JBIC, RBS, BNG price as financials dominate primary; KKR firms; ACE flat

By Cristal Cody and Aleesia Forni

Virginia Beach, May 21 - Financials including Japan Bank for International Cooperation, Royal Bank of Scotland Group plc and Bank Nederlandse Gemeenten NV priced new deals amidst the release of the Federal Open Market Committee meeting minutes.

Japan Bank for International Cooperation sold a $2.5 billion issue of senior notes in two tranches during the session.

A $1.5 billion tranche of 1.75% five-year notes priced with a spread of Treasuries plus 30.5 basis points, while a $1 billion tranche of 3% bonds due 2024 priced at Treasuries plus 51.8 bps.

Also on Wednesday, Royal Bank of Scotland Group priced $2.25 billion of 5.125% 10-year subordinated tier 2 notes at Treasuries plus 270 bps.

ACE INA Holdings Inc. came to market with a $700 million issue of 3.35% 10-year senior notes at 82 bps over Treasuries.

In other primary action during the session, KKR Group Finance Co. III LLC priced an upsized $500 million of 5.125% notes due 2044 at the tight end of talk with a spread of 180 bps over Treasuries.

The session also saw Sweden launch $1.5 billion of three-year notes at mid-swaps minus 4 bps, in line with talk set in the mid-swaps minus 4 bps area.

One market source said the market had shown "some signs of price sensitivity earlier this week," noting Nasdaq OMX Group Inc.'s recent $500 million sale of 4.25% 10-year notes.

The notes priced on Monday with a spread of Treasuries plus 175 bps, around 15 bps wider compared to original guidance, which was set in the Treasuries plus 160 bps area.

However, he saw a "positive tone" to Wednesday's session, with more than $3.4 billion of high-grade paper issued.

Investment-grade bond spreads tightened over the session after trending wider on Tuesday, according to market sources.

The Markit CDX North American Investment Grade series 22 index firmed 1 bp to a spread of 65 bps.

"Spreads in general [are] a tad tighter today," a trader said.

The investment-grade bond market saw little if any change following the release of the Federal Reserve's minutes from the April policy meeting, the trader said.

In aftermarket trading, new paper from KKR's notes due 2044 tightened 7 bps on the bid side, according to a trader.

ACE INA's 3.35% notes due 2024 headed out wrapped around issuance in the secondary market, a trader said.

JBIC two-parter

Japan Bank for International Cooperation priced $2.5 billion of senior notes (Aa3/AA-/) in five- and 10-year tranches on Wednesday, according to a market source and an FWP filed with the Securities and Exchange Commission.

The company priced $1.5 billion of 1.75% five-year notes at 99.558 to yield 1.843%, or Treasuries plus 30.5 bps.

A second tranche was $1 billion of 3% bonds due 2024 priced with a spread of Treasuries plus 51.8 bps. Pricing was at 99.495 to yield 3.059%.

The notes will be guaranteed by Japan.

Barclays, BofA Merrill Lynch, Goldman Sachs and J.P. Morgan Securities LLC were the joint bookrunners.

Proceeds will be used for the bank's financing operations.

The financial institution is based in Tokyo.

RBS prices tier 2 notes

Royal Bank of Scotland Group sold $2.25 billion of 5.125% 10-year subordinated tier 2 notes on Wednesday with a spread of Treasuries plus 270 bps, according to a market source and an FWP filed with the SEC.

The notes (Ba3/BB+/BBB-) priced at 99.213 to yield 5.227%.

Proceeds from the offering will be used for general corporate purposes.

RBS Securities Inc. was the global coordinator, structuring advisor, lead manager and bookrunner and was joined by BofA Merrill Lynch, Citigroup Global Markets Inc. and Wells Fargo Securities LLC as joint lead bookrunners and managers.

The financial services company is based in Edinburgh.

BNG floaters

Bank Nederlandse Gemeenten priced $700 million of 18-month floating-rate notes (Aaa/AAA/AAA) on Wednesday at par to yield Libor plus 1 bp, a market source said.

Pricing was in line with talk.

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

Barclays was the sole bookrunner.

The local government funding agency is based in the Hague, the Netherlands.

ACE prices tight

ACE INA Holdings priced $700 million of 3.35% senior notes (A3/A+/A+) due 2024 on Wednesday with a spread of 82 bps over Treasuries, an informed source said.

Pricing was at 99.85 to yield 3.368%.

The notes sold at the tight end of talk.

ACE INA's 3.35% notes due 2024 traded mostly flat at 82 bps bid, 80 bps offered in the secondary market, according to a trader.

Goldman Sachs, ANZ Securities, JPMorgan and Mitsubishi UFJ Securities (USA) Inc. were the joint bookrunners.

The company plans to use proceeds from the offering to repay $700 million of its 2.6% senior notes maturing in November 2015, according to a prospectus supplement with the SEC.

The notes are guaranteed by ACE Ltd.

ACE INA was last in the U.S. bond market with $950 million of senior notes priced in two parts on March 6, 2013.

The sale included $475 million of 2.7% 10-year notes priced with a spread of Treasuries plus 80 bps and $475 million of 4.15% 30-year bonds sold at Treasuries plus 100 bps.

The Bermuda-based holding company for insurance and reinsurance subsidiaries is a unit of Zurich-based ACE Ltd.

KKR upsizes

KKR Group Finance sold $500 million of 5.125% 30-year senior notes (/A/A) with a spread of 180 bps over Treasuries, according to a market source and an 8-K filing with the SEC.

The deal was upsized from $300 million.

Pricing was at the tight end of the Treasuries plus 180 bps to 185 bps area talk.

The notes priced at 98.612 to yield 5.217%.

KKR Group Finance's 5.125% notes due 2044 tightened in secondary trading to 173 bps bid, 169 bps offered, a trader said.

Proceeds from the sale will be used for general corporate purposes.

Citigroup Global Markets and Morgan Stanley & Co. LLC were the joint bookrunners for the Rule 144A and Regulation S deal.

There is a guarantee by New York City-based parent company KKR & Co. LP, along with subsidiaries KKR Management Holdings LP and KKR Fund Holdings LP.

Sweden launches

Sweden launched a $1.5 billion issue of three-year notes at mid-swaps minus 4 bps on Wednesday, a market source said.

The deal's launch comes in line with talk, which was set in the mid-swaps minus 4 bps area.

The joint bookrunners are Citigroup Global Markets, Deutsche Bank Securities Inc. and JPMorgan.

Bank/brokerage CDS costs down

Investment-grade bank and brokerage CDS prices declined, according to a market source.

Bank of America Corp.'s CDS costs firmed 1 bp to 68 bps bid, 71 bps offered. Citigroup Inc.'s CDS costs fell 1 bp to 70 bps bid, 73 bps offered. JPMorgan Chase & Co.'s CDS costs firmed 1 bp to 56 bps bid, 59 bps offered. Wells Fargo & Co.'s CDS costs were flat at 36 bps bid, 39 bps offered.

Merrill Lynch's CDS costs declined 1 bp to 72 bps bid, 75 bps offered. Morgan Stanley's CDS costs tightened 2 bps to 74 bps bid, 77 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 1 bp to 83 bps bid, 86 bps offered.

Paul Deckelman contributed to this review.

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