ING, Union Bank, Applied Materials sell debt; retail demand helps trading; new bonds struggle

By Andrea Heisinger

New York, June 1 - The volume in the high-grade primary didn't rise much on Wednesday from the previous day, but the three deals that did price were each $1 billion or more.

The day was heavy on financials with ING Bank NV and Union Bank NA each selling bonds.

ING priced the largest deal of the day at $2.5 billion in three parts. Its offering included a floating-rate tranche and two fixed-rate pieces.

San Francisco-based Union Bank sold $1 billion in two parts. A floating-rate tranche was added prior to pricing.

Another sale came from Applied Materials, Inc. which offered $1.75 billion of bonds in three parts to help fund a merger.

There was also a hugely upsized $575 million deal of $25-par notes due 2051 from Qwest Corp. that went overnight. The sale was initially $200 million.

There "wasn't much excitement" in the high-grade market for the day as three deals were priced. There remained some concern over the health of Greece's economy and a ripple effect problems there could have.

"We had some 'go' calls but I would say there's some volatility," one syndicate source said. "I think some things were held."

There haven't been any trades announced for the remainder of the week, and Thursday's issuance depends on how things look at the open, the source added.

Overall Trace volume rose slightly in the secondary market to just under $9 billion, a trader said.

Activity revolved around new paper coming in, with the previous day's Airgas Inc. and Camden Property Trust bonds seen trading.

Little trading was seen in Wednesday's offerings because they priced late. One of the new bonds from ING made slight gains.

A retail trader said that "people have money to spend" and that there's been "pretty good flow coming in."

There isn't a focus on any one sector, he said, calling it more "broad-based."

"It's been pretty active for a while now. A lot of people want into the market."

ING sells $2.5 billion

Netherlands-based ING Bank sold $2.5 billion of notes (Aa3/A+/A+) in three tranches, a market source said in late afternoon.

A $1.4 billion tranche of three-year floating-rate notes sold at par to yield three-month Libor plus 140 bps.

The second part was $500 million of 2.375% three-year notes priced at a spread of Treasuries plus 170 bps.

Finally, there was a $600 million tranche of 5% 10-year notes sold at 210 bps over Treasuries.

All of the notes were priced in line with talk, a source said. They sold under Rule 144A.

Bookrunners were Goldman Sachs & Co., Deutsche Bank Securities Inc., Morgan Stanley & Co., Inc. and ING Securities.

Two of the three tranches weren't immediately seen trading. The 10-year notes were quoted at an offer of 206 bps, according to a source.

The financial services company is based in Amsterdam.

Applied Materials' three parts

Applied Materials tapped the primary for $1.75 billion of senior notes (A3/A-) in three tranches, an informed source said.

The $400 million of 2.65% five-year notes sold at a spread of Treasuries plus 107 bps. It came below talk in the 115 bps area.

A second part was $750 million of 10-year notes priced at 138 bps over Treasuries. It priced at the tight end of guidance in the 140 bps area.

There was also a $600 million tranche of 5.85% 30-year bonds sold at a spread of 175 bps over Treasuries. It priced in line with talk in the 175 bps area.

There was significant demand for all of the tranches, with each having more than $1 billion on the books. The five-year notes alone had investors looking to buy about $1.75 billion.

Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were active bookrunners. Proceeds will be used to help fund the cash merger with Varian Semiconductor Associates Inc., along with cash on hand and proceeds from borrowings under a revolving credit facility.

There is a change-of-control put at 101 if the notes are downgraded below investment-grade, or if the Varian merger is not done on or before May 31, 2012.

The bonds priced late and weren't seen trading, sources said, although they were quoted in the gray market.

The five-year notes were seen at 107 bps bid, and an offer of 100 bps while the 10-year notes were offered at 134 bps, a source said.

The 30-year bonds were bid at 179 bps and offered at 172 bps.

The semiconductor and electronic components company is based in Santa Clara, Calif.

Union Bank prices at talk

Union Bank sold $1 billion of notes (A2/A+/A) in two parts, said a source close to the deal.

The deal was initially announced in a single tranche of five-year notes. The floating-rate notes were added in response to strong demand, a source said.

The $300 million tranche of three-year floaters notes priced at par to yield three-month Libor plus 95 bps. They were priced in line with talk in the Libor plus 95 bps area.

The second part was $700 million of 3% five-year notes priced at a spread of Treasuries plus 145 bps. They were also sold in line with of guidance in the 145 bps area.

Bookrunners were Barclays Capital Inc. and Morgan Stanley & Co., Inc.

Proceeds are being used for general corporate purposes.

The bonds were not seen in the secondary market because of their late pricing.

The financial services company is based in San Francisco.

Qwest sells $25-par notes

Qwest priced an upsized $575 million of 7.375% senior notes due 2051 (Baa3/BBB-/BBB-) at par of $25.

The deal, announced Tuesday, came at the rich end of talk for a yield of 7.375% to 7.5%.

The market was expecting $200 million of the paper, but a trader said that heavy demand resulted in the massive increase.

There is an $86.25 million over-allotment option.

Bank of America Merrill Lynch, Barclays Capital Inc., Citigroup Global Markets Inc., Morgan Stanley & Co. Inc., UBS Securities LLC and Wells Fargo Securities LLC were joint bookrunners.

Proceeds will be used to help redeem $825 million principal amount of 7.875% notes due 2011.

Qwest is a telecommunications subsidiary of CenturyLink, Inc., based in Monroe, La.

Airgas bonds lose steam

The new 2.95% notes due 2016 from specialty and industrial gas maker Airgas remained tighter than their pricing level, but lost some of the gains they made after being sold on Tuesday, a trader said.

They were sold at 130 bps over Treasuries and traded at 125 bps bid, 120 bps offered on Wednesday. This was about 2 bps wider than trading levels late Tuesday.

Camden Property trades flat

The two new notes from apartment community operator Camden Property Trust were trading wrapped around pricing levels, a source said.

The 4.625% notes due 2021 were sold at 165 bps over Treasuries and traded at 165 bps bid, 160 bps offered on Wednesday. The 4.875% bonds due 2023 performed similarly and traded a little tighter at 194 bps bid, 190 bps offered. They sold at 195 bps.

GE Capital bonds active

Two outstanding bonds from General Electric Capital Corp. were active in trading on Wednesday afternoon, a market source said.

One of the company's bonds, a 5.875% due 2012, was placed high up on the most active list. Its 2.95% due 2016 was also trading well. The 2016 was about 15 bps wider than where it priced on May 4.

Also trading at high volume was a 4% bond due 2021 from Microsoft Corp. It sold in February at 48 bps and was quoted significantly wider at 85 bps.

Stephanie N. Rotondo contributed to this report

© 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.