Exxon Mobil, Bank of America, SunTrust pack deal session; Kellogg strong; credit spreads firm

By Cristal Cody

Tupelo, Miss., Feb. 29 – Investment-grade primary action stayed strong over the last session of February, led by Exxon Mobil Corp.’s $12 billion eight-tranche offering of notes on Monday.

During the session, Bank of America Corp., Hyatt Hotels Corp., SunTrust Banks, Inc., Public Service Electric & Gas Co. and Indiana Michigan Power Co. also priced new bonds.

Credit spreads continued to improve over the day after tightening 2 basis points on Friday. The Markit CDX North American Investment Grade index firmed 3 bps to a spread of 107 bps.

In the secondary market, Kellogg Co.’s senior notes (Baa2/BBB/BBB) improved from Friday.

Exxon Mobil prices $12 billion

Exxon Mobil sold $12 billion of notes (Aaa/AAA) in eight tranches on Monday, according to a market source.

The company priced $750 million of floating-rate notes due March 1, 2018 at three-month Libor plus 60 bps.

Exxon Mobil sold a $1 billion three-year fixed-rate tranche of 1.439% notes with a 65 bps over Treasuries spread.

The company printed a $250 million tranche of floating-rate notes due March 1, 2019 at Libor plus 78 bps.

Exxon Mobil sold a five-year fixed-rate tranche of 1.708% notes with a spread of 80 bps over Treasuries.

The company priced $2.5 billion of 2.222% notes due March 1, 2021 with a spread of 100 bps over Treasuries.

A seven-year tranche of 2.726% notes priced with a spread of 120 bps plus Treasuries.

The company sold $2.5 billion of 3.043% 10-year notes with a spread of 130 bps over Treasuries.

In the final tranche, Exxon Mobil priced $2.5 billion of 4.114% 30-year bonds at 150 bps plus Treasuries.

BofA Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were the bookrunners.

Proceeds will be used for general corporate purposes.

Exxon Mobil is an energy company based in Irving, Texas.

SunTrust prints $1 billion

SunTrust Banks sold $1 billion of 2.9% senior notes due March 3, 2021 with a spread of 173 bps over Treasuries on Monday, according to a market source.

The bank dropped an intended offering of floating-rate notes.

SunTrust Robinson Humphrey, Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC were the lead managers.

Proceeds will be used to redeem the bank’s $1 billion outstanding of 3.6% senior notes due 2016 and for general corporate purposes.

Atlanta-based SunTrust Banks is a financial holding company for SunTrust Bank.

BofA sells $2 billion

Bank of America sold $2 billion of 4.4% 10-year medium-term subordinated notes with a spread of 270 bps over Treasuries on Monday, according to a market source.

The series L notes are due March 3, 2026.

BofA Merrill Lynch was the bookrunner.

Proceeds will be used for general corporate purposes.

The financial services company is based in Charlotte, N.C.

PSE&G sells two tranches

Public Service Electric & Gas sold $850 million in two tranches of series K secured medium-term notes on Monday, according to a market source and FWP filings with the Securities and Exchange Commission.

The company sold $300 million of 1.9% notes due March 15, 2021 at 99.842 with a spread of 70 bps over Treasuries.

In the second tranche, the utility priced $550 million of 3.8% notes due March 1, 2046 at 99.556 with a spread of 120 bps plus Treasuries.

The bookrunners were BNP Paribas Securities Corp., Mitsubishi UFJ Securities (USA), Inc., Mizuho Securities USA Inc., Scotia Capital (USA) Inc., CIBC World Markets Corp., Citigroup Global Markets Inc. and TD Securities (USA) LLC.

Proceeds will be used for general corporate purposes.

PSE&G is a Newark, N.J.-based gas and electric utility.

Hyatt taps market

Hyatt Hotels priced $400 million of 4.85% senior notes due March 15, 2026 with a spread of 312.5 bps over Treasuries on Monday, according to the company and a market source.

J.P. Morgan Securities LLC, Goldman, Sachs & Co. and Deutsche Bank Securities Inc. were the bookrunners.

Proceeds will be used for general corporate purposes, which may include the redemption of the company’s 3.875% senior notes due 2016, repayment of secured debt, share repurchases, acquisitions and other general corporate purposes.

Chicago-based Hyatt Hotels operates full service hotels, resorts and residential and vacation properties.

Indiana Michigan Power prices

Indiana Michigan Power sold $400 million of 4.55% 30-year senior notes at 99.657 to yield 4.571% on Monday, according to an FWP filing with the Securities and Exchange Commission.

The series K notes due March 15, 2046 (Baa1/BBB) priced with a spread of 195 bps over Treasuries.

BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC, Goldman, Sachs & Co. and RBC Capital Markets, LLC were the bookrunners.

The proceeds will be used to repay outstanding advances from affiliates and for general corporate purposes.

Fort Wayne, Ind.-based Indiana Michigan Power is an operating unit of American Electric Power Co., Inc.

Kellogg trades

In the secondary market earlier on Monday, Kellogg’s 3.25% notes due 2026, priced on Thursday in a $750 million tranche at Treasuries plus 157 bps, tightened about 10 bps from Friday to 142 bps offered, a market source said.

Kellogg’s 4.5% bonds due 2046 traded nearly 10 bps better from Friday at 186 bps offered in early secondary trading.

The company sold $650 million of the notes on Thursday at a spread of Treasuries plus 200 bps.

The maker of cereal and convenience foods is based in Battle Creek, Mich.

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