Sumitomo Mitsui sells bonds; Alta Wind prices pass-throughs; Oracle, Target firm in secondary

By Andrea Heisinger and Cristal Cody

New York, July 14 - Sumitomo Mitsui Banking Corp. and Alta Wind Holdings II-IV LLC sold bonds in the high-grade market on Wednesday as the pace of issuance slowed.

The deals came after a marquee name like Target Corp. got a $1 billion deal done. Domestic sales are expected to slow, and more foreign names, such as Sumitomo, are expected to pick up the slack as the second-quarter earnings season starts.

Wednesday's two sales were done under Rule 144A, as were several on the emerging markets side.

Japanese bank Sumitomo Mitsui sold $2 billion of notes evenly divided between three-year and five-year tranches.

Renewable energy company Alta Wind Holdings priced $579.863 million, which was an upsized amount. The sale had been announced toward the end of the previous week at a size of $412.2 million.

Jefferies Group, Inc. announced late in the day that it plans to reopen an issue of notes due 2021 to add $150 million.

New debt priced earlier in the week from Oracle Corp. and Target firmed in secondary trading, while financials were wider, according to sources.

The financial sector "had been tightening several days in a row. Some profit-taking going on and they're about 3 basis points to 5 bps wider today," a trader said.

In late trading, Morgan Stanley's 7.3% notes due 2019 moved out 5 bps to 285 bps over Treasuries, according to a source.

The CDX Series 14 North American investment-grade index eased 1 bp to a spread of 109 bps, a source said.

Overall investment-grade Trace volume fell 7% to nearly $12 billion, according to a market source.

"Seemed like flow was pretty good," a source said. "There's still a lot of appetite."

Treasuries rose and sent yields down on Wednesday.

The Federal Reserve said in minutes released from the June policy meeting that other measures should be considered to help the economy if needed.

The yield on the benchmark 10-year Treasury note firmed to 3.05% from 3.12%.

The yield on the 30-year bond fell to 4.03% from 4.11% the previous day.

Sumitomo sells two tranches

Sumitomo Mitsui Banking priced a benchmark $2 billion of notes (Aa2/A+) in two tranches after the sale was announced the previous day, a source close to the sale said.

A $1 billion tranche of 2.15% three-year notes priced at a spread of 118 bps over Treasuries.

The $1 billion tranche of 3.15% five-year notes sold at Treasuries plus 137.5 bps.

Both notes were priced under Rule 144A.

Bookrunners were Barclays Capital Inc., Citigroup Global Markets and Goldman Sachs & Co. Inc.

Proceeds are being used for general corporate purposes.

The financial services company is based in Tokyo.

Break in new deals expected

There is little new issuance expected for the rest of the week as companies get deeper into earnings blackouts.

One source, when asked if there was anything pricing on Thursday, said, "Nothing that I know of. I hope not."

There have been several sales executed this week, mostly on Monday and Tuesday.

Supply is dwindling as a result of that influx, a source said.

"I think we showed that people can get deals done, but now we're ready for a break," he said.

Large, oversubscribed deals have been completed recently, and if there are more remaining this week, they're likely to come from companies or financials overseas that are not in earnings blackouts.

"We saw a lot in the EM space today, and I think that's why," a syndicate source said.

Alta Wind pass-throughs

Alta Wind Holdings priced an upsized $579.863 million of 7% pass-through trust certificates due 2035 at par to yield 7%, an informed source said.

The deal was announced on July 9 at $412.2 million in size. Pricing was not expected until sometime this week, a source said at the time.

The certificates (/BBB-/BBB-) were priced under Rule 144A. They were priced at a coupon basis, with no spread quoted, according to the source.

Bookrunners were Barclays Capital Inc., Citigroup Global Markets and Credit Suisse Securities.

Proceeds are being used to repay debt.

The subsidiary of renewable energy company Terra-Gen Power LLC is based in New York City.

Jefferies plans reopening

Jefferies Group plans to reopen its 6.875% notes (Baa2/BBB) due 2021 to add $150 million, according to a 424B3 Securities and Exchange Commission filing done late in the day.

Total issuance will be $550 million, including $400 million priced on June 23 at 390 basis points over Treasuries.

Jefferies & Co. is bookrunner for the reopening.

Proceeds are being used for general corporate purposes.

The global securities and investment bank is based in New York City.

Oracle stronger

Oracle's two tranches of notes (A2/A/A) sold on Monday continued to firm in secondary trading, a trader said on Wednesday.

The company priced $1 billion of 3.875% notes due 2020 at Treasuries plus 85 bps.

The 10-year notes "early today were 76 [bid], 73 [offered]," the trader said.

Oracle also priced $2.25 billion of 5.375% bonds due 2040 at Treasuries plus 140 bps.

The bonds firmed on Wednesday at 134 bps bid, 131 bps offered.

The computer software and technology company is based in Redwood City, Calif.

Target tightens

Target's new 10-year notes (A2/A+/A) sold the previous day firmed in the secondary, a source said.

The Minneapolis-based discount retailer sold $1 billion of 3.875% notes due 2020 to yield Treasuries plus 80 bps.

The 10-year notes traded late in the afternoon at 79 bps bid, 77 bps offered.

CDS costs rise

A trader who watches the credit-default swaps market said that the cost of protecting holders of bonds issued by major banks and major investment banking houses rose on Wednesday.

The trader said that both bank and brokerage house CDS costs were 5 bps to 8 bps higher on the day.

Paul Deckelman contributed to this report.

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