Valmont prices add-ons to two tranches; lighter supply forecast; bonds mixed, new issues firm

By Cristal Cody

Tupelo, Miss., June 8 – Valmont Industries Inc. tapped the high-grade primary market on Friday with add-ons to two tranches of senior notes in a $255 million deal.

The notes firmed about 2 basis points in after-market trading.

Also, Freddie Mac priced $2.25 billion of five-year Reference Notes.

Investment-grade issuers sold nearly $40 billion of high-grade bonds during the week.

The week ahead is expected to be mixed with an array of economic data, the U.S. summit with North Korea and the Federal Reserve’s policy meeting.

Market sources forecast about $15 billion to $20 billion of supply in the upcoming week.

Several bond offerings tied to financing for mergers and acquisitions are expected in June, according to market sources.

There is growing talk that Bayer AG (Baa1/BBB/A-) may tap the dollar-denominated bond market to fund its $63 billion acquisition of Monsanto Co. that closed on Thursday, a source said. The company could price as much as $20 billion of notes this month.

For the week ended June 6, Lipper US Fund Flows reported inflows of $1.33 billion for corporate investment-grade funds.

High-grade inflows for the week ended Wednesday “remained relatively lackluster” at $770 million, although above a $520 million inflow from a week earlier, said Yuri Seliger, an analyst with BofA Merrill Lynch, citing data from EPFR Global and BofA Merrill Lynch Global Research in a note released Friday.

Inflows to short-term high grade declined to $520 million from $1.24 billion, while flows outside short-term improved to a $250 million inflow from a $720 million outflow, Seliger said. Outflows from high-grade ETFs accelerated to $370 million from $250 million, while inflows to funds improved to $1.14 billion from $770 million, according to the note.

The Markit CDX North American Investment Grade 30 index firmed about 1 bp to close the day at a spread of 66 bps.

In the secondary market, bonds were mixed during the session, sources said.

Telus Corp.’s $750 million of 4.60% notes due Nov. 16, 2048 (Baa1/BBB+/BBB+) that priced on Thursday headed out softer on the bid side at 162 bps bid, 159 bps offered.

The Vancouver, B.C.-based telecommunications company sold the notes at a spread of 160 bps over Treasuries.

Goldman Sachs Bank USA’s debut offering of $1 billion of 3.20% senior notes due June 5, 2020 that priced on Monday firmed to 63 bps bid, 60 bps offered in secondary trading.

The debt issuing entity of Goldman Sachs Group Inc. sold the notes at a spread of Treasuries plus 70 bps.

Bank and financial paper overall was mixed in the secondary market over the session, trading about 3 bps tighter to 6 bps wider, a source said.

Barclays plc’s 4.972% fixed-to-floating-rate notes due May 16, 2029 eased about 4 bps to 218 bps bid.

The London-based banking and financial services company (A2/A/A) sold $1.75 billion of the notes on May 9 at par to yield a Treasuries plus 197 bps spread.

Valmont taps bonds

Valmont Industries priced a $255 million reopening of senior notes (Baa3/BBB+) in two tranches in the offering on Friday, according to an FWP filing with the Securities and Exchange Commission.

The company sold $200 million of 5% senior notes due Oct. 1, 2044 at 93.15 to yield 5.468%, or a spread of Treasuries plus 239.2 bps.

In the add-on to its 5.25% senior notes due Oct. 1, 2054, Valmont priced $55 million of the issue at 92.038 to yield 5.776%. The notes priced with a Treasuries plus 270 bps spread.

The company originally sold $250 million of the 5% notes on Sept. 8, 2014 at 99.536 to yield 5.03% and a spread of 180 bps over Treasuries. The total outstanding is now $450 million.

Valmont also sold $250 million of the 5.25% notes on Sept. 8, 2014 at 98.68 to yield 5.33%, or a spread of Treasuries plus 210 bps. The total outstanding is now $305 million.

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

In the secondary market, the 5% notes due 2044 traded at 240 bps bid, 238 bps offered, a source said.

The 5.25% notes due 2054 were quoted at 270 bps bid, 268 bps offered.

The Omaha-based company designs and manufactures fabricated metal products.

Freddie Mac sells $2.25 billion

Freddie Mac priced $2.25 billion of 2.75% Reference Notes due June 19, 2023 at 99.456 to yield 2.867% on Friday, according to a news release.

The notes priced 10 basis points over than the yield on the five-year Treasury note.

Bookrunners were Nomura Securities International, Inc., TD Securities (USA) LLC and Wells Fargo Securities LLC.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.