 99.228 to yield 3.641%, or Treasuries plus 137 bps.

Pricing was at the tight side of the Treasuries plus 140 bps area guidance. The notes were tightened from the Treasuries plus 160 bps area.

Also, $500 million of 4.5% notes due 2036 sold at 98.124 to yield 4.643% with a spread of Treasuries plus 157 bps.

Price guidance was set in the Treasuries plus 160 bps area following talk in the Treasuries plus 180 bps area.

Finally, $2 billion of 4.7% notes due 2046 sold at 98.519 with a yield of 4.793%. The notes sold at Treasuries plus 172 bps.

Pricing was at the tight end of the Treasuries plus 175 bps area guidance, having firmed from the Treasuries plus 195 bps area.

Citigroup Global Markets Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, BofA Merrill Lynch, Credit Agricole, Mizuho Securities and Wells Fargo Securities LLC are the bookrunners.

Proceeds will be used to repay the $6 billion of borrowings under a 364-day revolving credit facility used to help fund the acquisition of Sikorsky Aircraft Corp. and for general corporate purposes.

The global security company is based in Bethesda, Md.

Duke Energy two-parter

Duke Energy sold a $1 billion two-part offering of senior notes (A3/BBB+/BBB+) in new and reopened tranches on Monday, according to a market source and an FWP filed with the Securities and Exchange Commission.

The company sold a $400 million tap of its existing 3.75% notes due April 15, 2024 at Treasuries plus 135 bps, or 100.926 to yield 3.618%.

The original $600 million issue priced at Treasuries plus 100 bps on April 1, 2015.

A second $600 million 4.8% tranche of notes maturing on Dec. 15, 2045 sold at Treasuries plus 175 bps. Pricing was at 99.664 to yield 4.821%.

Both tranches sold in line with initial price thoughts.

JPMorgan, Morgan Stanley, MUFG and Scotia Capital (USA) Inc. are the bookrunners.

Proceeds will be used to repay outstanding commercial paper, to repay at maturity Progress Energy Inc.’s $300 million of 5.625% senior notes due Jan. 15, 2016 and for general corporate purposes.

The diversified energy company is based in Charlotte, N.C.

Florida Power taps market

Florida Power & Light priced $600 million of 3.125% 10-year first mortgage bonds (Aa2/A/AA-) on Monday with a spread of Treasuries plus 87.5 bps, according to an FWP filing with the Securities and Exchange Commission.

Pricing was at the tight end of talk.

The notes sold at 99.837 to yield 3.144%.

The bookrunners were BNP Paribas Securities Corp., JPMorgan, MUFG, Scotia Capital, TD Securities LLC and U.S. Bancorp Investments Inc.

Proceeds from the sale will be added to the company’s general funds, which will be used for corporate purposes, including to repay short-term borrowings, to repay, redeem or repurchase outstanding debt and to finance the acquisition or construction of additional electric facilities and capital improvements to and maintenance of existing facilities.

Florida Power & Light is a Juno Beach, Fla.-based electric utility.

LegacyTexas on deck

In forward calendar news, LegacyTexas Financial Group Inc. announced plans to price fixed-to-floating rate subordinated notes due November 2025, according to a 424B2 filed with the SEC.

Sandler O’Neill + Partners LP and U.S. Bancorp are the lead managers.

The Plano, Texas-based holding company for LegacyTexas Bank plans to use the proceeds from this offering for general corporate purposes, potential strategic acquisitions and investments in LegacyTexas Bank as regulatory capital.

Citigroup improves

Citigroup’s 4.45% notes due 2027 traded 3 bps wider at 229 bps bid, a market source said.

Citigroup sold $1.5 billion of the notes (Baa3/BBB+/A-) in a reopening on Oct. 23 at a spread of 233 bps over Treasuries. The issue originally priced in a $2 billion offering on Sept. 23 at Treasuries plus 235 bps.

The financial services company is based in New York.

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