Marathon, Kimberly-Clark, Steelcase, ABN Amro tap market; Steelcase stronger in secondary

By Andrea Heisinger and Cristal Cody

New York, Jan. 27 - Kimberly-Clark Corp., Marathon Petroleum Corp., ABN Amro Bank NV and Steelcase Inc. each priced bonds on Thursday as the high-grade primary returned to life following the previous day's Federal Reserve meeting.

Kimberly-Clark priced $700 million in two parts by mid-afternoon. The deal was well-oversubscribed, a source said, and both tranches of 10-year and 30-year bonds priced at the tight end of revised guidance.

The deal was followed by a private one from Marathon Petroleum. The spin-off from Marathon Oil Corp. priced an upsized $3 billion of notes in three parts under Rule 144A and Regulation S.

Split-rated Steelcase priced $250 million of 10-year notes, although nearly all of the interest seemed to be on the investment-grade side, a source noted.

An addition to the primary late in the day was a $2 billion sale of notes in two parts by ABN Amro Bank. The sale was split evenly between three-year maturities with fixed- and floating-rate coupons.

A blanket of snow on the East Coast may have left some issuers and investors out of the primary.

"That's what we were trying to figure out this morning," a syndicate source who worked on the one of the day's sales said, "whether investors were around."

The weather may also lead to an unusually busy Friday, as some deals were delayed or simply not ready to go.

"I've heard there are a few on tap for tomorrow," a source said. "Nothing solid yet, but not an empty market."

The secondary markets also were quiet, except for the new issues.

Kimberly-Clark's notes firmed slightly, but Steelcase's notes narrowed in secondary trading by 25 basis points on the offer side, traders said.

"We've been slow all week, hearing the same from most shops," a trader said.

One trader said it "really did seem like a snow day. Hearing spreads are unchanged to a couple [basis points] wider."

The Markit CDX Series 14 North American investment-grade index was flat for a second straight day at a spread of 83 bps, a market source said.

Overall investment-grade Trace volume fell 25% to about $11 billion, a market source said.

Treasuries rallied after weaker economic data and a strong auction demand of $29 billion of seven-year notes.

The benchmark 10-year note yield dropped 3 bps to 3.39% and the 30-year bond yield fell 2 bps to 4.57%.

Kimberly-Clark prices tight

Kimberly-Clark sold $700 million of notes (A2/A/A) in two parts, a source who worked on the sale said.

The $250 million of 3.875% 10-year notes sold at a spread of Treasuries plus 60 bps. The tranche priced tighter than whispered guidance in the 65 to 70 bps range and at the tight end of revised talk in the 65 bps area.

A second part was $450 million of 5.3% 30-year bonds priced at a spread of 80 bps over Treasuries. The notes came in tighter than initial talk in the range of 85 bps to 90 bps and at the tight end of revised guidance in the 85 bps area.

Demand was around $3.5 billion total for the deal and $1.6 billion of that was for the 10-year tranche with the other $1.9 billion in the 30-year notes, a source said.

Citigroup Global Markets Inc., Goldman Sachs & Co., Morgan Stanley & Co. Inc. and J.P. Morgan Securities Inc. were bookrunners.

Proceeds will be used for general corporate purposes, including purchasing common stock shares, funding pension plans and redeeming outstanding commercial paper.

Kimberly-Clark's notes were tightening after the sale in the secondary market, traders said.

The notes due 2021 were seen at 61 bps bid, 56 bps offer and then later tightening to 58 bps bid, 56 bps offer.

The 30-year bonds also were tighter, trading at 80 bps bid, 75 bps offer, a trader said. The bonds were seen by another trader stronger at 78 bps bid, 75 bps offer.

The consumer products company is based in Irving, Texas.

Marathon sells $3 billion

Marathon Petroleum sold $3 billion of senior notes (Baa1/BBB) in three parts late in the day, a market source away from the deal said.

The size was upped from an initial $2.5 billion, another source said.

The $750 million of 3.5% five-year notes sold at a spread of Treasuries plus 155 bps. This was at the tight end of guidance in the 160 bps area.

A second tranche was $1 billion of 5.125% 10-year notes priced at Treasuries plus 175 bps. It also sold in line with talk in the 180 bps area.

The final part was $1.25 billion of 6.5% 30-year bonds priced at a spread of 200 bps over Treasuries. Guidance was in the 205 bps area, with the notes coming in at the tight end of that.

Bookrunners were J.P. Morgan Securities Inc. and Morgan Stanley & Co. Inc.

The notes were sold under Rule 144A and Regulation S.

Proceeds are going to repay intercompany debt to parent Marathon Oil Corp. and other subsidiaries, to pay a special distribution to Marathon and for working capital and other general corporate purposes.

One trader saw the notes trading in the gray market. The five-year notes were quoted at 143 bps, while the 10-year tranche was seen at 164 bps. The 30-year bonds traded in the grays at 191 bps bid, 188 bps offer, the trader said.

The oil company is based in Houston.

Steelcase's 10-years

Office furnishing company Steelcase sold $250 million of split-rated 6.375% 10-year senior notes (Ba1/BBB-) at 300 bps over Treasuries, according to a press release and market source.

Bank of America Merrill Lynch and J.P. Morgan Securities Inc. were bookrunners.

Proceeds will be used to repay 6.5% senior notes due Aug. 15, 2011.

Steelcase's notes narrowed in secondary trading, tightening 25 basis points on the offer side, traders said.

The notes were quoted at 287 bps bid, 275 bps offer.

The issuer is based in Grand Rapids, Mich.

ABN Amro sells $2 billion

ABN Amro Bank sold $2 billion of senior notes (Aa3/A) in two parts late in the day, a source who worked on the trade said.

The $1 billion of three-year floating-rate notes priced at par to yield Libor plus 177 bps.

A second part was $1 billion of 3% three-year notes priced at a spread of Treasuries plus 205 bps.

Bank of America Merrill Lynch, Barclays Capital Inc., Citigroup Global Markets Inc. and Goldman Sachs & Co. were bookrunners.

The bank and financial services company is based in Amsterdam.

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