Toyota, ViacomCBS, Omnicom, Ecolab, Xcel price; deal volume hits record; credit spreads ease

By Cristal Cody

Tupelo, Miss., March 27 – High-grade corporate issuers pushed bond volume for the week to more than $100 billion after several deals priced over Friday’s session.

Week-to-date supply hit a record weekly volume of more than $106 billion.

Investment-grade corporate deal volume already was at an all-time weekly high of more than $98 billion after Thursday’s session, sources said.

The previous heaviest high-grade volume week was the period ended Sept. 6, 2019 when more than $76 billion of bonds priced, one source said.

In the new issuance on Friday, Toyota Motor Credit Corp. priced a $4 billion three-part offering of notes.

ViacomCBS Inc. came with $2.5 billion of senior notes in two tranches.

Omnicom Group Inc. priced an upsized $600 million of long 10-year senior notes.

Xcel Energy Inc. also priced an upsized $600 million of 10-year senior notes.

Ecolab Inc. brought a $250 million reopening of its 4.8% senior notes due March 24, 3030.

In addition, Credit Suisse Group AG offered 11-year senior notes with initial talk in the Treasuries plus 387.5 basis points area on Friday.

The Inter-American Development Bank launched a $2 billion offering of five-year notes on Friday at mid-swaps plus 37 bps.

Toronto-Dominion Bank also launched a $1.25 billion offering of three-year covered bonds at mid-swaps plus 100 bps.

Broader market

Market tone was risk-off with stocks lower and credit spreads wider on the day.

The S&P 500 index closed down 3.37% and the Dow Jones industrial average finished off 4.06%.

Treasuries mostly rallied. The benchmark 10-year note yield fell 6.2 basis points to 0.749%.

High-grade credit spreads moved out more than 10 basis points on Friday.

The Markit CDX North American Investment Grade 33 index eased to a spread of 106.97 bps from 96.72 bps on Thursday, but improved from 125.86 bps on Monday.

The iShares iBoxx Investment Grade Corporate Bond ETF was off 0.6% at the start of the day and closed down 0.2%.

General Dynamics

New issues priced this week have mostly tightened in the secondary market, with some notes trading much tighter than issuance, a source said.

General Dynamics Corp.’s $4 billion of guaranteed senior notes (A2/A/A) priced in five tranches on Monday have come in about 70 bps to 100 bps in the secondary market.

The Falls Church, Va.-based global aerospace and defense company’s $1 billion of 3.625% notes due April 1, 2030 were last seen about 80 bps tighter in the 220 bps area.

The notes priced at 98.947 to yield 3.752% and a Treasuries plus 300 bps spread.

The 10-year tranche was initially talked to price in the Treasuries plus 320 bps to 325 bps area.

High-grade bonds were mostly flat to tighter in the secondary market on Friday, a source said.

Toyota prices $4 billion

Toyota Motor Credit priced $4 billion of notes (A1/AA-) in three tranches on Friday, according to a market source and FWP filings with the Securities and Exchange Commission.

The company sold $1.75 billion of 2.9% three-year notes at 99.989 to yield 2.904%, or a spread of Treasuries plus 260 bps.

A $1.25 billion tranche of 3% five-year notes priced at 99.816 to yield 3.04% and a 265 bps over Treasuries spread.

Toyota sold $1 billion of 3.375% 10-year notes at 99.933 to yield 3.383% and with a spread of 265 bps over Treasuries.

The three- and five-year notes were initially talked to price in the Treasuries plus 280 bps area, while the 10-year issue was talked in the 290 bps spread area.

BofA Securities, Inc., Morgan Stanley & Co. LLC, MUFG, RBC Capital Markets, LLC, SG Americas Securities, LLC and TD Securities (USA) LLC were the bookrunners.

Toyota Motor Credit is a Torrance, Calif.-based financing arm and subsidiary of Toyota Motor Corp.

ViacomCBS sells notes

ViacomCBS priced $2.5 billion of senior notes (Baa2/BBB/BBB) in two tranches on Friday, according to a market source and an FWP filing.

The company sold $1.25 billion of 4.75% five-year notes at 99.498 to yield 4.86%, or a spread of Treasuries plus 445 bps.

A $1.25 billion tranche of 4.95% notes due Jan. 15, 2031 priced at 98.036 to yield 5.191% and a Treasuries plus 445 bps spread.

Both tranches were initially talked to print in the Treasuries plus 460 bps area.

BofA Securities, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Mizuho Securities USA LLC were the bookrunners.

The media and entertainment company is based in New York.

Xcel Energy upsizes issue

Xcel Energy priced an upsized $600 million of 3.4% 10-year senior notes (Baa1/BBB+/BBB+) on Friday at a spread of 270 bps over Treasuries, according to a market source and an FWP filing.

The notes priced at 99.67 to yield 3.438%.

Initial guidance was in the Treasuries plus 312.5 bps area.

The deal was upsized from $500 million.

Barclays, BofA Securities, J.P. Morgan and RBC Capital Markets were the bookrunners.

The public utility holding company is based in Minneapolis.

Omnicom sells $600 million

Omnicom Group priced an upsized $600 million of 4.2% long 10-year senior notes (Baa1/BBB+) at 99.62 to yield 4.247% and a spread of Treasuries plus 350 basis points on Friday, according to a market source and an FWP filing.

Initial price talk was in the low 400 bps Treasuries area.

The deal was upsized from $500 million.

Citigroup, BofA Securities, J.P. Morgan, BNP Paribas Securities Corp., Mizuho and U.S. Bancorp Investments Inc. were the bookrunners.

The global marketing and corporate communications company is based in New York.

Ecolab prices add-on

Ecolab priced a $250 million reopening of its 4.8% senior notes due March 24, 3030 (Baa1/A-/A-) on Friday at a spread of 287.5 bps over Treasuries, according to a market source and an FWP filing.

The add-on was talked in the Treasuries plus 325 bps area.

The issue priced at 109.686 to yield 3.611%.

Ecolab first sold $500 million of the notes at 99.906 to yield 4.812%, or 387.5 bps over Treasuries, on March 20. The total outstanding is now $750 million.

BofA Securities, Citigroup, Goldman Sachs, MUFG and U.S. Bancorp were the lead managers.

The cleaning and sanitizing company is based in St. Paul, Minn.

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