Otis, BP, Tennessee Gas, Halliburton, KLA, Omnicom, UDR tap primary; SSA supply ahead

By Cristal Cody

Tupelo, Miss., Feb. 19 – High-grade supply remained strong over Wednesday’s session with more than $10 billion of bonds priced.

Otis Worldwide Corp. sold $5.3 billion of senior notes in six tranches as part of its spinoff from United Technologies Corp.

The deal follows a $9.25 billion six-part deal from Carrier Global Corp., which also is being spun off from United Technologies, on Thursday.

Also in the primary market on Wednesday, BP Capital Markets America Inc. sold $1.25 billion of 30-year notes.

Tennessee Gas Pipeline Co., LLC priced $1 billion of 10-year senior notes.

Halliburton Co. brought $1 billion of 10-year senior notes to the primary market.

KLA Corp. sold $750 million of 30-year senior notes.

Omnicom Group Inc. priced an upsized $600 million of 10-year senior notes.

F.N.B. Corp. came with $300 million of three-year senior notes.

In addition, UDR, Inc. priced a $200 million add-on to its 3.2% guaranteed medium-term notes due Jan. 15, 2030.

The deals bring week-to-date investment-grade issuance to more than $29 billion from just two sessions following Monday’s market holiday.

Looking ahead to Thursday, sovereign, supranational and agency supply is expected.

The Council of Europe Development Bank intends to price five-year senior global notes.

Also, the Federal Home Loan Bank System plans to sell a new three-year Global bond.

About $25 billion to as much as $40 billion of deal volume was forecast by market sources for the week.

Volume was heavy on Tuesday with more than $19 billion of issuance, led by Amgen Inc.’s $5 billion five-tranche offering of senior notes.

In the secondary market, new issues were quoted flat to about 4 basis points tighter.

Commonwealth Edison Co.’s $1 billion of first mortgage bonds (A1/A/A) that priced in two tranches on Tuesday were wrapped around issuance to about 1 bp tighter on the long end.

The unit of Chicago-based energy provider Exelon Corp. sold $350 million of 2.2% first mortgage bonds due March 1, 2030 at a spread of 68 bps over Treasuries and $650 million of 3% 30-year bonds at a Treasuries plus 100 bps spread.

The 10-year bonds were talked to price in the 85 bps spread area, while the 30-year tranche was initially talked to print at the Treasuries plus 115 bps area.

The Markit CDX North American Investment Grade 33 index ended Wednesday modestly tighter at a spread of 44.5 bps.

Otis prices $5.3 billion

Otis Worldwide sold $5.3 billion of senior notes (Baa2/BBB) in six tranches in the offering on Wednesday, according to a market source.

A $500 million tranche of three-year floaters priced at Libor plus 45 bps.

Initial price talk was at the Libor plus 65 bps area.

A $1.3 billion tranche of 2.056% five-year notes priced at a spread of 65 bps over Treasuries.

The notes were talked to price at the Treasuries plus 85 bps area.

Otis sold $500 million of 2.293% seven-year notes at a spread of 80 bps over Treasuries.

Initial price talk was at the 95 bps spread area.

A $1.5 billion tranche of 2.565% 10-year notes priced at a spread of 100 bps over Treasuries, compared to talk in the Treasuries plus 115 bps area.

Otis priced $750 million of 3.112% 20-year notes with a 110 bps over Treasuries spread.

Price talk on the 20-year issue was in the 135 bps over Treasuries area.

Finally, $750 million of 3.362% 30-year notes priced at a spread of 135 bps over Treasuries.

The 30-year notes were talked to price at the Treasuries plus 155 bps area.

BofA Securities, Inc., Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC were the bookrunners.

United Technologies is a Hartford, Conn.-based company that provides technology products and services to the building and aerospace industries.

Elevator and escalator maker Otis Worldwide is based in Farmington, Conn.

BP Capital prices

BP Capital Markets America priced $1.25 billion of 3% 30-year notes (A1/A-) at a spread of Treasuries plus 107 bps, according to an informed source.

Initial price talk was in the Treasuries plus 120 bps to 125 bps area.

BofA Securities, Barclays, Goldman Sachs and Morgan Stanley & Co. LLC were the bookrunners.

The notes are guaranteed by parent company BP plc.

BP Capital Markets America is a Chicago-based aviation and marine fuels provider and subsidiary of the London-based oil and gas company.

Tennessee Gas active

Tennessee Gas Pipeline sold $1 billion of 2.9% 10-year senior notes (Baa2/BBB/BBB) at a spread of 135 bps over Treasuries, according to a market source.

The notes were initially talked to price in the Treasuries plus 155 bps area.

Citigroup, Credit Suisse Securities (USA) LLC and Wells Fargo Securities LLC were the bookrunners.

Tennessee Gas Pipeline is a Kinder Morgan-owned 11,750-mile pipeline that transports natural gas from Louisiana, the Gulf of Mexico and south Texas to northern U.S. states.

Halliburton sells $1 billion

Halliburton priced $1 billion of 2.92% 10-year senior notes (Baa1/A-) at a spread of Treasuries plus 135 bps, according to a market source.

The notes were initially talked to price at the Treasuries plus 150 bps area.

J.P. Morgan Securities LLC, Citigroup, HSBC Securities (USA) Inc. and Mizuho Securities USA Inc. were the bookrunners.

Halliburton is a Houston-based diversified energy services company.

KLA prices $750 million

KLA priced $750 million of 3.3% 30-year senior notes (Baa1/BBB+/BBB+) during the session at a spread of Treasuries plus 130 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

The notes were talked to price at the Treasuries plus 155 bps area.

The issue priced at 99.962 to yield 3.302%.

Citigroup, JPMorgan, Wells Fargo, BofA Securities, MUFG and SunTrust Robinson Humphrey Inc. were the bookrunners.

KLA, previously known as KLA-Tencor, is a Milpitas, Calif.-based develops equipment and services for the electronics industry.

Omnicom upsizes deal

Omnicom sold an upsized $600 million of 2.45% 10-year senior notes (Baa1/BBB+) at 99.656 to yield 2.488%, or Treasuries plus 92 bps, according to a market source and an FWP filing.

Initial price guidance on the notes was in the Treasuries plus 110 bps to 115 bps area.

The deal was upsized from $500 million.

Citigroup, JPMorgan, Wells Fargo, BofA Securities and HSBC were the bookrunners.

The global marketing and corporate communications company is based in New York.

F.N.B. taps primary

F.N.B. priced $300 million of 2.2% three-year senior notes (Baa2/BBB+) at a spread of 83 bps over Treasuries, according to a market source.

Price guidance was at the Treasuries plus 85 bps area with initial price talk at the 105 bps spread area.

Goldman Sachs and BofA Securities were the bookrunners.

The bank is based in Hermitage, Pa.

UDR reopens notes

UDR priced a $200 million add-on to its 3.2% guaranteed medium-term notes due Jan. 15, 2030 (Baa1/BBB+) at 105.66 to yield 2.534%, or a spread of Treasuries plus 97 bps, according to a market source and an FWP filing.

The notes were talked to price at the Treasuries plus 110 bps area.

Wells Fargo and Citigroup were the bookrunners.

The company originally sold $300 million of the 3.2% notes on June 25, 2019 at 99.662 to yield 3.238% and a spread of Treasuries plus 125 bps. The company tapped the issue on Oct. 2, 2019 when it priced $100 million more of the notes at 103.319 to yield 2.817%, or a spread of Treasuries plus 123 bps.

The total outstanding is now $600 million.

The notes are fully and unconditionally guaranteed by United Dominion Realty, LP.

UDR is a real estate investment trust that owns and operates apartment communities.

Council of Europe on tap

Coming up on Thursday, the Council of Europe Development Bank (Aa1/AAA/AA+) plans to price dollar-denominated five-year senior global notes that are talked to print at the mid-swaps plus 9 bps area, according to a market source.

BofA Securities, BNP Paribas Securities Corp., Deutsche Bank Securities Inc. and TD Securities (USA) LLC are the bookrunners.

The Paris-based Council of Europe Development Bank finances social projects to member states, financial institutions and local authorities for projects including public infrastructure and low-income housing.

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