Oracle brings $10 billion offering; Amgen, DaVinciRe also price; bank paper mostly flat

By Aleesia Forni

Virginia Beach, April 28 – The primary bond market hosted another investment-grade megadeal on Tuesday, with Oracle Corp. pricing $10 billion of bonds as the Federal Reserve kicked off its two-day policy meeting.

The six-part deal attracted more than $21 billion of orders.

Amgen Inc. was also in Tuesday’s primary, pricing $3.5 billion of senior notes in four tranches at the tight end of talk.

The session also hosted an issue of pass-through certificates from Union Pacific Railroad Co. and a $150 million senior notes offer from DaVinciRe Holdings Ltd.

Spreads held up on Tuesday and ended the session mostly flat on the heels of weaker data out of both Japan and the United Kingdom.

The Markit CDX North American Investment Grade series 23 index was unchanged at a spread of 60 basis points.

Financial paper from Bank of America Corp., JPMorgan Chase & Co. and Morgan Stanley ended flat on the day.

Meanwhile, Apple Inc.’s bonds were mixed following the company’s report of a 27% year-over-year growth in revenue earlier this week.

Oracle sells $10 billion

Oracle priced a combined $10 billion of senior notes (A1/AA-/A+) in six tranches on Tuesday, according to a market source.

A $2.5 billion 2.5% note due 2022 sold at 99.648 to yield 2.555%, or Treasuries plus 80 bps.

There was also a $2.5 billion 2.95% note due 2025 priced at 99.543 to yield 3.003%. The notes sold with a spread of Treasuries plus 100 bps.

Oracle also priced $500 million of 3.25% notes due 2030 with a spread of Treasuries plus 130 bps.

The notes sold at 99.375 to yield 3.303%.

A $1.25 billion 3.9% note due 2035 sold at 99.324 to yield 3.949%, or Treasuries plus 125 bps.

The company sold $2 billion of 4.125% bonds due 2045 at 99.589 to yield 4.149%, or 145 bps over Treasuries.

Finally, $1.25 billion of 4.375% notes due 2055 sold at 99.549 to yield 4.399% with a spread of Treasuries plus 170 bps.

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

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

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

Amgen offering

Amgen sold $3.5 billion of senior notes (Baa1/A/BBB) in four tranches on Tuesday, according to a market source.

The company priced $750 million of 2.125% notes due 2020 at 99.925 to yield 2.141%, or Treasuries plus 75 bps.

The notes sold at the tight end of guidance, which had firmed from initial talk in the 80 bps area.

A second tranche was $500 million of 2.7% notes due 2022 priced at 100 bps over Treasuries. The notes priced at 99.715 to yield 2.745%.

Pricing was at the tight end of the Treasuries plus 105 bps area guidance. Initial talk was set in the 100 bps area over Treasuries.

A $1 billion 3.125% note due 2025 sold with a spread of Treasuries plus 120 bps. Pricing was at 99.456 to yield 3.189%.

Guidance was set in the 125 bps area over Treasuries after having firmed from initial talk in the 130 bps area.

Amgen also sold $1.25 billion of 4.4% bonds due 2045 at 99.406 to yield 4.436% with a spread of Treasuries plus 175 bps.

Pricing was in line with the 175 bps area guidance. Initial talk was set in the 180 bps area over Treasuries.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. are the bookrunners.

The company intends to use the net proceeds from this offering to repurchase additional shares of common stock under its stock repurchase program, to repay outstanding debt, including borrowings under a term loan credit agreement, and for general corporate purposes.

The manufacturer and marketer of human therapeutics based upon advances in cellular and molecular biology is based in Thousand Oaks, Calif.

Union Pacific pass-throughs

In other primary happenings Tuesday, Union Pacific Railroad priced $398,719,000 million of 2.695% pass-through certificates (Aa2/AA/) at par to yield Treasuries plus 72 bps, an informed source said.

The issuer will use the proceeds from the sale of the certificates to purchase equipment trust certificates, which will be issued by Union Pacific Railroad to help finance the acquisition of new locomotives.

The bookrunners are Credit Suisse Securities and Morgan Stanley.

Union Pacific is an Omaha-based rail transport company.

DaVinciRe new issue

DaVinciRe Holdings, a joint venture of RenaissanceRe Holdings Ltd., priced $150 million of 4.75% senior notes (Baa2/A/) due 2025 on Tuesday at Treasuries plus 287.5 bps, according to an informed source and a company press release.

The notes were sold via Rule 144A and Regulation S.

Barclays was the bookrunner.

RenaissanceRe Holdings Ltd. is a global provider of reinsurance and insurance.

Bank, financial paper flat

Bank paper from Bank of America, JPMorgan and Morgan Stanley followed suit with spreads overall on Tuesday, closing out the session unchanged compared to Monday’s close.

Bank of America’s 4% notes due 2025 remained at 204 bps bid.

The financial services company sold $2.5 billion of the notes (Baa2/A-/A) on Jan. 16 at Treasuries plus 225 bps.

Bank of America is based in Charlotte, N.C.

JPMorgan Chase’s 3.125% notes due 2025 remained at 124 bps bid.

The New York City-based financial services company sold $2.5 billion of the notes (A3/A/A+) on Jan. 16 at Treasuries plus 145 bps.

Also on Tuesday, Morgan Stanley’s 2.65% notes due 2020 remained flat at 100 bps bid in the secondary market, a source said.

Morgan Stanley sold $2.5 billion of the notes on Jan. 22 at Treasuries plus 130 bps.

The financial services company is based in New York City.

Apple bonds mixed

Apple’s 2.5% notes due 2025 traded 1 bp better at 79 bps bid, according to a market source.

Apple sold $1.5 billion of the notes (Aa1/AA+/) on Feb. 2 at Treasuries plus 85 bps.

The company’s 3.45% notes due 2024 (Aa1/AA+/) edged 2 bps wider to 76 bps bid, according to a market source.

Apple sold $2.5 billion of the 10-year notes at a spread of Treasuries plus 77 bps, or 99.916, to yield 3.46%, on April 29, 2014.

The computer and mobile communications device company is based in Cupertino, Calif.

Banks, brokers CDSs flat, higher

Banks and brokers CDS costs were flat to higher on Tuesday, according to a market source.

Bank of America’s CDS costs were 1 bp higher at 63 bid, 66 offered. Citigroup Inc.’s CDSs were unchanged at 72 bid, 75 offered.

JPMorgan Chase’s CDSs were 1 bp higher at 61 bid, 64 offered. Wells Fargo & Co. CDS costs were flat at 41 bid, 44 offered.

Among brokers, Merrill Lynch’s CDS costs were flat at 64 bid, 69 offered, while Morgan Stanley rose 1 bp to 73 bid, 76 offered. Goldman Sachs Group Inc. ended unchanged at 78 bid, 81 offered.

Paul Deckelman contributed to this review.

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