Bank supply in focus; Wells Fargo, JPMorgan, ANZ, AerCap price notes; Hercules plans tap

By Cristal Cody

Tupelo, Miss., Jan. 16 – Bank and financial issuers tapped the primary market on Tuesday with more supply expected in the space over the month.

Wells Fargo Bank NA came with a $6 billion four-tranche offering of notes.

JPMorgan Chase & Co. priced $4 billion of notes in two tranches in the first session after the financial services company posted fourth quarter earnings on Friday.

Also, ANZ New Zealand International Ltd. sold $1.5 billion of senior notes in two parts.

Market focus remains on bank earnings with Citigroup Inc. reporting its earnings on Tuesday, Bank of America Corp. and Goldman Sachs Group, Inc. releasing earnings reports on Wednesday and Morgan Stanley due with its earnings report on Thursday.

“Unlike last January’s record high volume of $32 [billion], we expect banks to issue at a slower pace this time – closer to the $19 [billion] average from 2014 to 2016 – as they have mostly met TLAC requirements and our bank credit analyst predicts a 19% YoY decline in supply volumes,” according to a BofA Merrill Lynch research note released on Tuesday.

The short market week is expected to see heavy bond issuance with some syndicate sources forecasting as much as $35 billion of volume.

In other issuance on Tuesday, AerCap Ireland Capital DAC and AerCap Global Aviation Trust priced $1.15 billion of guaranteed senior notes in two tranches.

Also, Hercules Capital, Inc. announced it intends to return to the primary market to reopen its first investment-grade bond. The company plans to tap its 4.625% notes due Oct. 23, 2022 (/BBB-/) via Citigroup Global Markets Inc., Jefferies & Co. and Wells Fargo Securities, LLC.

Hercules Capital will hold the second day of a two-day round of fixed income investor calls on Wednesday.

The Markit CDX North American Investment Grade 29 index softened more than 1 basis point over the day to end at a spread of 48 bps.

Wells Fargo prices $6 billion

Wells Fargo Bank sold $6 billion of senior bank notes (Aa2/AA-/AA-) in four tranches during Tuesday’s session, according to a market source.

The bank priced $1 billion of two-year floating-rate notes at Libor plus 23 bps.

Wells Fargo Bank sold $1.75 billion of 2.4% two-year notes at a Treasuries plus 43 bps spread.

In the three-year floating-rate tranche, Wells Fargo Bank priced $750 million of notes at Libor plus 31 bps.

Wells Fargo Bank sold $2.5 billion of 2.6% three-year notes with a spread of 50 bps over Treasuries.

The bookrunner was Wells Fargo Securities.

The bank is a subsidiary of San Francisco-based Wells Fargo & Co.

JPMorgan raises $4 billion

JPMorgan Chase (A3/A-/A+) priced $4 billion of notes in two tranches on Tuesday, according to a market source.

JPMorgan sold $2.25 billion of 3.509% 11-year notes at a spread of 97 bps over Treasuries.

The $1.75 billion tranche of 3.897% 31-year notes were sold with a 107 bps spread over Treasuries.

Both tranches priced on the tight side of guidance.

J.P. Morgan Securities LLC was the bookrunner.

The New York-based financial services firm plans to use the proceeds for general corporate purposes.

ANZ prices two parts

ANZ New Zealand International sold $1.5 billion of senior notes (A1/AA-/AA-) in two tranches on Tuesday, according to a market source.

The company priced $1 billion of 2.75% three-year notes at a spread of Treasuries plus 63 bps, on the tight side of talk in the Treasuries plus 65 bps area.

ANZ New Zealand priced $500 million of 3.45% 10-year notes on top of guidance at a Treasuries plus 95 bps spread.

ANZ Securities Inc., Citigroup Global Markets, J.P. Morgan Securities and RBC Capital Markets, LLC were the lead managers.

ANZ New Zealand is an Auckland, New Zealand-based funding arm of ANZ Bank New Zealand Ltd.

AerCap sells notes

AerCap Ireland Capital and AerCap Global Aviation Trust priced a $1.15 billion two-tranche offering of guaranteed senior notes (Baa3/BBB-/BBB-) on Tuesday, according to a market source and an FWP filing with the Securities and Exchange Commission.

The companies sold $600 million of 3.3% five-year notes at 99.74 to yield 3.357%. The notes priced on top of guidance at a spread of 100 bps over Treasuries.

In the second tranche, AerCap priced $550 million of 3.875% 10-year notes at 99.663 to yield 3.916%. The notes priced with a Treasuries plus 137 bps spread, on the tight side of guidance in the Treasuries plus 140 bps area.

The bookrunners were BNP Paribas Securities Corp., Goldman Sachs & Co., HSBC Securities (USA) Inc., J.P. Morgan Securities, BofA Merrill Lynch, Barclays, Citigroup Global Markets, Credit Agricole Securities (USA) Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Mizuho Securities USA Inc., Morgan Stanley & Co. LLC, RBC Capital Markets, Santander Investment Securities Inc., SunTrust Robinson Humphrey Inc., TD Securities (USA) LLC and Wells Fargo Securities.

The notes are guaranteed by AerCap Holdings NV.

Proceeds will be used for general corporate purposes, including to acquire, finance or refinance aircraft assets and to repay debt.

AerCap is an independent aircraft leasing company based in Amsterdam.

International Finance reopens

Elsewhere, International Finance Corp. (Aaa/AAA) closed Tuesday on a $350 million reopening to its series 1735 Dec. 15, 2022 senior floating-rate notes at 99.9002 on Friday, according to a final terms filing with the SEC.

The tranche No. 5 floaters (Aaa/AAA/) have a coupon of Libor plus 7 bps.

Barclays and Deutsche Bank AG, London Branch were the managers.

The company originally sold $500 million of the notes on July 11, 2017 at par to yield Libor plus 7 bps.

The company also issued $250 million of the notes on Sept. 8, $250 million of notes on Nov. 9 and $150 million of notes on Dec. 29. The total outstanding now is $1.5 billion.

International Finance plans to list the notes for trading on the London Stock Exchange plc’s regulated market.

Proceeds from the deal will be used for general corporation operations.

Washington, D.C.-based International Finance is a member of the World Bank Group.

Freddie Mac foregoes issuance

Also on Tuesday, Freddie Mac announced in a news release that it will forgo an offering of reference notes on its Jan. 16 announcement date.

Freddie Mac’s 2018 reference notes calendar designates dates that it may use to announce the issuance of notes. The next announcement date is Jan. 18, according to the calendar. Freddie Mac designated a total of 18 announcement dates for potential issuance of reference notes for the year.

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

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