PSE&G, Oneok Partners price with all eyes on Verizon; Dell softer ahead of shareholder vote

By Cristal Cody and Aleesia Forni

Virginia Beach, Va., Sept. 9 - All eyes were on the newly announced upcoming deal from Verixon Communications Inc. during Monday's session, though a modest crop of new issues made their way to the high-grade bond market.

Corporate Office Properties LP, Public Service Electric & Gas Co. and Oneok Partners, LP were among the names bringing deals to the day's primary market.

The session saw Verizon Communications announce plans to price an eight-tranche offering of senior unsecured notes during the Sept. 9 week, according to market sources.

The deal will consist of three-year fixed- and floating-rate notes and five-year fixed- and floating-rate notes.

There will also be tranches of seven-, 10-, 20- and 30-year bonds.

Issuers were likely feeling persuaded to bring new deals in order to "price before Verizon hits [the market]," one syndicate banker said late Monday.

Proceeds will be used to finance the company's acquisition of Vodafone's 45% ownership in Verizon Wireless.

Monday saw a new issue from Oneok Partners, which priced $1.25 billion of notes in three parts, according to a syndicate source.

All three parts of the offering sold at the tight end of talk.

In other primary market action, PSE&G priced a $600 million two-part issue of notes due 2024 and 2018, according to an informed source.

Meanwhile, Corporate Office hit the primary with a $250 million offering of 5.25% senior notes due 2024.

The notes sold with a spread of Treasuries plus 250 bps, according to a market source.

There was also a new deal from Ford Motor Credit Co. LLC, which sold $77,489,000 of senior notes in two tranches during the session, according to a 424B2 filing with the Securities and Exchange Commission.

The Markit CDX Series 20 North American Investment Grade index declined 3 bps to a spread of 79 bps on Monday.

In the secondary market, bonds from Dell Inc. and Verizon Communication Inc. traded weaker, sources said.

Dell was the "main name trading" following reports that investor Carl Icahn will not block company founder Michael Dell's $25 billion buyout offer to take the company private, a trader said.

Dell shareholders will vote on the buyout offer on Thursday.

Verizon eyes megadeal

Verizon Communications is expected to sell an eight-part offering of notes during the Sept. 9 week, according to market sources.

The deal will consist of three-year fixed- and floating-rate notes, five-year fixed- and floating-rate notes, and seven-, 10-, 20- and 30-year bonds.

The company will conduct a roadshow ahead of the offering.

Books close on Tuesday afternoon, and the deal is expected to price on Wednesday.

The dealers reached out to high-yield accounts, according to an institutional investor, who added that the size of the deal probably dictated that they would be marketing to any and all comers.

Guidance on the three-year paper is 165 bps, 190 bps on the five-year, 215 bps on the seven-year, 225 bps on the 10-year, 250 bps on the 20-year and 265 bps on the 30-year.

Proceeds will be used to finance the company's acquisition of Vodafone's 45% ownership in Verizon Wireless.

The notes will feature a make-whole call and a 101% poison put.

J.P. Morgan Securities LLC, Barclays, BofA Merrill Lynch and Morgan Stanley & Co. LLC are the active bookrunners.

Passive bookrunners are Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Mizuho Securities USA Inc., Mitsubishi UFJ Securities, RBC Capital Markets LLC, RBS Securities Inc. and Wells Fargo Securities LLC.

Co-managers are Deutsche Bank Securities Inc. and Santander Investment Securities Inc.

Verizon is a New York City-based telecommunications company.

Oneok prices tight

The day's largest deal came from Oneok Partners, which sold a $1.25 billion three-part offering of senior notes, according to a syndicate source.

All three tranches sold at the tight end of talk.

The deal included $425 million 3.2% five-year notes sold with a spread of Treasuries plus 150 bps, or 99.935 to yield 3.214%.

A $425 million issue of 5% 10-year notes sold with a spread of Treasuries plus 210 bps.

The deal priced at 99.960 to yield 5.005%.

Finally, a $400 million tranche of 6.2% 30-year bonds sold with a spread of Treasuries plus 235 bps, or 99.567 to yield 6.232%.

The notes (Baa2/BBB/) are guaranteed by Oneok Partners Intermediate LP.

RBS Securities Inc., BofA Merrill Lynch and Deutsche Bank Securities Inc. are the bookrunners.

Proceeds will be used to repay amounts under a $1.2 billion commercial paper program and for general corporate purposes.

The natural gas company is based in Tulsa, Okla.

PSE&G sells two-parter

In other market action on Monday, Public Service Electric & Gas Co. priced a $600 million two-part issue of secured medium-term notes, series I, due March 15, 2024 and Sept. 15, 2018, according to an informed source and two separate FWP filings with the Securities and Exchange Commission.

The company priced $350 million 2.3% five-year notes with a spread of Treasuries plus 60 bps or 99.972.

There was also $250 million of 3.75% 10.5-year notes sold with a spread of Treasuries plus 85 bps or 99.991.

The bookrunners were BNY Mellon Capital Markets LLC, Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBC Capital Markets LLC and RBS Securities Inc.

CastleOak Securities, LP and Citigroup Global Markets Inc. were the co-managers.

Proceeds will be added to the company's general funds and used for general corporate purposes, including the repayment of short-term debt.

PSE&G is a Newark, N.J.-based utility.

Corporate Office's $250 million

Corporate Office sold $250 million of 5.25% senior notes due 2024 on Monday with a spread of Treasuries plus 250 bps, according to a market source and an FWP with the Securities and Exchange Commission.

Pricing was at 98.783 to yield 5.405%.

Wells Fargo Securities LLC, Barclays and Citigroup Global Markets Inc. are the bookrunners.

The bonds are guaranteed by Corporate Office Properties Trust.

Proceeds are being used to repay borrowings under an unsecured revolving credit facility and for general corporate purposes.

Corporate Office Properties was last in the market with an upsized $350 million of 3.6% 10-year senior notes sold on May 1 with a spread of Treasuries plus 200 bps.

The real estate investment trust for suburban office properties is based in Columbia, Md.

Ford sells in two tranches

Meanwhile, Ford Motor priced $77,489,000 senior notes in two tranches on Monday, according to a 424B2 filing with the SEC.

The company sold $44,739,000 2.25% notes due 2016 at par.

Ford also sold $32.75 million 4.75% 10-year notes at par.

Ford Motor Credit is the financing arm of Dearborn, Mich.-based automaker Ford Motor Co.

Dell eases ahead of vote

"Across the complex, Dell is 3-5 [bps] wider, pending news of the vote this week," a trader said.

Dell's 4.625% notes due 2021 (Baa1/BBB/BB+) went out on Monday at 93 bps bid, 94 bps offered.

The Round Rock, Texas-based computer and technology company sold $400 million of the notes in March 2011 at a spread of Treasuries plus 125 bps.

Telecom widens

Bonds in the telecommunications sector closed the day slightly softer, according to market sources.

"Not much change - maybe a little bit of movement 1-2 bps wider," a trader said.

Verizon's 2.45% notes due 2022 (Baa1/BBB+/A-) traded at 157 bps bid, 150 bps offered on Monday, the trader said.

The 2.45% notes have widened more than 30 bps since the New York City-based telecommunications company officially announced on Sept. 2 that it plans to buy Vodafone Group plc's 45% stake in Verizon Wireless.

Verizon's CDS costs and bonds were as much as 5 bps wider earlier in the session, a source said.

In other telecom trading, AT&T Inc.'s 2.5% senior notes due 2015 (A3/A-/A) were quoted at 63 bps bid, 58 bps offered on Monday, a trader said.

The Dallas-based communications company sold $2.25 billion of the notes in July 2010 at a spread of Treasuries plus 77 bps.

Bank/brokerage CDS costs

Investment-grade bank and brokerage CDS costs ended unchanged to lower on the day, a market source.

Bank of America Corp.'s CDS costs declined 3 bps to 105 bps bid, 110 bps offered. Citigroup Inc.'s CDS costs fell 2 bps to 98 bps bid, 103 bps offered. JPMorgan Chase & Co.'s CDS costs firmed 1 bp to 87 bps bid, 92 bps offered. Wells Fargo & Co.'s CDS costs fell 1 bp to 63 bps bid, 68 bps offered.

Merrill Lynch's CDS costs closed flat at 100 bps bid, 110 bps offered. Morgan Stanley's CDS costs tightened 3 bps to 136 bps bid, 141 bps offered. Goldman Sachs Group, Inc.'s CDS costs declined 2 bps to 128 bps bid, 133 bps offered.

Paul Deckelman and Paul A. Harris contributed to this review

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