Schlumberger, Devon price notes amid oil price slide; Visa, Dollar General notes firm

By Aleesia Forni and Cristal Cody

New York, Dec. 10 – A pair of energy names, Schlumberger Holdings Corp. and Devon Energy Corp., priced new bonds to fund acquisitions on Thursday amid another bout of market volatility.

Oil prices were again under pressure during the session, sliding to near seven-year lows below $37 per barrel on concerns of a global supply glut.

In light of the rocky backdrop, Schlumberger faced some pushback from investors with its new $6 billion offering.

Tranches on the $6 billion five-part deal were each tightened by around 8 basis points compared to initial price thoughts.

The deal follows an earlier $1.5 billion trade by crude oil refiner Marathon Petroleum that saw the spread on its 30-year tranche widen by around 20 bps at the guidance stage, while pricing on the three- and five-year tranches was unchanged from initial thoughts.

Devon Energy, meantime, sold its $850 million offering at Treasuries plus 362.5 bps, inside initial price guidance set in the high-300 bps area over Treasuries.

Investment-grade bonds were mixed during the session, and credit spreads leaked wider.

Visa Inc.’s senior notes (A1/A+) that priced on Wednesday tightened in the secondary market.

Dollar General Corp.’s 4.15% senior notes due 2025 firmed 4 bps over the day.

Kraft Heinz Co.’s 3.95% notes due 2025 traded 3 bps weaker during the session.

The Markit CDX North American Investment Grade 25 index closed 2 bps wider at a spread of 88 bps.

Schlumberger taps market

Schlumberger Holdings priced on Thursday $6 billion of senior notes (A2/AA-) in five parts, a market source said.

The company garnered around $11.2 billion of orders for the deal, which was seen as lackluster, a market source noted, especially when compared to the massively oversubscribed books deals have seen in recent weeks.

Visa’s $16 billion offering of senior notes that priced in six parts on Wednesday attracted a book that was more than 2.8 times oversubscribed.

Schlumberger’s sale included a $500 million 1.9% tranche of two-year notes at 99.967 to yield 1.917%, or Treasuries plus 97 bps.

Pricing was at the tight side of guidance set in the Treasuries plus 100 bps area, tightened from talk in the Treasuries plus 105 bps area.

A $1.3 billion 2.35% tranche of three-year notes sold at 112 bps over Treasuries. Pricing was at 99.988 to yield 2.354%.

Guidance was in the Treasuries plus 115 bps area, and initial talk was set in the Treasuries plus 120 bps area.

Also, $1.6 billion of 3% five-year notes sold at 99.774 to yield 3.049% with a spread of Treasuries plus 137 bps.

The notes sold at the tight end of guidance set in the Treasuries plus 140 bps area and tighter than initial talk in the Treasuries plus 145 bps area.

There was an $850 million tranche of 3.625% seven-year notes sold at 99.865 to yield 3.647%, or Treasuries plus 162 bps.

Price guidance was in the Treasuries plus 165 bps area, having tightened from the Treasuries plus 170 bps area.

Finally, $1.75 billion 4% 10-year bonds priced at Treasuries plus 177 bps. Pricing was at 99.935 to yield 4.008%.

The tranche sold at the tight end of the Treasuries plus 180 bps area guidance. Initially, talk was in the Treasuries plus 185 bps area.

The proceeds will be used for general corporate purposes, including financing a portion of Schlumberger’s pending acquisition of Cameron International Corp.

Active bookrunners were BofA Merrill Lynch, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC. Passive bookrunners were Deutsche Bank Securities Inc., Goldman Sachs & Co., MUFG, RBC Capital Markets LLC and Societe Generale.

Houston-based Schlumberger Ltd. supplies technology, integrated project management and information solutions to customers in the oil and gas industries.

Devon new issue

Devon Energy sold $850 million of 5.85% 10-year senior notes (Baa1/BBB+/BBB+) at Treasuries plus 362.5 bps to fund the acquisition of Felix Energy Holdings, LLC, according to a market source and an FWP filing with the Securities and Exchange Commission.

Any remaining proceeds will be used for general corporate purposes.

The issue sold at 99.955 to yield 5.856%.

Pricing came inside initial price guidance set in the high-300 bps area over Treasuries.

BofA Merrill Lynch and Morgan Stanley are the active bookrunners. Passive bookrunners are Goldman Sachs and JPMorgan.

The oil, natural gas and natural gas liquids company is based in Oklahoma City.

Freddie Mac

Elsewhere in the primary, Freddie Mac priced $3.5 billion of 1% Reference Notes due Dec. 15, 2017 on Thursday at Treasuries plus 12.5 bps, according to a company news release.

Pricing was at 99.897 to yield 1.052%.

Nomura Securities, TD Securities and Wells Fargo Securities LLC are the lead managers.

The government-backed mortgage lender is based in McLean, Va.

Visa improves

Visa’s 3.5% notes due 2025 traded on Thursday at 95 bps bid, 92 bps offered in the secondary market, a trader said.

The company sold $4 billion of the notes on Wednesday at a spread of Treasuries plus 97 bps.

The tranche of 4.3% bonds due 2045 firmed to 129 bps bid, 125 bps offered in secondary trading.

Visa sold $3.5 billion of the bonds in Wednesday’s sale at Treasuries plus 132 bps.

San Francisco-based Visa operates a retail electronic payments network.

Dollar General firms

Dollar General’s 4.15% senior notes due 2025 firmed 4 bps over the session to 207 bps bid, a market source said.

Dollar General priced $500 million of the notes (Baa3/BBB) on Oct. 15 at Treasuries plus 215 bps.

The discount retailer is based in Goodlettsville, Tenn.

Kraft Heinz eases

Kraft Heinz’s 3.95% notes due 2025 eased 3 bps to head out at 148 bps bid, a market source said.

The notes (Baa3/BBB-/) were sold in a $2 billion offering on June 23 at 155 bps over Treasuries.

The food and beverage company is based in Pittsburgh and Northfield, Ill.

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