Oracle brings $10 billion megadeal; ERAC, Goldman Sachs also price; Oracle, Goldman firm

By Aleesia Forni and Cristal Cody

Virginia Beach, June 30 – Oracle Corp., ERAC USA Finance LLC and Goldman Sachs Group Inc. sold new bonds during a solid session for the high-grade market.

These issuers capped off the month of June pricing nearly $15 billion of paper.

Oracle’s $10 billion megadeal was the highlight of the session, with the seven-part deal pricing around 10 basis points tighter compared to initial guidance.

In other market action, ERAC came to market with $750 million of notes in two parts, while Goldman Sachs sold $4 billion of notes in 10- and 30-year tranches.

A source noted that Goldman’s new bond offering was more than two times oversubscribed.

With Monday’s supply, the week’s total new issuance is already closing in on what sources had predicted to be around a $15 billion week.

Following the rush of issuance on Monday, the primary’s pace is expected to calm for the remainder of the Independence Day holiday-shortened week.

Investment-grade credit spreads stayed mostly softer over the day, according to market sources.

The Markit CDX North American Investment Grade series 22 index eased 1 bp to a spread of 59 bps.

Oracle’s notes were slightly better in the secondary market, a trader said.

Goldman Sachs’ two tranches of notes traded about 1 bp tighter on the bid side in aftermarket trading, according to a trader.

Oracle megadeal

Monday’s primary market saw Oracle price a $10 billion issue of notes (A1/A+/A+) in seven tranches, according to a market source.

All seven tranches of the offering sold tight of guidance.

The sale included $1 billion of three-year floating-rate notes priced at par to yield Libor plus 20 bps.

A second tranche was $750 million of five-year floaters priced at par to yield Libor plus 51 bps.

There was also $2 billion of 2.25% five-year notes priced at 65 bps over Treasuries.

A $1.5 billion tranche of 2.8% notes due 2021 sold at Treasuries plus 70 bps.

Oracle also sold $2 billion of 3.4% 10-year notes at 90 bps over Treasuries.

The company priced $1.75 billion of 4.3% 20-year notes at Treasuries plus 95 bps.

Finally, $1 billion of 4.5% notes due 2044 sold at 115 bps over Treasuries.

No aftermarket trading was seen late in the session in Oracle’s tranches of notes due 2017 and notes due 2021, a trader said.

Oracle’s notes due 2019 tightened to 62 bps offered.

The company’s notes due 2024 firmed to 86 bps offered, according to the trader.

The tranche of notes due 2034 were quoted tighter at 93 bps bid, 91 bps offered in the secondary market.

Oracle’s bonds due 2044 firmed to 112 bps offered, the trader said.

Bookrunners were BofA Merrill Lynch, J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

Proceeds will be used for general corporate purposes, possibly including stock repurchases, payment of cash dividends on common stock, future acquisitions and repayment of debt.

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

Goldman brings $4 billion

Goldman Sachs Group was also in Monday’s primary with a multi-billion dollar bond offering.

The company sold a $4 billion two-part offering of senior notes (Baa1/A-/A), an informed source said.

The sale included $2.25 billion of 3.85% 10-year bonds priced at 99.868 to yield 3.866%, or Treasuries plus 135 bps.

A second tranche was $1.75 billion of 4.8% 30-year bonds priced at 99.512 to yield 4.831%, or Treasuries plus 150 bps.

Both tranches of the trade sold tight of initial price guidance.

Goldman Sachs’ notes due 2024 firmed to 134 bps bid, 133 bps offered in the secondary market, a trader said.

The notes due 2044 headed out in secondary trading at 149 bps bid, 148 bps offered, according to the trader.

Goldman Sachs & Co. was the bookrunner.

The financial services company is based in New York City.

ERAC two-parter

ERAC USA Finance priced $750 million of senior notes (Baa1/BBB+/) on Monday in tranches due 2019 and 2024 at the tight end of price talk, according to a market source.

A $500 million tranche of 2.35% notes due 2019 priced at 99.854 to yield 2.38%, or Treasuries plus 75 bps.

There was also a $250 million add-on to the company’s existing 3.85% notes due 2024 priced at 100.66 to yield 3.771%, or Treasuries plus 125 bps.

JPMorgan, RBS Securities Inc. and Wells Fargo Securities were the joint bookrunners.

The financing subsidiary of Enterprise Rent-A-Car Co. is based in St. Louis.

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage CDS prices rose, according to a market source.

Bank of America Corp.’s CDS costs eased 1 bp to 65 bps bid, 67 bps offered. Citigroup Inc.’s CDS costs were flat at 63 bps bid, 68 bps offered. JPMorgan Chase & Co.’s CDS costs ended unchanged at 53 bps bid, 58 bps offered. Wells Fargo & Co.’s CDS costs rose 1 bp to 41 bps bid, 44 bps offered.

Merrill Lynch’s CDS costs eased 1 bp to 69 bps bid, 73 bps offered. Morgan Stanley’s CDS costs eased 2 bps to 65 bps bid, 67 bps offered. Goldman Sachs Group’s CDS costs eased 1 bp to 69 bps bid, 74 bps offered.

Paul Deckelman contributed to this review.

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