UBS, BPCE, Markel, UPS, Sterling push session’s issuance to $6.37 billion; Cisco, Apple firm

By Aleesia Forni and Cristal Cody

New York, March 29 – The pace of the investment-grade primary was again somewhat subdued on Tuesday.

Financial issuers UBS Group Funding (Jersey) Ltd. and BPCE SA were joined by Markel Corp., United Parcel Service, Inc. and Sterling National Bank.

Between them, around $6.37 billion of new issuance entered the primary during the session.

Investors poured into UBS Group’s $5 billion three-part new issue, with the final book topping $10 billion. Tranches of the sale firmed by around 20 basis points to 25 bps compared to initial price thoughts.

The day’s five deals push the week’s total supply to more than $11 billion, closing in on what was predicted to be around a $15 billion to $20 billion week.

Credit spreads opened about 1 bp softer and recovered ground following Yellen’s comments. The Markit CDX North American Investment Grade index closed mostly unchanged from Monday at a spread of 83 bps.

In the secondary market, Cisco Systems, Inc.’s 2.95% senior notes due 2026 tightened 3 bps over the day.

Apple Inc.’s 3.25% notes due 2026 improved about 1 bp during the session.

UBS sells $5 billion

UBS Group Funding (Jersey) met solid demand for its $5 billion three-part offering of senior notes (BBB+/A) on Monday, a market source said.

The deal, which accounted for the bulk of Tuesday’s supply, included $2 billion of 3% five-year notes sold at 99.925 to yield 3.016%. The notes sold at Treasuries plus 175 bps.

Price guidance was set in the Treasuries plus 180 bps area, following initial price thoughts in the Treasuries plus 195 bps area.

A $1 billion floating-rate tranche of five-year notes sold at par to yield Libor plus 178 bps after being talked at the Libor equivalent to the fixed-rate piece.

The company also sold $2 billion of 4.125% 10-year notes with a spread of Treasuries plus 235 bps. Pricing was at 99.779 to yield 4.152%.

The notes sold at the tightest side of the Treasuries plus 240 bps area, tightened from talk in the Treasuries plus 260 bps area.

UBS Securities LLC is the bookrunner for the Rule 144A and Regulation S deal.

The notes are guaranteed by Zurich-based financial services company UBS Group AG.

BPCE subordinated notes

BPCE priced $750 million of 4.875% subordinated notes due April 1, 2026 at Treasuries plus 320 bps, a market source said.

The notes (Baa3/BBB/A-) sold inside initial price thoughts set in the 330 bps area over Treasuries.

Bookrunners for the Rule 144A and Regulation S trade were Citigroup Global Markets Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, Natixis and Wells Fargo Securities LLC.

The financial services company is based in Paris.

Markel new issue

Markel priced $400 million of 5% 30-year senior notes (Baa2/BBB+/BBB+) on Tuesday in line with initial price thoughts at Treasuries plus 245 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

Pricing was at 98.957 to yield 5.068%.

Citigroup and Wells Fargo are the bookrunners.

Proceeds will be used to fund a tender offer, to retire Alterra USA Holdings Ltd.’s $90.6 million of 7.2% notes due April 14, 2017 and for general corporate purposes.

The provider of specialty insurance products is based in Glen Allen, Va.

UPS floaters

Also on Tuesday, United Parcel Service priced a $118.18 million issue of floating-rate senior notes (Aa3/A+) due March 15, 2066 at par to yield Libor minus 30 bps, according to an FWP filing with the SEC.

The bookrunners are UBS, Deutsche Bank Securities Inc., JPMorgan and Morgan Stanley & Co. LLC.

The notes may be called in 2046 at 105 and then at amounts declining annually by 50 bps until 2056, when the notes are callable at par.

The notes are putable from March 15, 2017 to March 15, 2021 at 98, from March 15, 2022 to March 15, 2026 at 99 and on March 15, 2027 and every third year thereafter at par.

Proceeds will be used for general corporate purposes.

The package delivery and supply chain management company is based in Atlanta.

Sterling upsizes

Sterling National Bank priced $110 million of 5.25% fixed-to-floating-rate senior notes due April 1, 2026 on Tuesday, according to a company news release.

The deal was upsized from $105 million.

The notes will bear interest at 5.25% until April 1, 2021 and then at Libor plus 393.7 bps until their maturity or earlier redemption.

Proceeds will be used for general corporate purposes.

Sterling National Bank is a Montebello, N.Y.-based principal subsidiary of Sterling Bancorp.

Cisco tightens

Cisco Systems’ 2.95% notes due 2026 traded 3 bps better on Tuesday at 72 bps bid, according to a market source.

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

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

Apple improves

Apple’s 3.25% bonds due 2026 firmed about 1 bp to 100 bps bid in the secondary market, a source said.

The company sold $1.25 billion of the notes in an add-on on March 17 at a spread of Treasuries plus 100 bps.

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

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

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