Frenzied primary following FOMC decision; Apple improves; Cisco flat

By Aleesia Forni and Cristal Cody

New York, March 17 – Issuers piled into the investment-grade bond market on Thursday following the Federal Reserve’s decision to hold rates steady earlier this week.

With Treasuries and credit spreads rallying early during the session, Apple Inc., Entergy Louisiana LLC, American International Group Inc. and Loews Corp. were among the names taking advantage of a stronger market tone to price $10.27 billion of new issuance.

The pick-up in activity follows Wednesday’s decision from the Federal Reserve to keep its benchmark interest rate unchanged at 0.25% to 0.5%.

Apple sold all three add-on tranches of its $3.5 billion new issue between 10 basis points to 15 bps tight of talk.

And Loews upsized its 10-year bonds to $500 million, while AIG issued $1.5 billion of notes around 15 bps inside initial price thoughts.

Financial names including Bank of Nova Scotia and Lloyds Banking Group plc also accessed Thursday’s primary.

The slew of new deals coming to market at the tail end of the week pushes its total supply to $25.47 billion.

Apple’s reopened tranche of 3.25% senior notes due 2026 firmed 2 bps in secondary trading.

Cisco Systems, Inc.’s 2.95% senior notes due 2026 were flat on the day.

International Business Machines Corp.’s 3.45% senior notes due 2026 softened 1 bps on Thursday.

The Markit CDX North American Investment Grade index firmed 3 bps to close at a spread of 83 bps.

Apple add-ons

In the largest deal priced on Thursday, Apple sold $3.5 billion of add-ons to three tranches of its existing senior notes (Aa1/AA+), according to a market source.

There was a $750 million add-on to the company’s 2.25% notes due Feb. 23, 2021 sold at Treasuries plus 55 bps, at the tightest side of the 55 bps to 58 bps range over Treasuries guidance.

The notes were talked in the 70 bps area over Treasuries.

A $1.25 billion tranche of 3.25% bonds due Feb. 23, 2026 sold at 100 bps over Treasuries after being guided in the 100 bps to 103 bps range over Treasuries.

The notes were initially talked in the area of 110 bps over Treasuries.

And a $1.5 billion add-on to the company’s 4.5% bonds due Feb. 23, 2036 priced with a spread of Treasuries plus 155 bps.

The notes were guided in the Treasuries plus 155 bps to 158 bps range, inside initial talk in the Treasuries plus 165 bps to 170 bps range.

All three tranches originally priced on Feb. 16.

Goldman Sachs & Co., BofA Merrill Lynch, Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes, including repurchases of common stock and payment of dividends under the company’s recently expanded program to return capital to shareholders, funding for working capital, capital expenditures and acquisitions and repayment of debt.

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

AIG new issue

American International Group also entered Thursday’s primary, selling $1.5 billion of 3.9% senior notes (Baa1/A-/BBB+) on top of guidance at a spread of Treasuries plus 200 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes sold at 99.95 to yield 3.906%.

Initial guidance was in the 215 bps area over Treasuries.

Bookrunners are Barclays, Deutsche Bank Securities Inc., RBC Capital Markets LLC and U.S. Bancorp Investments Inc.

Proceeds will be used for general corporate purposes.

The insurance company is based in New York City.

Lloyds tier 2 notes

Lloyds Banking Group sold $1.5 billion of 4.65% subordinated tier 2 debt securities (Baa2/BBB-/A-) due March 24, 2026 at Treasuries plus 278 bps, according to an informed source and an FWP filed with the Securities and Exchange Commission.

The notes sold on Thursday at the tight side of guidance set in the Treasuries plus 280 bps area.

Pricing was at 99.77 to yield 4.679%.

BofA Merrill Lynch, Goldman Sachs & Co., J.P. Morgan Securities LLC and Lloyds Securities LLC are the bookrunners.

Proceeds will be used for general corporate purposes.

The retail bank is based in London.

Scotia prices tight

The Bank of Nova Scotia was in Thursday’s market with a $1.4 billion offering of 2.45% senior notes (Aa3/A+) priced at a spread of Treasuries plus 112 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes sold at 99.794 to yield 2.494%.

Pricing came at the tight side of guidance set in the 115 bps area over Treasuries, which had firmed from talk in the 120 bps to 125 bps range over Treasuries.

Scotia Capital (USA) Inc., BofA Merrill Lynch, Barclays, Goldman Sachs & Co. and J.P. Morgan Securities LLC are the underwriters.

Proceeds will be added to the bank’s funds and will be used for general business purposes.

The financial services company is based in Toronto.

Willis Towers two-parter

Willis Towers Watson plc sold $1 billion of senior notes in two parts on Thursday at the tight end of price guidance, according to a market source.

The sale (Baa3/BBB/BBB) included $450 million of 3.5% five-year notes priced at 99.578 to yield 3.526%, or Treasuries plus 215 basis points.

And $550 million of 4.4% 10-year bonds sold at Treasuries plus 255 bps. The notes sold at a price of 99.578 to yield 4.453%.

The notes were issued by Trinity Acquisition plc.

BofA Merrill Lynch, J.P. Morgan Securities LLC, SunTrust Robinson Humphrey, Barclays and Wells Fargo Securities LLC were the bookrunners.

Proceeds will be used to repay $300 million under a revolving credit facility and tranche B term loans under a bridge loan facility, with any remaining proceeds to be used to pay down amounts outstanding under a revolving credit facility.

The guarantors are Willis Towers Watson plc, Willis Towers Watson Sub Holdings Ltd., Willis Netherlands Holdings BV, Willis Investment UK Holdings Ltd., TA I Ltd., WTW Bermuda Holdings Ltd., Willis Group Ltd. and Willis North America Inc.

The global risk adviser and insurance and reinsurance broker is based in London.

Loews upsizes

Meantime, Loews sold an upsized $500 million issue of 3.75% senior notes at Treasuries plus 187.5 bps on Thursday, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes (A3/A+/A) were upsized from $400 million and priced at 99.784 to yield 3.776%.

Pricing came at the tight side of guidance set in the 200 bps area over Treasuries. Initial talk was in the Treasuries plus 225 bps area.

Bookrunners were Barclays, J.P. Morgan Securities LLC, Citigroup Global Markets Inc., MUFG and Wells Fargo Securities LLC.

Proceeds will be used for general corporate purposes.

Loews is a New York City-based holding company for diversified subsidiaries, including insurance, hotels, oil drilling and pipeline transportation.

Legg Mason acquisition financing

Legg Mason, Inc. sold $450 million of 4.75% senior notes (Baa1/BBB) due March 15, 2026 at Treasuries plus 285 basis points on Thursday to fund its acquisitions of Clarion Partners and EnTrustPermal Group Holdings LLC.

The issue was priced at 99.954 to yield 4.756%, according to an FWP filed with the Securities and Exchange Commission.

Bookrunners were Citigroup Global Markets Inc. and J.P. Morgan Securities LLC.

The asset management company is based in Baltimore.

Entergy mortgage bonds

Entergy Louisiana attracted an order book that was nearly two times oversubscribed for its $425 million issue of 3.25% collateral trust mortgage bonds, a market source said.

The notes (A2/A-) due April 1, 2028 sold on Thursday at Treasuries plus 135 bps, according to an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.99 to yield 3.251%.

Barclays, BNP Paribas Securities Corp., MUFG and SMBC Nikko are the bookrunners.

Proceeds will be used to pay $60 million to purchase interests of Unit No. 3 (nuclear) of the Waterford Steam Electric Station, to repay borrowings from the Entergy system money pool and for general corporate purposes.

Entergy Louisiana is a Jefferson, La.-based energy provider.

Freddie on deck

Elsewhere on Thursday, Freddie Mac announced that it intends to sell Reference Notes due April 15, 2019 on Friday.

The issue will settle on March 21.

Barclays, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC will head the syndicate.

The government-backed mortgage lender is based in McLean, Va.

Apple firms

Apple’s reopened 3.25% notes due 2026 were quoted at 98 bps bid in secondary trading on Thursday afternoon, a source said.

Apple originally priced $2 billion of the notes on Feb. 16 at a spread of 150 bps plus Treasuries.

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

Cisco steady

Cisco Systems’ 2.95% notes due 2026 were unchanged on the day at 78 bps bid, according to a market source.

The company sold $750 million of the notes (A1/AA-) on Feb. 22 at 120 bps plus Treasuries.

San Jose, Calif.-based Cisco produces internet protocol-based networking and other communications and information technology products.

IBM eases

International Business Machines’ 3.45% notes due 2026 eased 1 bp on Thursday to 114 bps bid, a market source said.

The company sold $1.35 billion of the notes (Aa3/A-/A+) on Feb. 16 at 170 bps over Treasuries.

The information technology and computer company is based in Armonk, N.Y.

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