Valero prices; Nabors sells split-rated notes; Valero tightens; Citigroup, AT&T notes soften

By Cristal Cody

Eureka Springs, Ark., Dec. 2 – Two issuers tapped the primary market on Friday in an otherwise mostly quiet session, sources report.

Valero Energy Partners LP brought a $500 million offering of 10-year senior notes on the tight side of guidance.

Nabors Industries Inc. priced $600 million of split-rated notes (Ba2/BBB-/BBB-) at par to yield 5½% and a spread of 339 basis points over Treasuries.

Primary action is expected to slow to about $15 billion to $20 billion of volume in the week ahead, which is likely the last week of significant issuance for 2016, a source said.

The Markit CDX North American Investment Grade index firmed about 1 bp to close the day at a spread of 73 bps.

Bonds were mixed in secondary trading over the day.

Valero Energy’s notes were seen trading 5 bps tighter in aftermarket trading on Friday.

Citigroup, Inc.’s 2.9% notes due 2021 priced in the previous session traded 1 bp softer on the bid side.

Time Warner Inc.’s new 3.8% notes due 2027 remained tight on Friday.

Bonds from AT&T Inc., which announced plans to acquire Time Warner in October, were mixed. The company’s 4.125% notes due 2026 softened about 1 bp during the session.

Valero sells $500 million

Valero Energy Partners priced a $500 million offering of 4.375% 10-year senior notes on Friday at 99.959 to yield 4.38%, according to a market source and an FWP filing with the Securities and Exchange Commission.

The notes due Dec. 15, 2026 (Baa3/BBB-/BBB-) priced with a spread of 200 bps plus Treasuries.

J.P. Morgan Securities LLC, BofA Merrill Lynch, Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC, PNC Capital Markets LLC, SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey Inc. and U.S. Bancorp Investments Inc. were the bookrunners.

Proceeds will be used for general partnership purposes.

The notes tightened to 195 bps bid in the secondary market, a source said.

San Antonio-based Valero is an oil refinery owner and operator.

Citi paper eases

Citigroup’s 2.9% notes due 2021 eased to 106 bps bid, 104 bps offered in secondary trading on Friday afternoon, according to a market source.

Citigroup sold $2.25 billion of the five-year notes (Baa1/BBB+/A) on Thursday at a spread of 105 bps over Treasuries.

The financial services company is based in New York.

Time Warner holds tight

Time Warner’s 3.8% notes due 2027 traded on Friday at 150 bps bid, 146 bps offered in the secondary market, according to a source.

Time Warner sold $1.5 billion of the notes (Baa2/BBB-/BBB+) on Tuesday at a spread of 155 bps over Treasuries.

The media company is based in New York.

AT&T softens

AT&T’s 4.125% notes due 2026 eased about 1 bp on Friday to head out at 162 bps bid, according to a market source.

AT&T priced a $900 million add-on to the bonds on May 3, 2016 at Treasuries plus 150 bps. The notes originally were sold on Jan. 29, 2016 in a $1.5 billion offering at 195 bps over Treasuries.

The telecommunications company is based in Dallas.

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