Caterpillar, Barrick Gold price; Credit Suisse sells covered bonds; Barrick firms; Aon widens

By Andrea Heisinger and Cristal Cody

New York, May 24 - Caterpillar Inc. and Barrick Gold Corp./Barrick North America Finance LLC had the two largest sales in the high-grade bond market on Tuesday with each totaling $4 billion or more. This was a return to form for the primary, which has seen several large deals in the month of May.

It was Caterpillar's largest sale ever at $4.5 billion in five parts. The deal was initially in four tranches, but two-year floating-rate notes were added at the launch.

Gold mining company Barrick sold $4 billion in four parts.

Risk management company Aon Corp. priced $500 million of five-year notes in line with talk.

A utility issue came from Oklahoma Gas & Electric Co. The company sold $250 million of 30-year bonds for general corporate purposes.

On the sovereign side, Germany's KfW sold $5 billion of five-year notes.

And there was an issue of five-year covered bonds from Credit Suisse Group AG. The $1 billion deal follows Monday's $1.25 billion five-year covered issue from Norway's SpareBank 1 Boligkreditt AS.

Specialty chemical maker RPM International Inc. reopened its issue of 6.125% notes due 2019 to add $150 million.

There was a $400 million offering of 10-year notes from Reinsurance Group of America, Inc. The company is using the proceeds to repay notes.

Chicago-based transportation leasing company GATX Corp. priced $250 million of 10-year notes.

A $230 million sale of perpetual non-cumulative preferred stock came from Endurance Specialty Holdings Ltd.

The tone was better at the open than it was on Monday when equities fell on sovereign debt fears from the euro zone. Many sales that were slated to price Monday were instead sold Tuesday, which accounted for the large deals from Caterpillar and Barrick.

"Most of this was yesterday's," a syndicate source said. "And a lot of stuff that was supposed to price today is pricing tomorrow. Should be another busy one."

The volume doesn't touch what the high-grade primary has seen for the past two weeks but should hit the $12 billion expected, the source added.

Overall investment-grade Trace volume climbed 25% to more than $12.5 billion on Tuesday, a market source said.

Barrick Gold's new bonds traded 1 basis point to 2 bps tighter in initial secondary trading after the deal priced, a trader said.

Caterpillar's bonds also were stronger in the secondary market, but Aon's new notes due 2016 widened on the bid side by 1 bp, according to traders.

"No markets" were seen in RPM International's reopening of the notes due 2019, a trader said.

The Markit CDX Series 14 North American Investment Grade index firmed 1 bp to a spread of 91 bps, Markit Group Ltd. said.

Treasuries rose, sending yields down 1 bp to 2 bps on a fresh round of overseas debt concerns and after the government saw strong demand for its sale of two-year notes on Tuesday. Ending the day, the yield on the 10-year note yield fell 2 bps to 3.11% and the 30-year bond yield dropped 2 bps to 4.25%.

Caterpillar's $4.5 billion

Caterpillar sold $4.5 billion of senior bonds (A2/A/A) in five parts, said a market source away from the deal.

The sale was initially in four parts. A tranche of two-year floating-rate notes was added at the launch, the source said.

A $500 million tranche of floaters due 2012 was priced at par to yield Libor plus 10 bps. The second tranche of floaters was $750 million of two-year notes priced at par to yield Libor plus 17 bps.

The $750 million of 1.375% three-year notes priced at a spread of Treasuries plus 50 bps.

There was a $1.25 billion tranche of 3.9% 10-year notes sold at 85 bps over Treasuries.

The final part was $1.25 billion of 5.2% 30-year bonds priced at Treasuries plus 98 bps.

All of the tranches sold in line with guidance.

Active bookrunners were Barclays Capital Inc., J.P. Morgan Securities LLC and RBS Securities Inc.

Proceeds are being used to pay a portion of the costs for the company's acquisition of Bucyrus International, Inc.

There is a change-of-control put at 101 if the Bucyrus merger is not completed on or before June 30, 2012.

Caterpillar last sold bonds in a $1.5 billion sale in three tranches on Dec. 2, 2008.

In secondary trading, the company's three-year notes firmed to 48 bps bid, 43 bps offered, one trader said. Another trader saw the notes at 45 bps offered.

Also, the 10-year notes traded at 81 bps offered and later at 85 bps bid, 80 bps offered, traders said. The tranche of 30-year bonds tightened to 95 bps bid, 92 bps offered.

The heavy machinery maker is based in Peoria, Ill.

Barrick units sell $4 billion

Barrick Gold and Barrick North America Finance sold $4 billion of senior notes (Baa1/A-) in four parts, an informed source said.

There was more than $9 billion on the books for the sale, and the most interest was in the 10-year tranche, the source said.

Barrick Gold sold $700 million of 1.75% three-year notes priced at a spread of Treasuries plus 90 bps. The company also sold a $1.1 billion tranche of 2.9% five-year notes priced at Treasuries plus 115 bps.

The three-year notes sold at the low end of guidance in the 95 bps area, and the five-year notes priced in line with talk in the 115 bps area.

Barrick North America Finance priced $1.35 billion of 4.4% 10-year notes at 130 bps over Treasuries. The issuer also priced $850 million of 5.7% 30-year bonds at Treasuries plus 150 bps. Both of the notes priced in line with guidance.

All of the notes were offered under Rule 144A.

Citigroup Global Markets Inc., Morgan Stanley & Co., Inc. and RBS Securities were bookrunners.

The proceeds will be used to partially finance Barrick's offer to purchase Equinox Minerals Ltd. in an all-cash offer of about $7.7 billion.

Barrick Gold last priced a deal when it sold $750 million of 10-year notes on March 19, 2009.

In secondary trading, the three-year notes were seen soon after pricing at 90 bps bid, 85 bps offered, traders said.

The five-year notes traded at 115 bps bid, one trader said. The notes firmed to 114 bps bid, 109 bps offered, another source said.

The notes due 2021 also tightened to 128 bps bid, 124 bps offered.

The gold mining company is based in Toronto.

Aon sells five-year

Chicago-based Aon sold $500 million of 3.125% five-year senior notes (Baa2/BBB+/BBB+) to yield 135 bps over Treasuries, a market source said.

They sold in line with talk in the 135 bps area, the source said.

Bookrunners were Bank of America Merrill Lynch and Morgan Stanley.

Proceeds are going to repay the outstanding portion of a $1 billion three-year term credit agreement.

In the secondary market, Aon's notes due 2016 traded at 136 bps bid, 135 bps offered, a trader said.

Another trader saw the notes 2 bps tighter on the offer side at 136 bps bid, 133 bps offered.

The issuer is a risk management, insurance and consulting company.

Credit Suisse's covered bonds

Credit Suisse Group priced $1 billion of 2.6% five-year covered bonds at a spread of 60 bps over mid-swaps, or Treasuries plus 83.2 bps, said a source away from the offering.

The bonds (Aaa/AAA) were sold under Rule 144A.

Bookrunners were BNP Paribas Securities, Credit Suisse Securities, HSBC Securities and RBS Securities.

The international financial services company is based in Zurich.

Oklahoma G&E's 30-year

Oklahoma Gas & Electric sold $250 million of 5.25% 30-year senior bonds (A2/BBB+/A+) at a spread of Treasuries plus 105 bps, a source close to the deal said.

They were sold at the tight end of guidance in the 110 bps area, plus or minus 5 bps, the source said.

JPMorgan and Wells Fargo Securities LLC were active bookrunners.

Proceeds will be added to the company's general funds and used to repay short-term debt, to fund an ongoing capital expenditure program or for working capital.

The notes traded at 101 bps offered in the secondary, a trader said.

The electric utility is based in Oklahoma City.

RGA sells $400 million

Reinsurance Group of America sold $400 million of 5% 10-year senior notes (Baa1/A-) to yield Treasuries plus 195 bps, said a source who worked on the sale.

They were priced in the middle of price guidance in the 200 bps area, plus or minus 10 bps, the source said.

Bank of America Merrill Lynch, JPMorgan and Wells Fargo were bookrunners.

Proceeds will be used to fund the payment of $200 million of 6.75% senior notes maturing in December 2011 and for general corporate purposes.

The holding company for life reinsurance is based in Chesterfield, Mo.

RPM reopens 10-year

RPM International reopened its issue of 6.125% notes due 2019 to add $150 million, an informed source said.

The notes (Baa3/BBB-/BBB-) were priced at Treasuries plus 178 bps.

Total issuance is $450 million including $300 million issued on Oct. 9, 2009.

Bookrunners were Bank of America Merrill Lynch and Wells Fargo.

Proceeds from the reopened notes are going toward general corporate purposes including working capital and acquisitions of businesses or other assets and to fund the increased minimum interest in Kemrock Industries and Exports Ltd.

The maker of specialty chemical products is based in Medina, Ohio.

GATX sells 10-year

GATX sold $250 million of 4.85% 10-year senior notes (Baa1/BBB) to yield Treasuries plus 175 bps, according to an FWP filing with the Securities and Exchange Commission.

Bookrunners were Bank of America Merrill Lynch and Citigroup.

Proceeds are being used to repay commercial paper maturing within three days, to repay some or all of the company's outstanding $181.77 million of 6.273% notes due June 15, 2011 and for general corporate purposes including working capital and capital expenditures.

The transportation leasing service is based in Chicago.

KfW prices $5 billion

KfW sold $5 billion of 2% five-year notes (Aaa/AAA/AAA) at 99.726, according to an FWP filing with the SEC.

Bookrunners were Goldman Sachs & Co., Morgan Stanley and UBS Securities LLC.

The development bank for Germany is based in Frankfurt.

Endurance sells preferreds

Endurance Specialty Holdings priced a $230 million issue of 7.5% non-cumulative series B perpetual preferred shares.

According to a market source, $150 million, or 6 million shares (Baa3/BBB-), was expected to be sold. Price talk was in the 7.625% area.

"It's trading at par already," the source said after the deal was first announced. "They should cut the [dividend] and increase the size."

The deal consists of a $200 million offering plus a $30 million over-allotment option.

The liquidation preference is $25 per share.

Bank of America Merrill Lynch and Wells Fargo were the joint bookrunners.

Proceeds will be used for general corporate purposes, including repurchases of outstanding debt and to support the underwriting activities of Endurance's insurance and reinsurance subsidiaries.

Endurance is a Pembroke, Bermuda-based insurance company.

Stephanie N. Rotondo contributed to this review

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