Harley-Davidson, Oaktree price, TD Ameritrade plans two tranches; spreads ease; Cisco active

By Andrea Heisinger and Paul Deckelman

New York, Nov. 19 - Harley-Davidson Funding Corp. and Oaktree Capital Management, LP each priced small bond deals on a quiet Thursday.

The pace was considerably slower than in recent days and weeks.

TD Ameritrade Holding Corp. announced a sale of senior unsecured notes in two tranches in a filing with the Securities and Exchange Commission. It is expected to price on Friday.

The funding arm of the motorcycle maker, Harley-Davidson Funding, sold $500 million of five-year notes via Rule 144A and Regulation S by mid-afternoon.

Oaktree Capital sold $250 million of 10-year notes in a deal that went overnight from Wednesday. A market source said he wasn't sure why a size was announced the previous day, but the pricing was held up.

It was "a quiet day" for new issuance, a market source said. "It's kind of nice," he added.

Delta Air Lines Inc. announced terms for its $688.74 million sale of class A and B pass-through certificates that priced late on Wednesday. The class B tranche was split-rated.

Among the established issues in the secondary arena on Thursday, a market source said the CDX Series 13 North American high-grade index widened out by 2 basis points to a mid bid-asked spread level of 102 bps, after having held steady on Wednesday.

Advancing issues continued to lead decliners by around a 10-to-9 ratio.

Overall market activity, reflected in dollar-volume totals, fell by 9% from Wednesday's pace.

Spreads in general were seen a bit wider, in line with modest decline in Treasury yields; for instance, the yield on the benchmark 10-year notes nosed downward by 2 bps Thursday to 3.34%

With a fall-off in new-deal activity from the frenetic pace seen the previous few sessions, investors looked to established bonds, particularly Cisco Systems Inc., which saw active trading in several of its recent issues.

Harley-Davidson sells $500 million

Harley-Davidson Funding priced $500 million of 5.75% five-year senior unsecured notes at Treasuries plus 362.5 bps, a source away from the sale said.

They notes were sold under Rule 144A and Regulation S and are guaranteed by Harley-Davidson Credit Corp.

Bookrunners were BNP Paribas Securities, Citigroup Global Markets, J.P. Morgan Securities and RBS Securities.

Proceeds will go for general corporate purposes, including debt repayment.

The financing provider for motorcycle maker Harley-Davidson is based in Milwaukee.

TD Ameritrade plans two-tranche deal

TD Ameritrade Holding announced a sale of senior unsecured notes in two tranches, according to a 424B5 filing with the SEC. The offering is Friday's business, a syndicate source said.

The securities brokerage had previously filed a shelf registration, which fueled rumors that it is planning a buyout of internet trader E*TRADE Financial Corp.

"Wow. That was announced already?" a market source said in reaction to the senior note sale filing. "It's interesting they're doing a Friday deal."

Bookrunners are Bank of America Merrill Lynch and Citigroup Global Markets. Joint lead manager is TD Securities.

Proceeds will be used to repay existing senior secured term loan facilities.

The sale is guaranteed by the company's subsidiaries.

The securities brokerage and financial services provider is based in Omaha, Neb.

'Dull day' comes to primary

After a near-constant stream of new deals coming into both the primary and secondary part of the high-grade market in the past two weeks, there was a slight slowdown on Thursday.

"We kind of got the paperwork in order - playing catch up," a syndicate source said. "I think this is the first day without a bunch of deals in a while."

That trend may hold over until after Thanksgiving. The TD Ameritrade sale is expected for Friday, but other than that there is not much left on the calendar.

A three-tranche sale from Canada's CDP Financial Inc. was announced on Wednesday, but then disappeared with no size or timing announced.

"I think that one's pricing after Thanksgiving," a syndicate source away from the sale said late on Thursday. "I haven't heard anything more [about it]."

The coming week may have a couple of days of fruitful issuance on Monday and Tuesday before the holiday break.

"There are some things out there that didn't get done [this week]," the syndicate source said.

Oaktree sells 10-years early

Los Angeles-based Oaktree Capital Management sold $250 million of 6.75% 10-year notes early in the day at 360 basis bps over Treasuries. The sale went overnight after being announced on Wednesday, and was priced under Rule 144A.

Bank of America Merrill Lynch ran the books for the global investment management company.

Delta gives pass-through terms

Atlanta-based Delta Air Lines sold $688.74 million of class A and B pass-through certificates late on Wednesday, according to an FWP filing with the Securities and Exchange Commission.

The deal consisted of $568.796 million of 7.75% class A certificates priced at par. They have an initial distribution date of Dec. 17, 2019, and a final distribution of June 17, 2021.

The $119.944 million of 9.75% split-rated class B certificates (Ba2/BBB-) were also priced at par. They have an initial distribution of Dec. 17, 2016, and final date of June 17, 2018.

Goldman Sachs & Co. and Morgan Stanley were bookrunners.

The proceeds will be used to purchase equipment notes for new aircraft.

Harley too late for aftermarket action

The investment-grade sector's major deal of the day, Harley-Davidson's $500 million offering, was seen having come too late for any real trading activity.

"I did not see any trading levels on it," a trader said, "other than that someone was out there looking for bonds, but I did not see any offers in it."

Oaktree offer seen

The trader saw a 335 bps bid offer for Oaktree Capital Management's $250 million offering of 6.75% notes due 2019. That contrasts with the 360 bps level at which the issue had priced earlier in the day.

"However, after seeing that initial offer for the paper, the trader said "I don't know if they ever traded -- I never saw anything else after that."

Spreads widen for recent issues

The trader said that "spreads were definitely a little softer, although there was nothing dramatic," and this was true even of recently buoyant new deals.

Morgan Stanley & Co.'s 4.20% notes due 2014, which had priced at 205 bps over comparable Treasuries on Tuesday, were a case in point - a trader saw the bonds trading as wide as 220 bps over, versus levels around 214 bps on Wednesday.

A market source meantime saw TransAlta Corp.'s 4.75% notes due 2015 having widened nearly 20 bps on the session to about the 230 bps level.

However, those bonds were still trading well inside the 250 bps level at which the $500 million issue had priced on Nov. 9.

Cisco very active

Another deal which priced that session was Silicon Valley-based high-tech giant Cisco Systems' three-part $5 billion transaction - and those bonds were being actively traded Thursday.

A trader saw over $100 million of its 5.5% bonds due 2040 and $75 million of its 4.45% notes due 2020.

The long bond was trading around 141 bps bid, 139 bps offered on Thursday, slightly wider than the 139 bps bid, 137 bps offered level seen on Wednesday.

Some $2 billion of the bonds had priced at 130 bps over back on Nov. 9.

The trader also saw the 2020 bonds offered at 105, versus the 102 level seen on Wednesday, because "everything was a little softer" Thursday.

The company had priced $2.5 billion of the bonds at 100 bps over on Nov. 9.

Cisco's short issue from that deal - the $500 million of 2.9% notes due 2014 - did not make the Most Actives list Thursday as did its two longer companion issues.

But the bonds were being quoted around 45 bps over, versus the 67 bps over level at which they had priced.

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