Microsoft megadeal leads $19.4 billion day; PepsiCo firms; Coca-Cola softens; JPMorgan eases

By Aleesia Forni and Cristal Cody

Virginia Beach, Oct. 29 – Issuers piled into the investment-grade primary during Thursday’s session, led by a $13 billion megadeal from Microsoft Corp. that helped push the week’s total supply to more than $35 billion.

The rush of new deals followed a Wednesday session that was empty in light of the conclusion of the Federal Reserve’s two-day policy meeting and its ultimate decision to hold interest rates steady at the near-zero level.

Microsoft sold the behemoth bond in seven parts in a trade that garnered more than $30 billion of orders, a market source said.

Mead Johnson Nutrition Co. was also in the primary, offering two tranches of notes in a $1.5 billion sale that ratcheted in spreads between 30 basis points and 35 bps from initial price thoughts.

Also pricing new deals during the $19.4 billion trading day were Norfolk Southern Corp., Morgan Stanley, American Express Credit Corp., Dr. Pepper Snapple Group Inc. and Dover Corp.

Bonds were mixed in secondary trading on Thursday.

PepsiCo Inc.’s 4.45% senior notes due 2046 firmed 2 bps.

Coca-Cola Co.’s 2.875% senior notes due 2025 traded 5 bps wider over the day.

In the bank and financial space, JPMorgan Chase & Co.’s 2.55% senior notes due 2020 eased 3 bps.

Citigroup Inc.’s 2.65% notes due 2020 were flat on Thursday.

Credit spreads gave back Wednesday’s 1 bp gain. The Markit CDX North American Investment Grade 25 index eased 1 bp on Thursday to close at a spread of 79 bps.

Microsoft sells $13 billion

Microsoft priced a $13 billion seven-part offering of senior notes (Aaa/AAA) on Thursday, according to an informed source.

The sale included a $1.75 billion 1.3% three-year note sold at 99.9 to yield 1.334% with a spread of Treasuries plus 30 bps.

There was also a $2.25 billion 2% five-year note priced with a spread of 50 bps over Treasuries. The notes sold at 99.92 to yield 2.017%.

A $1 billion 2.65% seven-year piece sold at 99.968 to yield 2.655%, or Treasuries plus 75 bps.

And $3 billion of 3.125% 10-year bonds priced at 99.974 to yield 3.128% with a 95 bp spread over Treasuries.

Also, $1 billion of 4.2% 20-year bonds were issued at a spread of Treasuries plus 125 bps. The notes sold at 99.718 to yield 4.221%.

The company also priced a $3 billion 4.45% tranche of 30-year bonds at 99.655 to yield 4.471%, or Treasuries plus 150 bps.

A $1 billion 4.75% tranche of 30-year bonds sold at 99.627 to yield 4.771%, or Treasuries plus 180 bps.

All tranches sold tight of price talk.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Wells Fargo Securities LLC, Barclays, Citigroup Global Markets Inc., Goldman Sachs & Co. and HSBC Securities are the bookrunners.

Proceeds will be used for general corporate purposes.

The computer software company is based in Redmond, Wash.

Mead Johnson offer

Mead Johnson Nutrition was in Thursday’s market with a $1.5 billion offering of senior notes (Baa1/BBB-) in tranches due 2020 and 2025, according to a market source and an FWP filed with the Securities and Exchange Commission.

There was $750 million of 3% five-year notes sold at 99.902 to yield 3.021% with a Treasuries plus 150 bps spread.

The tranche was priced at the tight end of guidance set in the Treasuries plus 155 bps area following initial talk set in the Treasuries plus 185 bps area.

Also sold was $750 million of 4.125% 10-year notes at a price of 99.958 to yield 4.13% with a spread of Treasuries plus 195 bps.

The notes also came at the tight end of guidance, in this case set in the Treasuries plus 200 bps area, tightened from talk in the Treasuries plus 225 bps area.

Citigroup, JPMorgan and Morgan Stanley & Co. LLC were the joint bookrunners.

Proceeds will be used to repay a $1 billion term loan and for general corporate purposes.

Mead Johnson is a Glenview, Ill.-based pediatric nutrition company.

PNC bank notes

PNC Bank priced $1.75 billion of senior bank notes (A2/A/A+) in two parts on Thursday, a market source said.

Included in the sale was $1 billion of 1.8% three-year notes issued at Treasuries plus 78 bps.

Also, $750 million of 2.45% five-year notes priced at Treasuries plus 95 bps.

The bookrunners were Citigroup, Jefferies & Co., JPMorgan, Morgan Stanley and PNC Capital Markets LLC.

PNC is a Pittsburgh-based bank and holding company.

AmEx two-parter

Also on Thursday, American Express Credit sold $1 billion of three-year notes in two tranches, according to a market source and two separate FWP filings with the SEC.

The sale (A2/A-/A+) included $750 million of 1.875% notes due 2018, which sold with a spread of 85 bps over Treasuries.

The notes sold at 99.991 to yield 1.878%.

Pricing came inside initial guidance set in the 100 bps area.

There was also $250 million of floating-rate notes due 2018 priced at par to yield Libor plus 78 bps.

The floaters were talked at the Libor equivalent to the fixed-rate tranche.

The bookrunners were Credit Suisse Securities (USA) LLC, BofA Merrill Lynch and UBS Securities LLC.

Proceeds will be used for general corporate purposes.

American Express Credit is a New York-based subsidiary of credit card issuer and travel-related services provider American Express Co.

Dr. Pepper offer

The session also hosted Dr. Pepper Snapple Group, which sold $750 million of senior notes (Baa1/BBB+) in tranches due 2025 and 2045, according to a market source and an FWP filing with the SEC.

A $500 million 3.4% tranche of 10-year notes priced at 99.403 to yield 3.471% with a spread of Treasuries plus 130 bps.

Pricing came at the tight end of the Treasuries plus 135 bps area guidance that followed talk in the Treasuries plus 150 bps area.

Also, $250 million of 4.5% 30-year bonds sold with a 155 bps spread over Treasuries. Pricing was at 99.738 to yield 4.516%.

Pricing was also at the tight end. Guidance was set in the Treasuries plus 160 bps area, tightened from initial talk in the Treasuries plus 180 bps area.

The bonds have a change-of-control put at 101%.

The bookrunners are Bank of America Merrill Lynch, Credit Suisse, Deutsche Bank Securities Inc. and Morgan Stanley.

Proceeds will be used to retire the issuer’s $500 million of 2.9% senior notes at maturity on Jan. 15, 2016 and for general corporate purposes.

The notes are guaranteed by current or future subsidiaries that guarantee other debt.

The maker of non-alcoholic beverages is based in Plano, Texas.

Norfolk Southern prices

Norfolk Southern priced a $600 million issue of 4.65% 30-year senior notes (Baa1/BBB+) at 172 bps over Treasuries on Thursday, according to an informed source and an FWP filing with the SEC.

The notes sold at 99.327 to yield 4.691%.

The deal came at the tight end of guidance that was set in the 175 bps area over Treasuries. Initially, talk was in the Treasuries plus 190 bps area.

Citigroup, Goldman Sachs and Wells Fargo are the joint bookrunners.

The company plans to use proceeds for general corporate purposes.

Norfolk Southern is a railroad operator based in Norfolk, Va.

Morgan Stanley

Morgan Stanley priced $400 million of 2.721% five-year senior notes (A3/A-/A) on Thursday at par, according to an FWP filing with the SEC.

Morgan Stanley & Co. LLC was the bookrunner.

The financial services company is based in New York City.

Dover does $400 million

Rounding out the day’s deals, Dover sold a $400 million offering of 3.15% 10-year notes at Treasuries plus 107 bps, according to a market source.

Pricing was at 99.225 to yield 3.241%.

The notes sold at the tight end of guidance that was set at the Treasuries plus 110 bps area.

The bookrunners were BofA Merrill Lynch, Citigroup, JPMorgan, Goldman Sachs and Wells Fargo.

Proceeds will be used for general corporate purposes.

The manufacturer of industrial, engineering, fluid management and electronic technical components and equipment is based in Downers Grove, Ill.

PepsiCo improves

PepsiCo’s 4.45% notes due 2046 firmed 2 bps to 134 bps bid in the secondary market, a source said.

The company sold $750 million of the bonds (A1/A) on Oct. 8 at a spread of Treasuries plus 150 bps.

PepsiCo is a Purchase, N.Y.-based food and beverage company.

Coca-Cola eases

Coca-Cola’s 2.875% notes due 2025 eased 5 bps during the session to 87 bps bid, a market source said.

The company sold $1.75 billion of the 10-year notes (Aa3/AA/A+) on Oct. 22 at 87 bps over Treasuries.

Coca-Cola is an Atlanta-based beverage company.

JPMorgan softer

JPMorgan’s 2.55% notes due 2020 eased 3 bps in secondary trading to 123 bps bid, according to a market source.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Oct. 22 at a spread of Treasuries plus 123 bps.

The financial services company is based in New York City.

Citigroup stable

Citigroup’s 2.65% notes due 2020 headed out unchanged in the secondary market at 128 bps bid, a source said.

Citigroup sold $2.7 billion of the notes (Baa1/A-/A) on Oct. 19 at 133 bps over Treasuries.

The financial services company is based in New York.

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