Scotiabank, John Deere hit primary market as activity resumes; new issues firm

By Cristal Cody and Aleesia Forni

Virginia Beach, Dec. 10 - The high-grade bond market saw a steady stream of new deals price on Tuesday, with $4.3 billion of supply brought to the primary.

The Bank of Nova Scotia sold a $1.75 billion two-part issue of senior notes due 2016 during the session, according to a syndicate source.

The company priced a $1 billion issue of 1.1% notes sold with a spread of Treasuries plus 52 basis points and $750 million of floaters sold with a coupon of Libor plus 42 bps.

There was also a $1.25 billion sale of notes from John Deere Capital Corp.

The company sold $500 million of two-year floaters at par to yield Libor plus 12 bps.

A $750 million tranche of 1.95% five-year notes priced at Treasuries plus 55 bps.

In other primary action, Crane Co. brought to market an upsized $550 million issue of senior notes in two tranches.

Crane priced $250 million of 2.75% five-year notes at Treasuries plus 130 bps and $300 million of 4.45% 10-year notes at 165 bps over Treasuries.

Meanwhile, Arch Capital Group (U.S.) Inc. sold an upsized $500 million issue of 5.144% 30-year senior notes with a spread of Treasuries plus 130 bps.

CubeSmart LP was in the market with $250 million of 4.375% guaranteed senior notes due 2023 priced with a spread of Treasuries plus 170 bps.

Nederlandse Waterschapsbank NV priced a $500 million issue of floating-rate notes due March 17, 2015 on Tuesday at par to yield Libor plus 4 bps, according to a market source.

One market source noted that Bank of Nova Scotia's new issue was nearly two times oversubscribed.

"Deals continue to see solid order books," the source added.

With an unusually quiet session on Monday, supply sits at $4.8 billion for the week so far.

Players had predicted roughly $20 billion of new paper for the week, but even with "a couple [deals] lined up tomorrow," one source doubts issuance will reach that estimate.

Investment-grade bonds were mostly flat to moderately weaker going out, while new paper traded stronger in aftermarket trading, according to market sources on Tuesday.

Crane's two tranches of notes headed out the door 5 bps to 10 bps tighter in the secondary market, a source said.

Arch Capital's 5.144% notes due 2043 traded 4 bps better late in the day.

New paper from Bank of Nova Scotia firmed about 3 bps, while CubeSmart's 4.375% notes due 2023 came in 2 bps in the secondary market.

John Deere's new notes traded mostly wrapped around issuance, according to a trader.

Scotiabank two-parter

Scotiabank sold on Tuesday a two-part issue of senior notes (Aa2/A+/AA-) due 2016, according to a syndicate source.

The deal included $1 billion of 1.1% notes priced at 99.971 to yield 1.11%, or Treasuries plus 52 bps.

The notes priced at the tight end of talk.

Bank of Nova Scotia's 1.1% notes due 2016 traded tighter at 49 bps bid, 48 bps offered, according to a trader.

There was also $750 million of floating-rate notes priced at par to yield Libor plus 42 bps.

Scotia Capital (USA) Inc., BofA Merrill Lynch, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the joint bookrunners.

Proceeds will be used for general banking purposes.

The financial services company is based in Toronto.

John Deere sells $1.25 billion

In other primary action, John Deere Capital sold $1.25 billion of senior notes (A2/A/) in two tranches on Tuesday, according to an informed source and two separate FWP filings with the Securities and Exchange Commission.

The deal included $500 million of floating-rate notes due 2015 priced at par to yield Libor plus 12 bps.

The notes priced on top of talk.

There was also $750 million of 1.95% notes due 2018 sold with a spread of Treasuries plus 55 bps, or 99.787, to yield 1.995%.

Pricing was at the tight end of talk.

Bookrunners were Citigroup Global Markets, Goldman Sachs & Co. and Mitsubishi UFJ Securities.

The funding arm of agriculture and industrial equipment maker Deere & Co. is based in Moline, Ill.

Crane upsizes

Crane sold an upsized $550 million of senior notes (Baa2/BBB) in five-year and 10-year tranches on Tuesday, according to a market source and an FWP filed with the SEC.

The sale included a $250 million tranche of 2.75% senior notes due 2018 sold with a spread of Treasuries plus 130 bps, or 99.986, to yield 2.753%.

A $300 million tranche of 4.45% senior notes due 2023 priced at 165 bps over Treasuries.

The notes sold at 99.992 to yield 4.451%.

Crane's 2.75% notes came in the secondary market to 120 bps bid, 117 bps offered, a trader said.

The 4.45% notes traded 5 bps better at 160 bps bid, 157 bps offered.

JPMorgan and Wells Fargo Securities LLC were the joint bookrunners.

Proceeds will be used to repay amounts borrowed under the company's 364-day credit agreement and its five-year credit agreement and to finance a portion of the purchase of MEI Conlux Holdings (U.S.) Inc. and affiliate MEI Conlux Holdings (Japan) Inc.

Crane is a Stamford, Conn.-based diversified manufacturer of highly engineered industrial products.

Arch Capital new issue

Meanwhile, Arch Capital Group priced an upsized $500 million issue of 5.144% senior notes (A3/A-/A-) due Nov. 1, 2043 with a spread of Treasuries plus 130 bps, according to a market source and an FWP filing with the SEC.

Pricing was at par to yield 5.144%.

The notes sold at the tight end of talk and are fully and unconditionally guaranteed by Arch Capital Group Ltd.

Arch Capital's 5.144% notes due 2043 firmed to 126 bps bid, 124 bps offered in secondary trading, a source said.

BofA Merrill Lynch, JPMorgan and Wells Fargo Securities are the joint bookrunners.

Proceeds will be used to fund the acquisition of certain assets of PMI Mortgage Insurance Co. as well as shares of the company's common stock.

Arch Capital Group is a Hamilton, Bermuda-based reinsurance company.

CubeSmart prices tight

CubeSmart priced $250 million of 4.375% guaranteed 10-year senior notes with a spread of Treasuries plus 170 bps, according to a market source and an FWP filed with the SEC.

The notes (Baa3/BBB-/) priced at 98.995 to yield 4.501%.

In aftermarket trading, CubeSmart's 4.375% notes due 2023 firmed to 168 bps bid, 163 bps offered, a trader said.

Wells Fargo Securities LLC, BofA Merrill Lynch and Jefferies & Co. were the joint bookrunners.

The notes are guaranteed by CubeSmart.

Pricing was at the tight end of talk.

Proceeds will be used to repay all of the outstanding debt under the unsecured term loan portion of the company's credit facility maturing in 2014.

The company also plans to use proceeds to repay a portion of the debt under its revolving credit facility in connection with the acquisition of some storage facilities.

The real estate investment trust of self-storage facilities is based in Wayne, Pa.

Bank/brokerage CDS costs mixed

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

Bank of America Corp.'s CDS costs eased 1 bp to 80 bps bid, 84 bps offered. Citigroup Inc.'s CDS costs were flat at 75 bps bid, 79 bps offered. JPMorgan Chase & Co.'s CDS costs ended unchanged at 71 bps bid, 75 bps offered. Wells Fargo & Co.'s CDS costs were flat at 42 bps bid, 46 bps offered.

Merrill Lynch's CDS costs closed unchanged at 82 bps bid, 86 bps offered. Morgan Stanley's CDS costs firmed 1 bp to 92 bps bid, 96 bps offered. Goldman Sachs Group, Inc.'s CDS costs eased 1 bp to 97 bps bid, 101 bps offered.

Paul Deckelman contributed to this review.

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