Disney, UPS, Northrop Grumman, JPMorgan, Morgan Stanley, Citigroup price; outflows soar

By Cristal Cody

Tupelo, Miss., March 19 – Investment-grade companies priced more than $18 billion of bonds over Thursday’s session.

Walt Disney Co. sold $6 billion of medium-term notes in five tranches.

United Parcel Service, Inc. priced $3.5 billion of senior notes in four tranches.

Northrop Grumman Corp. placed $2.25 billion of senior notes in three parts.

JPMorgan Chase & Co. tapped the market with $2.5 billion of fixed-to-floating rate senior notes due March 24, 2031.

MetLife, Inc. sold $1 billion of 10-year senior notes.

Citigroup Inc. priced $1.3 billion of fixed-to-floating-rate senior notes due March 26, 2041.

Morgan Stanley came with $2 billion of global medium-term fixed-to-floating-rate senior notes due March 24, 2051.

The offerings bring week to date high-grade supply to more than $45 billion.

Issuers priced more than $27 billion of bonds in the primary market on Tuesday in the only other active deal session this week.

An investment-grade bond deal from T-Mobile U.S. Inc. to finance its acquisition of Sprint Corp. remains on the table after the company announced Thursday that it is financially prepared to close the merger, based on previously secured commitments for senior credit facilities and bridge financing.

As previously reported, the company has a commitment for $8 billion of credit facilities and a $19 billion 364-day senior secured covenant-lite bridge facility.

A potential high-grade senior secured bond offering from T-Mobile was anticipated in the $20 billion-plus area based on the company’s senior bridge financing, according to market sources.

T-Mobile held a roadshow in the U.S. and Europe markets in 2019 for the offering via Barclays, Deutsche Bank Securities Inc. and Goldman Sachs & Co. LLC.

Meanwhile, Refinitive Lipper US Fund Flows on Thursday reported a record $35.59 billion of outflows for corporate investment-grade funds for the past week ended Wednesday.

The outflows mark the third week of outflows with the total up from the then-record $7.28 billion of outflows in the previous week and $4.79 billion of outflows in the week prior.

Credit spreads firm

Investment-grade credit spreads recovered about 10 basis points on Thursday after widening nearly 24 bps in the previous session.

The Markit CDX North American Investment Grade 33 index firmed to a spread of 138.51 bps from 148.03 bps on Wednesday.

Stocks turned back into positive territory at the start of the session on increased economic action plans by the U.S. government in response to the coronavirus.

Equities eked out slight gains on Thursday. The S&P 500 improved 0.47%, while the Dow Jones industrial average closed up 0.95% and the Nasdaq climbed 2.3%.

Treasuries resumed a rally that saw yields decline about 3 bps to 17 bps on the day. The benchmark 10-year note yield fell 18 bps to 1.086% early Thursday and closed off 14.7 bps at 1.119%.

Additional business closings were announced in the country with Americans being urged or ordered to work from home with schools and retailers closed and restaurants in a number of states closed except for take-out or delivery.

Other retailers including Walmart Inc. and Kroger Co. announced shorter operating hours.

The Federal Reserve released several announcements on Thursday, including the establishment of temporary U.S. dollar liquidity arrangements with foreign banks to lessen strains in global U.S. dollar funding markets.

The Federal Reserve Board also said it is “encouraged by the notable increase in discount window borrowing this week with banks demonstrating a willingness to use the discount window as a source of funding to support the flow of credit to households and businesses.”

In the secondary market, high-grade bonds were mostly weaker on Thursday, a source said.

Walmart Inc.’s senior notes (Aa2/AA/AA) were mixed but traded about 13 bps to 50 bps wider.

McDonald’s Corp.’s senior medium-term notes (Baa1/BBB+/) moved out about 40 bps to 75 bps over the session.

Occidental Petroleum Corp.’s 3.5% senior notes due Aug. 15, 2029 (Ba1/BBB/BBB+) priced as part of a $13 billion 10-tranche offering in 2019 sank nearly 10 points on the day to 57.5 bid after Moody’s Investors Service downgraded the company to Ba1 from Baa3 in the previous session, a source said.

The notes were last seen with a spread in the 744 bps area.

The Los Angeles oil and gas, chemical and midstream company sold $1.5 billion of the notes on Aug. 1 at 99.506 to yield 3.559% and a Treasuries plus 185 bps spread.

Walt Disney prices $6 billion

Walt Disney sold $6 billion of medium-term notes (A2/A/A) in five tranches on Thursday, according to a market source and an FWP filing with the Securities and Exchange Commission.

A $1.75 billion tranche of 3.35% five-year notes priced at 99.945 to yield 3.362% and a spread of Treasuries plus 270 bps.

Walt Disney sold $500 million of 3.7% seven-year notes at 99.89 to yield 3.718%, or a Treasuries plus 270 bps spread.

The company brought $1.25 billion of 3.8% 10-year notes at 99.72 to yield 3.834% and a Treasuries plus 270 bps spread.

A $750 million tranche of 4.625% 20-year notes priced at 99.767 to yield 4.643%, or a 275 bps over Treasuries spread.

In the final tranche, Walt Disney sold $1.75 billion of 4.7% 30-year notes at 99.316 to yield 4.743% and a Treasuries plus 285 bps spread.

The five-, seven- and 10-year notes were talked to price at the Treasuries plus 285 bps area.

The 20-year notes were initially talked to price with a spread in the 290 bps over Treasuries area, and the 30-year notes were talked at the 300 bps spread area.

Bookrunners were BofA Securities, Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC, BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc., Mizuho Securities USA LLC, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, SG Americas Securities, LLC, SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey, Inc., TD Securities (USA) LLC, U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC.

The notes will be guaranteed by TWDC Enterprises 18 Corp.

Walt Disney is a Burbank, Calif.-based entertainment and media company.

UPS raises $3.5 billion

United Parcel Service priced $3.5 billion of registered senior notes (A2/A/) in four tranches on Thursday, according to a market source.

The company sold $1 billion of 3.9% five-year notes at a spread of 325 bps over Treasuries.

The five-year notes were talked to price at the Treasuries plus 350 bps area.

UPS priced $750 million of 4.45% 10-year notes with a Treasuries plus 335 bps spread.

The 10-year issue was initially talked to price in the 360 bps spread area.

A $500 million tranche of 5.2% 20-year notes priced at a 335 bps over Treasuries spread compared to talk in the 360 bps spread area.

UPS sold $1.25 billion of 5.3% 30-year notes at a Treasuries plus 345 bps spread.

The bonds were talked to price in the Treasuries plus 370 bps area.

BofA Securities, Citigroup Global Markets, J.P. Morgan and Wells Fargo were the bookrunners.

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

JPMorgan prices $2.5 billion

JPMorgan Chase priced $2.5 billion of 4.493% fixed-to-floating rate senior notes due March 24, 2031 (A2/A-/AA-) at a spread of Treasuries plus 340 bps on Thursday, according to a market source.

Initial price talk was in the Treasuries plus 350 bps area with guidance firmed to the 345 bps area, plus or minus 5 bps.

The notes will reset after the fixed-rate period to a floating rate of SOFR plus 379 bps.

J.P. Morgan was the bookrunner.

The financial services firm is based in New York.

Northrop Grumman prices $2.25 billion

Northrop Grumman priced $2.25 billion of senior notes (Baa2/BBB/BBB) in three tranches on Thursday, according to a market source.

The company priced $750 million of 4.4% 10-year notes at a spread of 330 bps over Treasuries.

A $500 million tranche of 5.15% 20-year notes priced with a Treasuries plus 330 bps spread.

Northrop Grumman priced $1 billion of 5.25% 30-year notes at a 340 bps over Treasuries spread.

Initial price talk on the 10-year notes was in the Treasuries plus 350 bps area, while the 20-year notes were talked to print in the Treasuries plus 350 bps to 362.5 bps area and 30-year notes were initially talked to print at the 362.5 bps to 375 bps over Treasuries area.

Price guidance firmed to the 335 bps area for the 10-year notes, to 335 bps area for the 20-year tranche and to the 345 bps area for the 30-year bonds.

J.P. Morgan, BofA Securities, Citigroup Global Markets, Goldman Sachs and Wells Fargo were the bookrunners.

The global security company is based in Falls Church, Va.

Morgan Stanley prints $2 billion

Morgan Stanley (A3/BBB+/A) priced $2 billion of 5.597% global medium-term fixed-to-floating-rate senior notes due March 24, 2051 on Thursday at par to yield a spread of 375 bps over Treasuries, according to a market source and an FWP filing.

Initial price talk was in the Treasuries plus 375 bps area.

The coupon will reset to a floating rate of SOFR plus plus 484 bps from March 24, 2050 to but excluding the maturity date.

Morgan Stanley was the bookrunner.

Morgan Stanley is a New York-based financial products and services company.

Citigroup prices $1.3 billion

Citigroup priced $1.3 billion of 5.316% fixed-to-floating-rate senior notes due March 26, 2041 (A3/BBB+/A) on Thursday at a spread of Treasuries plus 350 bps, according to a market source.

The notes priced on top of talk in the Treasuries plus 350 bps area.

After the initial fixed-rate period, the notes will convert to a floating rate of SOFR plus 454.8 bps.

Citigroup Global Markets was the bookrunner.

The New York-based financial services company plans to use the proceeds for general corporate purposes.

MetLife sells $1 billion notes

MetLife sold $1 billion of 4.55% 10-year senior notes (A3/A-/A-) on Thursday at a spread of 350 bps over Treasuries, according to a market source and an FWP filing.

Initial price talk was in the Treasuries plus 350 bps to 362.5 bps area.

The notes priced at 99.595 to yield 4.601%.

Barclays, Credit Suisse, Deutsche, Goldman Sachs and J.P. Morgan were the bookrunners.

MetLife is a New York-based insurance provider.

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