United Technologies prices subordinated notes wide of talk; Oracle, Amgen bonds widen

By Aleesia Forni

Virginia Beach, April 29 – The high-grade market was showing signs of weakness on Wednesday, as the Federal Reserve wrapped up its two-day policy meeting.

The day’s lone issuer, United Technologies Corp., was forced to price its new $1,099,000,000 three-year subordinated note wide of price talk.

The company also did not tighten price guidance compared to the initial talk levels for its new $850 million 30-year senior note offering.

Meanwhile, spreads in the secondary market were mostly weaker overall.

The Markit CDX North American Investment Grade series 23 index was 2 basis points wider at a spread of 62 bps.

Recent deals from Oracle Corp. and Amgen Inc., both of which priced during Tuesday’s session, weakened on the day in the secondary.

Tranches of Oracle’s $10 billion six-part offering eased 3 bps to 12 bps, while Amgen’s $3.5 billion issue was 2 bps to 5 bps weaker.

Bank and financial paper was mixed on the day, with bonds from Bank of America Corp. and Morgan Stanley trading wider, while JPMorgan Chase & Co.’s 10-year bonds were 1 bp tighter.

United Tech two-parter

United Technologies was in the market with a $1,949,838,000 two-part offering of notes on Wednesday, according to a market source.

The company priced $1,099,838,000 of 1.778% junior subordinated notes (A3/A-/) due May 4, 2018 in a remarketing at Treasuries plus 75 bps.

Pricing was at 100.375 to yield 1.65%.

The notes sold wide of initial talk set in the range of 65 bps to 70 bps over Treasuries.

There was also $850 million of 4.15% 30-year senior notes priced at 99.862 to yield 4.158%, or Treasuries plus 140 bps.

Guidance was set in the range of 140 bps to 145 bps, unchanged from initial talk.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and HSBC Securities are the remarketing agents for the junior subordinated notes. The co-remarketing agents are BNP Paribas Securities Corp., Deutsche Bank Securities Inc. and Goldman Sachs & Co.

Bookrunners for the senior notes are BofA Merrill Lynch, JPMorgan, Citigroup, HSBC Securities, BNP Paribas Securities, Deutsche Bank Securities and Goldman Sachs.

Proceeds from the senior notes sale will be used to repay the company’s 4.875% notes due 2015 and for other general corporate purposes

United Technologies is a Hartford, Conn.-based company that provides technology products and services to the building and aerospace industries.

NWB Bank plans add-on

In forward calendar news, Nederlandse Waterschapsbank NV announced plans to price a $500 million add-on to its existing 1.25% notes due Sept. 18, 2017, an informed source said.

The notes are guided in the mid-swaps plus 2 bps area.

The issue’s current size is $2 billion, including $500 million priced on Sept. 26, 2014 and $1.5 billion priced on Sept. 9, 2014.

Citigroup Global Markets, Deutsche Bank and Scotia Capital are the bookrunners.

The financial services company for the public sector is based in the Hague, the Netherlands.

Oracle sells $10 billion

Oracle’s $10 billion of senior notes (A1/AA-/A+), which sold in six tranches on Tuesday, was trading wider at Wednesday’s close.

The company’s $2.5 billion 2.5% note due 2022 traded 3 bps wider at 83 bps bid.

Pricing was at Treasuries plus 80 bps.

Its $2.5 billion 2.95% note due 2025 was quoted 4 bps weaker at 104 bps bid.

The notes sold with a spread of Treasuries plus 100 bps.

The company’s new $500 million of 3.25% notes due 2030, which sold with a spread of Treasuries plus 130 bps, was trading 12 bps weaker at 142 bps bid.

A $1.25 billion 3.9% note due 2035 traded 4 bps wider at 129 bps bid following pricing with a spread of Treasuries plus 125 bps.

The company’s $2 billion of 4.125% bonds due 2045 widened 5 bps to 150 bps bid having priced at Treasuries plus 145 bps.

Meantime, its $1.25 billion of 4.375% notes due 2055, which sold at a spread of Treasuries plus 170 bps, was quoted 7 bps wider at 177 bps bid.

Bookrunners were JPMorgan, 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 eases

Amgen’s $3.5 billion of senior notes (Baa1/A/BBB), which also sold on Tuesday in four tranches, traded weaker late Wednesday.

The company’s $750 million of 2.125% notes, which sold at Treasuries plus 75 bps, was quoted 3 bps wider at 78 bps bid.

Its $500 million of 2.7% notes was 2 bps wider at 102 bps bid following pricing with a spread of 100 bps over Treasuries.

A $1 billion 3.125% note due 2025, which sold with a spread of Treasuries plus 120 bps, traded at 125 bps bid on Wednesday.

Amgen’s $1.25 billion of 4.4% bonds due 2045 weakened 2 bps to 177 bps bid.

The notes sold with a spread of Treasuries plus 175 bps.

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

Bank, financial paper mostly wider

Bank of America’s 4% notes due 2024 (Baa2/A-/A) widened 1 bp on Wednesday to 133 bps offered.

Bank of America sold $2.75 billion of the notes on March 27, 2014 at Treasuries plus 137 bps.

In other trading on Wednesday, the bank’s 4% notes due 2025 widened 4 bps to 208 bps bid.

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

Morgan Stanley’s 2.65% notes due 2020 widened 1 bp to 101 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.

Meanwhile, JPMorgan Chase’s 3.125% notes due 2025 firmed 4 bps to 120 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.

Banks, brokers CDSs higher

Banks and brokers CDS costs were mostly higher on Wednesday, according to a market source.

Bank of America’s CDS costs were 1 bp higher at 64 bid, 67 offered. Citigroup Inc.’s CDSs were also 1 bp higher at 73 bid, 76 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 up 1 bp at 66 bid, 69 offered. Morgan Stanley’s CDSs rose 2 bps to 75 bid, 78 offered. Goldman Sachs Group Inc. ended 5 bps higher at 83 bid, 88 offered.

Paul Deckelman contributed to this review.

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