Walgreen, Transocean, ConAgra, Dominion sell in congested primary; HP active; new deals firm

By Aleesia Forni and Andrea Heisinger

New York, Sept. 10 - Issuers for the week didn't hesitate to jump into the market on Monday with a landslide of new offerings pricing.

There was a handful of deals from high-profile names pricing in multiple maturities.

Walgreen Co. sold $4 billion of notes in five tranches, while Merck & Co., Inc. priced $2.5 billion of paper in three maturities.

Dominion Resources, Inc. priced $1.05 billion of bonds in three parts. Another energy company, Oneok Partners, LP, was in the market with a $1.3 billion trade in two maturities.

There was a deal from the financial sector as the Commonwealth Bank of Australia priced $3.25 billion of bonds in three maturities.

Tyco Flow Control International Finance SA sold $900 million of bonds due 2017 and 2022 in a private offering.

Offshore oil and gas drilling contractor Transocean Inc. priced $1.5 billion of senior notes in two tranches guaranteed by parent company Transocean Ltd.

Convenience food giant ConAgra Foods, Inc. sold $750 million of senior notes divided evenly among three tranches.

Among Monday's quickly priced single-tranche offerings was a $600 million deal of 10-year notes from Clorox Co.

Public Service Electric & Gas Co. was in the market with a $350 million deal of 30-year bonds that sold 10 basis points tighter than talk.

Measurement company Agilent Technologies, Inc. priced $400 million of 10-year notes.

Exelon subsidiary Peco Energy Co. sold $350 million of 10-year first mortgage bonds.

A $200 million sale of cumulative perpetual preferred shares was announced by Public Storage. Pricing is expected on Tuesday.

There was about $17 billion of straight corporate investment-grade bond issuance to start the week. Monday and Tuesday are expected to be the busiest days for new deals as companies vie to price deals before market conditions can deteriorate later in the week.

There is a two-day Federal Open Market Committee meeting starting on Wednesday that's being watched closely for signs of a third round of quantitative easing or other steps to help the economy.

"That's why we're so busy right now," a source said of the early rush to price deals for the week. It's similar to the deluge that hit the market the previous week ahead of a meeting of the European Central Bank, where a bond-buying measure in euro zone countries was announced.

Many of the day's sales, and a lot from the previous week's haul, were sold 10 bps or more tighter than the spread at which they were talked.

"It's high demand," a syndicate source said in explanation.

Merck, Transocean, Agilent, ConAgra and PSE&G all priced their deals extremely tight during Monday's session.

Tuesday should have a full calendar as well, although which companies would exactly tap the market were up in the air.

"I know that across the syndicates, yes, it should be busy," a source said.

The Markit CDX Series 18 North American Investment Grade index was unchanged at a spread of 95 bps on Monday.

In the secondary market, Hewlett-Packard Co.'s notes due 2021 and 2022 were among the day's most actively traded deals, according to a market source.

"HP is a little weaker, maybe 5 bps weaker," a trader said. "Aside from that, there's not a ton of activity."

Another trader was "seeing markets on lots of [Monday's] new deals" near the day's close.

Nearly all of the day's new issues were quoted tighter late in the session, according to the trader.

The new notes from Agilent firmed 3 bps, while each tranche of ConAgra's new deal was quoted 2 bps tighter in the secondary market.

Meanwhile, Tyco's new five- and 10-year notes firmed 2 bps.

In other trading, Walgreen's new issues were seen 4 bps to 5 bps tighter late in the day, and Commonwealth Bank's deal firmed 1 bps.

Walgreens offers $4 billion

Walgreens was in the market with a $4 billion offering of notes (Baa1/BBB/) in five tranches, a market source said.

A $550 million tranche of floating-rate notes due 2013 priced at par to yield Libor plus 50 bps.

There was $750 million of 1% notes due 2015 sold at a spread of Treasuries plus 80 bps. The notes traded 4 bps tighter at 76 bps bid, 73 bps offered.

A $1 billion tranche of 1.8% five-year notes was priced at 120 bps over Treasuries. A trader saw the notes at 115 bps bid, 112 bps offered.

The largest tranche was $1.2 billion of 3.1% 10-year notes sold at a spread of Treasuries plus 145 bps, and the tranche traded at 141 bps bid, 138 bpd offered late in the day.

Finally, there was $500 million of 4.4% 30-year bonds priced at a spread of Treasuries plus 165 bps. These notes were quoted 5 bps tighter at 160 bps bid, 157 bps offered near the session's close.

Active bookrunners were Bank of America Merrill Lynch and Goldman Sachs & Co.

Proceeds are being used to repay borrowings under a bridge term loan and for general corporate purposes, including the acquisition of USA Drug.

The drugstore chain is based in Deerfield, Ill.

Merck sees high demand

Merck announced and priced a $2.5 billion offering of notes (A1/AA/A+) in three tranches, a source close to the deal said.

There was "high demand" for the tranches, with investors oversubscribing the books at "north of $9.5 billion," the source said.

A $1 billion tranche of 1.1% notes due 2018 was sold at a spread of Treasuries plus 50 bps. The tranche priced tighter than guidance in the 60 bps area.

There was also $1 billion of 2.4% 10-year notes priced at 75 bps over Treasuries. The notes sold tighter than guidance in the high 80 bps area.

A $500 million tranche of 3.6% 30-year bonds was sold at 90 bps over Treasuries. The bonds were priced tighter than talk in the 100 bps area.

Bookrunners were Bank of America Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC.

Proceeds are being used for general corporate purposes, including making contributions to pension plans and repaying outstanding commercial paper borrowings and upcoming debt maturities.

The global health care company is based in Whitehouse Station, N.J.

Tyco's private deal

Tyco Flow Control International Finance priced a $900 million deal of notes (Baa2/BBB/) in a private two-part sale, a market source said.

The offering included $350 million of 1.875% five-year notes priced at a spread of 125 bps over Treasuries.

In the secondary market, the notes firmed 2 bps to 123 bps bid, 121 bps offered.

The second part was $550 million of 3.15% 10-year bonds sold at 150 bps over Treasuries.

A trader saw the 10-year bonds at 148 bps bid, 146 bps offered.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC were bookrunners.

The sale was done under Rule 144A and Regulation S.

Proceeds are being used loan sufficient funds to Pentair Inc. to enable it to redeem $500 million of its senior unsecured notes following the completion of the planned merger of Pentair with a wholly owned, indirect subsidiary of Tyco Flow Control following the planned spin-off of Flow Control from its parent company, Tyco International Ltd. The flow control subsidiary also intends to make a cash payment to Tyco to repay certain intercompany obligations entered into in connection with the spin-off and merger.

The valve and control, water and environmental products unit of Tyco International is based domestically in Princeton, N.J.

Dominion's $1.05 billion

Dominion Resources priced a $1.05 billion offering of senior notes (Baa2/A-/) in three maturities, a market source said.

The deal had a do-not-grow provision on it.

A $350 million tranche of 1.4% five-year notes was sold at a spread of Treasuries plus 78 bps. The notes were sold tighter than guidance in the 85 bps area, a source said.

There was $350 million of 4.05% 10-year paper priced at a spread of 110 bps over Treasuries. The 10-year bonds were sold in line with guidance in the 110 bps area.

A $350 million tranche of 4.05% 30-year bonds was sold at a 130 bps spread over Treasuries. There was talk in the 130 bps to 135 bps range, with the bonds selling at the tight end.

BNP Paribas Securities Corp., J.P. Morgan Securities LLC, RBS Securities Inc. and Wells Fargo Securities LLC were active bookrunners.

Proceeds are being used for general corporate purposes, repayment of short-term debt including commercial paper and the funding of capital needs.

The energy producer and transporter is based in Richmond, Va.

ConAgra prices $750 million

ConAgra Foods priced a $750 million deal of senior notes (Baa2/BBB/BBB) in three tranches, a source close to the trade said.

A $250 million tranche of 1.35% three-year notes sold at a spread of Treasuries plus 110 bps. The notes were talked higher in the 145 bps area.

The $250 million of 2.1% five-year notes was priced at a spread of 150 bps over Treasuries. The tranche was sold tighter than talk in the 180 bps area.

A $250 million tranche of 3.25% 10-year notes was priced at a spread of Treasuries plus 165 bps. The tranche sold lower than guidance in the 190 bps area.

In trading, the three-year notes tightened 2 bps to 108 bps bid, 106 bps offered, while the 5.5-year tranche was quoted at 148 bps bid, 145 bps offered.

The 10-year notes were also 2 bps tighter at 163 bps bid, 161 bps offered.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes including repayment of outstanding commercial paper.

The commercial and consumer foods company is based in Omaha.

Transocean sells in two parts

Transocean announced and priced a $1.5 billion trade of senior notes (Baa3/BBB-/BBB-) in two tranches, a source said.

The sale was "very oversubscribed," the source said, with about $9 billion on the books.

The deal included $750 million of 2.5% five-year notes priced at a spread of 190 bps over Treasuries. The notes were sold tighter than guidance in the low 200 bps area, the source said.

There was also $750 million of 3.8% 10-year notes sold at 220 bps over Treasuries. The notes were also priced tighter than talk in the mid-200 bps area.

Barclays, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC were active bookrunners.

Proceeds are being used to fund costs associated with the construction of four newbuild drillships.

The deal is guaranteed by Transocean Ltd., an offshore oil and drilling contractor based in Zug, Switzerland.

Oneok sells $1.3 billion

Oneok Partners priced a reallocated $1.3 billion deal of senior notes (Baa2/BBB/) after adding a tranche to its initial plans for five-year notes, a syndicate source said.

The $400 million of 2% five-year notes sold at a spread of Treasuries plus 140 bps.

A $900 million tranche of 3.375% 10-year notes priced at 175 bps over Treasuries.

The deal is guaranteed by Oneok Partners Intermediate Limited Partnership.

RBS Securities Inc., Mitsubishi UFJ Securities (USA) Inc. and U.S. Bancorp Investments Inc. were bookrunners.

Proceeds are being used to repay amounts under a $1.2 billion commercial paper program and for general corporate purposes, including capital expenditures.

The natural gas company is based in Tulsa, Okla.

CBA's $3.25 billion

Commonwealth Bank of Australia priced $3.25 billion of bonds (Aa2/AA-/) in tranches due 2015, 2017 and 2022, a source away from the trade said.

A $1 billion tranche of three-year notes was sold at a spread of Treasuries plus 80 basis points.

The $1 billion of five-year notes sold at a spread of Treasuries plus 95 bps.

There was also $1.25 billion of 10-year notes priced at 130 bps over Treasuries.

The five-year tranche traded 1 bps tighter at 129 bps bid, 125 bps offered.

Full terms of the trade were not available at press time.

Bookrunners were Commonwealth Bank, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and J.P. Morgan Securities LLC.

The banking and financial services company is based in Sydney.

Clorox's 10-years

Clorox did a quick $600 million deal of 3.05% 10-year senior notes (Baa1/BBB+/BBB+) to yield Treasuries plus 140 bps, a market source said.

The notes were seen at 135 bps offered later in the day.

There was a do-not-grow provision on the sale.

BNP Paribas Securities Corp., Citigroup Global Markets Inc., Mitsubishi UFJ Securities (USA) Inc. and Wells Fargo Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes, including retirement of commercial paper and repayment of $350 million of 5.45% notes due in October.

The manufacturer and marketer of consumer and professional products is based in Oakland, Calif.

PSE&G prices tight

Public Service Electric & Gas priced $350 million of 3.65% 30-year medium-term secured notes, series H, (A1/A-/) to yield Treasuries plus 85 bps, a market source said.

The deal was sold tighter than guidance in the 95 bps area.

Bookrunners were Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and RBS Securities Inc.

Proceeds are being added to the company's general funds to be used for general corporate purposes.

The utility is based in Newark, N.J.

Agilent sells $400 million

Agilent Technologies sold $400 million of 3.2% 10-year senior notes (Baa2/BBB+/BBB+) to yield Treasuries plus 155 bps, a source close to the trade said.

A trader saw the notes at 145 bps offered earlier in the session before tightening to 152 bps bid, 142 bps offered near the day's end.

The notes were sold tighter than talk in the 190 bps area.

Bookrunners were Bank of America Merrill Lynch, Barclays and J.P. Morgan Securities LLC.

Proceeds are being used for general corporate purposes, including repayment of senior notes due on Sept. 14.

The bio-analytic and electronic measurement technology company is based in Santa Clara, Calif.

Peco's mortgage bonds

Peco Energy priced $350 million of 2.375% 10-year first mortgage bonds (A1/A-/A) to yield Treasuries plus 70 bps, a market source away from the trade said.

Bookrunners were BNP Paribas Securities Corp., J.P. Morgan Securities LLC and U.S. Bancorp Investments Inc.

Proceeds are being used to pay $250 million of 4.75% first-mortgage bonds due Oct. 1 at maturity and to fund general corporate purposes.

The electric and natural gas transmission subsidiary of Exelon is based in Philadelphia.

Public Storage's preferreds

Public Storage is selling at least $200 million series V cumulative perpetual preferred shares of beneficial interest, the company said in a prospectus filed with the Securities and Exchange Commission.

The shares will be issued as depositary shares representing a 1/1,000th interest.

Price talk is 5.375% to 5.5%, according to a trader. Pricing is expected on Tuesday.

A trader said the issue was trading in a $24.60 to $24.65 context in the gray market as of midday.

"It's a pretty low coupon for not having a DRD on it," the trader said, noting that the issue would probably come around 5.4%.

Another trader said, after the bell, that the paper was around $24.65 in the gray market.

The Glendale, Calif.-based real estate investment trust will apply to list the new series of preferreds on the New York Stock Exchange under the ticker symbol "PSAPV."

Bookrunners are Bank of America Merrill Lynch, Morgan Stanley & Co. Inc., UBS Securities LLC and Wells Fargo Securities LLC.

Proceeds will be used to redeem all $247.3 million of outstanding 6.45% series F cumulative preferreds. Any remaining funds will be used to general corporate purposes, which might include investments in self-storage facilities and the redemption of other preferred issues.

Stephanie N. Rotondo contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.