Wells Fargo, Estee Lauder, Discover, GATX tap high-grade primary; credit spreads soften

By Cristal Cody

Tupelo, Miss., Feb. 6 – High-grade primary action on Monday included bond deals in the banking and financial services space as well other sectors.

Wells Fargo & Co. sold $2 billion of five-year senior floating-rate notes.

Estee Lauder Cos. Inc. brought $1.5 billion of senior notes in three tranches to the primary market during the session.

Discover Financial Services priced $1 billion of 10-year split-rated senior notes.

Also, IHS Markit Ltd. sold $500 million of eight-year split-rated senior notes. The London-based business information and analytics company priced the eight-year notes in line with guidance of a 4.75% coupon, according to a market source and a news release.

BofA Merrill Lynch, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC were the bookrunners.

In other new issuance, First Republic Bank priced $400 million of 30-year subordinated notes.

GATX Corp. sold $300 million of 10-year senior notes on Monday.

About $20 billion to $30 billion of deal volume is expected over the week by market sources.

The Markit CDX North American Investment Grade index closed the day about 1 basis point softer at a spread of 65 bps.

Apple Inc.’s three-year fixed- and floating-rate notes (Aa1/AA+/) priced on Thursday were quoted about 1 bp softer earlier in the session.

Wells Fargo floaters

Wells Fargo sold $2 billion of five-year senior floating-rate notes (A2/A/AA-) on Monday at par to yield Libor plus 93 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

The notes priced tighter than initial price guidance in the Libor plus 95 bps to100 bps area.

Wells Fargo Securities was the bookrunner.

Proceeds will be used to the company’s general funds and will be available for general corporate purposes.

The financial services company is based in San Francisco.

Estee Lauder notes

Estee Lauder priced $1.5 billion of senior notes (A2/A+/) in three tranches on Monday, according to a market source.

The company placed $500 million of 1.8% three-year notes at a spread of 40 bps over Treasuries.

The $500 million tranche of 3.15% 10-year notes priced with a Treasuries plus 75 bps spread.

Estee Lauder sold $500 million of 4.15% 30-year notes at a 110 bps over Treasuries spread.

All three tranches priced on the tight side of talk.

BofA Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities were active managers. BNP Paribas Securities Corp. and MUFG were passives.

Proceeds will be used for general corporate purposes, including repaying commercial paper as it matures and refinancing the company’s $300 million 5.55% senior notes due May 15, 2017.

New York-based Estee Lauder is a manufacturer and marketer of skin care, makeup, fragrance and hair care products.

Discover notes

Discover Financial Services sold $1 billion of 4.1% 10-year split-rated senior notes (Ba1/BBB-/BBB+) on Monday at a spread of 170 bps over Treasuries, on the tight side of guidance, according a market source and an FWP filing with the SEC.

The notes due Feb. 9, 2027 priced at 99.911 to yield 4.111%.

Barclays, Citigroup Global Markets, Deutsche Bank Securities Inc. and BofA Merrill Lynch were the bookrunners.

Proceeds will be used for general corporate purposes.

Discover is a Riverwoods, Ill.-based direct banking and payment services company.

First Republic Bank notes

First Republic Bank (Baa1/BBB+/A-) priced $400 million of 4.625% 30-year subordinated notes (Baa1/BBB+/BBB+) on Monday at a spread of Treasuries plus 165 bps, according to a market source and a company release.

The notes due Feb. 13, 2047 are expected to qualify as tier 2 capital for the bank.

BofA Merrill Lynch, Goldman, Sachs & Co., J.P. Morgan Securities and Morgan Stanley & Co. LLC were the bookrunners.

First Republic Bank plans to use the proceeds for general corporate purposes, which may include funding loans or purchasing investment securities for its portfolio.

First Republic Bank is a banking and wealth management company based in San Francisco.

GATX notes

GATX sold $300 million of 3.85% 10-year senior notes (Baa2/BBB) at 99.744 to yield 3.88% on Monday, according to an FWP filing with the SEC.

The notes due March 30, 2027 priced at a spread of Treasuries plus 147 bps.

Citigroup Global Markets, BofA Merrill Lynch and Morgan Stanley were the bookrunners.

Proceeds will be used to repay $300 million of the company’s 1.25% senior notes due March 4, 2017 and for general corporate purposes.

GATX is a transportation leasing company based in Chicago.

Apple eases

Apple’s 1.9% notes due Feb. 7, 2020 were seen early Monday about 1 bp softer from Friday at 44 bps bid, according to a market source. The notes were seen trading on Friday at 43 bps bid, 41 bps offered.

The $1 billion tranche of three-year notes priced on Thursday at a spread of Treasuries plus 45 bps.

Apple’s floating-rate notes due Feb.7, 2020 traded about 1 bp softer at 16 bps offered. The notes were quoted on Friday at 17 bps bid, 15 bps offered.

Apple priced $500 million of the floating-rate notes at par to yield Libor plus 20 bps.

The computer and mobile communications device company is based in Cupertino, Calif.

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