FedEx, Avnet, El Paso Electric price; light deal volume forecast; AT&T firms; Cisco eases

By Cristal Cody

Eureka Springs, Ark., March 21 – FedEx Corp., Avnet, Inc. and El Paso Electric Co. priced $2.7 billion of investment-grade bonds on Monday.

FedEx sold $2 billion of notes in two tranches in a deal that was about five times oversubscribed, a source said.

Avnet tapped the primary market with a $550 million offering of 10-year notes.

El Paso Electric priced a $150 million add-on to its 5% senior notes due Dec. 1, 2044.

Primary action over the shortened holiday week is expected to be front-loaded with about $10 billion of volume, a source said.

“We could see more trades come forward tomorrow and maybe Wednesday,” the source said.

In the secondary market, AT&T Inc.’s 4.125% notes due 2026 firmed 2 basis points.

Cisco Systems, Inc.’s 2.95% senior notes due 2026 traded 2 bps weaker.

Time Warner Inc.’s 3.875% notes due 2026 were flat over the day.

The new 26 series Markit CDX North American Investment Grade index closed 7 bps tighter at a spread of 78 bps.

FedEx prices $2 billion

FedEx sold $2 billion of notes in two tranches on Monday, according to a market source and an FWP filing with the Securities and Exchange Commission.

The company sold $750 million of 3.25% notes due April 1, 2026 with a spread of 135 bps over Treasuries. The 10-year notes priced at 99.796 to yield 3.274%.

FedEx also priced $1.25 billion of 4.55% notes due April 1, 2046 at 99.561 to yield 4.577% and a spread of 185 bps over Treasuries.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, BNP Paribas Securities Corp., BofA Merrill Lynch, Mizuho Securities USA Inc., Scotia Capital (USA) Inc., SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC were the lead managers.

Proceeds will be used for working capital and general corporate purposes, which includes the redemption or prepayment and defeasance of the underlying debt of certain leveraged operating leases, including the redemption of $245 million outstanding of tax-exempt Alliance Airport, Inc. 4.85% term bonds due 2021 and prepayment and defeasance of $238 million outstanding of tax-exempt Indianapolis Airport Authority 5.1% term bonds due 2017, and for share repurchases.

FedEx is a Memphis, Tenn.-based package and freight transportation company.

El Paso Electric reopens bonds

El Paso Electric sold $150 million in an add-on to its 5% senior notes due Dec. 1, 2044 at 104.701 to yield 4.697% on Monday, according to an FWP filing with the SEC.

The notes (Baa1/BBB) priced at a spread of 200 bps over Treasuries.

Wells Fargo Securities LLC and U.S. Bancorp Investments Inc. were the bookrunners.

The notes originally priced in a $150 million offering on Nov. 24, 2014 at 99.645 to yield 5.023% and a spread of 200 bps over Treasuries. The total outstanding is $300 million.

Proceeds from the deal will be used for general corporate purposes, which may include funding capital expenditures and repaying outstanding short-term debt.

El Paso Electric is an electric utility based in El Paso, Texas.

Avnet prices $550 million

Avnet sold $550 million of 4.625% 10-year notes at 99.276 to yield 4.716% on Monday, according to an FWP filing with the SEC.

The notes due April 15, 2026 (Baa3/BBB-) priced with a spread of 280 bps over Treasuries.

JPMorgan, BofA Merrill Lynch and Mitsubishi UFJ Securities (USA), Inc. were the bookrunners.

Proceeds will be used for general corporate purposes, which may include the repayment or redemption of $300 million outstanding 6.625% notes due Sept. 15, 2016 and debt owed under its senior revolving credit facility and accounts receivable securitization program.

Avnet is a Phoenix-based distributor of electronic components, enterprise computer and storage products and IT solutions and services.

AT&T stronger

AT&T’s 4.125% notes due 2026 tightened 2 bps 163 bps bid in secondary trading on Monday, a market source said.

The company sold $1.75 billion of the notes (Baa1/BBB+/A-) on Jan. 29 at 220 bps plus Treasuries.

AT&T is a Dallas-based telecommunications company.

Cisco eases

Cisco Systems’ 2.95% notes due 2026 eased 2 bps during the session to 80 bps bid, according to a market source.

The company sold $750 million of the notes (A1/AA-) on Feb. 22 at 120 bps over Treasuries.

San Jose, Calif.-based Cisco produces internet protocol-based networking and other communications and information technology products.

Time Warner stable

Time Warner’s 3.875% notes due 2026 headed out unchanged at 164 bps bid, a source said.

Time Warner sold $600 million of the notes (Baa2/BBB/ BBB+) on Nov. 17 at a spread of Treasuries plus 162.5 bps.

The media company is based in New York.

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