Market focuses on behemoth Apple trade; Apple short-dated notes firm; El Paso Pipelines softer

By Cristal Cody and Aleesia Forni

Virginia Beach, April 29 - The high-grade market was undoubtedly focused on the colossal-sized deal from Apple Inc., entering the primary market for only the second time.

The company priced a $12 billion seven-part offering of senior notes in tranches due 2017, 2019, 2021, 2024 and 2044.

A $1 billion issue of floating-rate notes due 2017 priced to yield Libor plus 7 basis points, and a $1.5 billion tranche of 1.05% three-year notes priced at 18 bps over Treasuries.

The fixed-rate notes sold at the tight end of the Treasuries plus 20 bps area talk.

There was also $1 billion of five-year floating-rate notes priced to yield Libor plus 30 bps and $2 billion of 2.1% five-year notes priced at Treasuries plus 37.5 bps.

The notes sold at the tight end of the Treasuries plus 40 bps area talk.

The sale also included $3 billion of 2.85% notes due 2021 priced with a spread of 60 bps over Treasuries.

Pricing was at the tight end of the Treasuries plus 62.5 bps area talk.

There was also $2.5 billion of 10-year notes priced at Treasuries plus 77 bps, at the tight end of the Treasuries plus 80 bps area talk.

Finally, $1 billion of 30-year bonds priced on top of talk at Treasuries plus 100 bps.

Sources had expected the deal's size to come in around that of its record-breaking deal that priced last year.

The company first entered the high-grade primary market April of last year, selling $17 billion of paper in six tranches.

However, with the deal's smaller size, sources believe the company is likely to bring another deal to the market later this year, possibly one denominated in euros.

The jumbo sized deal "went very well," a market source said, with the notes pricing between 10 bps to 20 bps tighter than original guidance.

The order book for the new issue was more than three times oversubscribed, another market source said.

Away from the day's new megadeal, Citigroup Inc. brought to market $1 billion of 5.3% subordinated bonds due 2044 with a spread of Treasuries plus 185 bps, according to a market source.

Also on Tuesday, El Paso Pipeline Partners Operating Co. LLC sold a $600 million issue of 4.3% senior notes due 2024 at Treasuries plus 160 bps.

The notes came tight of initial guidance.

Apple's short-dated tranches tightened 3 bps to 5 bps in the aftermarket as the session closed, according to a trader. The longer-dated notes traded wrapped around issuance.

El Paso Pipeline's new 4.3% notes due 2024 eased 1 bp on the bid side in the secondary market, according to a trader.

The Markit CDX North American Investment Grade series 22 index headed out flat at a spread of 66 bps.

Apple brings megadeal

Apple priced a $12 billion seven-part offering of senior notes (Aa1/AA+/) during the session on Tuesday, according to market sources.

The sale included $1 billion of floating-rate notes due 2017 priced at par to yield Libor plus 7 bps.

A $1.5 billion tranche of 1.05% fixed-rate notes due 2017 priced at 18 bps over Treasuries, or 99.947 to yield 1.068%.

The notes sold at the tight end of the Treasuries plus 20 bps area talk.

A third tranche was $1 billion of five-year floating-rate notes priced at par to yield Libor plus 30 bps.

There was also a $2 billion tranche of 2.1% five-year notes sold at Treasuries plus 37.5 bps. The notes sold at 99.962 to yield 2.108%.

Pricing was at the tight end of talk, set in the area of Treasuries plus 40 bps.

A $3 billion tranche of 2.85% seven-year notes priced at 60 bps over Treasuries, at the tight end of the Treasuries plus 62.5 bps area talk. The notes sold at 99.754 to yield 2.889%.

The sale also included $2.5 billion of 10-year notes priced at Treasuries plus 77 bps, or 99.916 to yield 3.46%. The notes sold at the tight end of the Treasuries plus 80 bps area talk.

Finally, a $1 billion issue of 30-year bonds sold on top of talk at Treasuries plus 100 bps. Pricing was at 99.459 to yield 3.46%.

Goldman Sachs & Co. and Deutsche Bank Securities Inc. are the joint bookrunners.

In the secondary market, Apple's 1.05% notes due 2017 tightened to 14 bps bid, 8 bps offered, according to a trader late afternoon.

The 2.1% notes due 2019 traded better at 34 bps bid.

Apple's 2.85% notes due 2021 firmed to 55 bps bid, 53 bps offered going out the door, the trader said.

The 3.45% notes due 2024 traded wrapped around issuance at 77 bps bid, 74 bps offered.

The tranche of 4.45% notes due 2044 traded flat on the bid side at 100 bps bid, 98 bps offered.

Proceeds will be used for general corporate purposes, including repurchases of the company's common stock and payment of dividends under its recently expanded program to return capital to shareholders.

Earlier this month, the company announced plans to increase its existing share repurchase program authorization to $90 billion from $60 billion and raised its cash dividend by roughly 8% to $3.29 per share of common stock, beginning with the dividend to be paid during the third quarter of 2014.

Apple last came to market with a $17 billion offering of notes priced in six tranches on April 30, 2013.

The computer and mobile communications device company is based in Cupertino, Calif.

El Paso Pipeline new issue

El Paso Pipeline Partners Operating Co. priced $600 million of 10-year senior notes on Tuesday with a spread of Treasuries plus 160 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes priced at 99.968 to yield 4.304%.

The notes are guaranteed by El Paso Pipeline Partners LP.

El Paso Pipeline's 4.3% notes due 2024 traded late in the day at 161 bps bid, 157 bps offered, a trader said.

The joint bookrunners for the offering were BofA Merrill Lynch, Mitsubishi UFJ Securities (USA) Inc., RBC Capital Markets LLC, Credit Agricole Securities (USA) Inc., SG Americas Securities LLC and Scotia Capital (USA) Inc.

Proceeds will be used to help fund the acquisition of a 50% equity interest in Ruby Pipeline Holding Co. LLP, an indirect 50% equity interest in Gulf LNG Holdings Group, LLC and an indirect 47.5% equity interest in Young Gas Storage Co., Ltd.

Located in Houston, El Paso Pipeline owns and operates natural gas transportation lines and storage assets.

Citi prices sub notes

Citigroup priced $1 billion of 5.3% subordinated bonds due 2044 with a spread of Treasuries plus 185 bps, according to a market source.

Citigroup Global Markets Inc. was the bookrunner.

The bank is based in New York.

Bank/brokerage CDS flat to lower

Investment-grade bank and brokerage CDS prices were unchanged to lower, according to a market source.

Bank of America Corp.'s CDS costs were flat at 66 bps bid, 69 bps offered. Citigroup's CDS costs firmed 1 bp to 69 bps bid, 72 bps offered. JPMorgan Chase & Co.'s CDS costs were unchanged at 55 bps bid, 58 bps offered. Wells Fargo & Co.'s CDS costs firmed 1 bp to 33 bps bid, 36 bps offered.

Merrill Lynch's CDS costs were unchanged at 71 bps bid, 75 bps offered. Morgan Stanley's CDS costs firmed 2 bps to 71 bps bid, 74 bps offered. Goldman Sachs Group, Inc.'s CDS costs were unchanged at 82 bps bid, 85 bps offered.

Paul Deckelman contributed to this review.

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