High-grade supply heavy; NIKE, McDonald’s, HSBC, Deere, 3M, Pfizer price; credit spreads firm

By Cristal Cody

Tupelo, Miss., March 25 – Investment-grade issuers pounced on the primary market on Wednesday, pricing nearly $25 billion of bonds.

NIKE, Inc. led the pack with a $6 billion five-part offering of fixed-rate notes.

McDonald’s Corp. sold $3.5 billion of senior medium-term notes in four tranches.

Bank of America Corp. priced a $2.5 billion add-on to its 4.083% medium-term fixed-to-floating-rate senior notes due March 20, 2051.

HSBC Holdings plc sold $2.5 billion of 10-year senior notes.

Deere & Co. priced $2.25 billion of notes in three parts.

Berkshire Hathaway Inc. brought $2 billion of notes in two tranches.

3M Co. priced $1.75 billion of notes in three tranches.

Archer-Daniels-Midland Co. priced $1.5 billion of senior notes in two tranches.

Pfizer Inc. sold $1.25 billion of 10-year senior notes.

O'Reilly Automotive, Inc. placed $500 million of 10-year senior notes.

Also, Bank of Nova Scotia priced $900 million of three-year covered bonds.

Wednesday’s volume brings week to date high-grade supply to more than $62 billion.

Up to $70 billion of supply was anticipated after issuers priced more than $61 billion of high-grade bonds last week, market sources report.

The financial markets were mostly upbeat on reports that Congress has reached a $2 trillion stimulus package that is expected to include checks sent directly to Americans to provide relief from the coronavirus-related economic fall-out.

The Dow improved 2.39% and the S&P 500 gained 1.15%, while the Nasdaq declined 0.45%.

Treasuries reversed course after rallying at the start of the day. The benchmark 10-year note yield was down 2 bps to 0.789% over the morning but finished up 4 bps at 0.858%.

U.S. investment-grade corporate bond exchange-traded funds were positive over the session.

The iShares iBoxx Investment Grade Corporate Bond ETF rose 1.55% early Wednesday and closed 4.79% better.

High-grade credit spreads have tightened over the past two sessions.

On Wednesday, the Markit CDX North American Investment Grade 33 index firmed to a spread of 104.87 basis points from 107.83 bps on Tuesday and 125.86 bps on Monday.

NIKE prices $6 billion

NIKE sold $6 billion of fixed-rate notes (A1/AA-/) in five tranches on Wednesday, according to a market source and an FWP filing with the Securities and Exchange Commission.

A $1 billion tranche of 2.4% five-year notes priced at 99.864 to yield 2.429%, or a spread of Treasuries plus 190 bps, compared to talk in the 240 bps area.

NIKE sold $1 billion of 2.75% seven-year notes at a 200 bps over Treasuries spread, or 99.987 to yield 2.752%. Initial price talk was in the 250 bps area.

A $1.5 billion tranche of 2.85% 10-year notes priced at 99.853 to yield 2.867%, or a Treasuries plus 200 bps spread.

Initial talk was in the 250 bps spread area.

The company sold $1 billion of 3.25% 20-year notes at 99.374 to yield 3.293%, or a Treasuries plus 180 bps spread.

The tranche was initially talked to price at the 240 bps spread area.

In the final tranche, $1.5 billion of 3.375% 30-year notes priced at 99.663 to yield 3.393%. The notes priced with a Treasuries plus 190 bps spread.

The issue was talked to print at the 250 bps over Treasuries area.

BofA Securities Inc., Citigroup Global Markets Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC were the bookrunners.

The Beaverton, Ore.-based sports footwear and apparel company plans to use the proceeds for general corporate purposes.

McDonald’s prices $3.5 billion

McDonald’s priced $3.5 billion of senior medium-term notes (Baa1/BBB+/) in four tranches on Wednesday, according to a market source and an FWP filing.

The company sold $750 million of 3.3% notes notes due July 1, 2025 at 99.965 to yield 3.308% and a spread of 280 bps over Treasuries.

A $1 billion tranche of 3.5% notes due July 1, 2027 priced at 99.515 to yield 3.577%, or a Treasuries plus 285 bps spread.

The company sold $1 billion of 3.6% notes due July 1, 2030 at a Treasuries plus 285 bps spread, or 99.266 to yield 3.687%.

Finally, $750 million of 4.2% 30-year notes priced at 98.855 to yield 4.268% and with a spread of 285 bps over Treasuries.

The five-, seven- and 10-year notes were talked at the Treasuries plus 335 bps area, while the 30-year tranche was talked to price at the 345 bps spread area.

BofA Securities, Citigroup, J.P. Morgan and Wells Fargo Securities, LLC were the bookrunners.

The fast food chain is based in Chicago.

HSBC prices $2.5 billion

HSBC Holdings priced $2.5 billion of 4.95% 10-year registered senior notes (A2/A/A+) at a spread of 415 basis points over Treasuries on Wednesday, according to a market source.

Initial price talk was in the Treasuries plus 450 bps area.

HSBC Securities (USA) Inc. was the bookrunner.

The banking and financial services group is based in London.

Bank of America reopens notes

Bank of America priced a $2.5 billion add-on to its 4.083% medium-term fixed-to-floating-rate senior notes due March 20, 2051 (A2/A-/A+) on Wednesday at a spread of 235 bps over Treasuries, according to a market source.

Initial price talk was in the Treasuries plus 260 bps area.

The notes were first priced in a $3 billion offering on March 17 at par to yield a spread of 260 bps. The total outstanding is now $5.5 billion.

The notes will reset March 20, 2050 to a floating rate of Libor plus 315 bps.

BofA Securities was the bookrunner.

The financial services company is based in Charlotte, N.C.

Deere & Co. prices $2.25 billion

Deere priced $2.25 billion of notes (A2/A/A) in three tranches on Wednesday, according to a market source and FWP filings.

A $700 million tranche of 2.75% five-year notes priced at 99.864 to yield 2.779% and a spread of 225 bps over Treasuries.

The company sold $700 million of 3.1% 10-year notes at 99.811 to yield 3.122%, or a Treasuries plus 225 basis points spread.

Also, $850 million of 3.75% 30-year notes priced at 99.998 to yield 3.75% and a spread of 25 bps over Treasuries.

Initial price talk on all three tranches was in the Treasuries plus 275 bps area.

BofA Securities, Citigroup, Goldman Sachs, J.P. Morgan, MUFG and RBC Capital Markets, LLC were the bookrunners.

Deere, located in Moline, Ill., manufactures and distributes agricultural and commercial equipment.

Berkshire Hathaway sells two tranches

Berkshire Hathaway (Aa2/AA/) priced $2 billion of notes in two tranches on Wednesday, a market source said.

A $1.1 billion tranche of 3.7% notes due July 15, 2030 priced at a spread of 285 bps over Treasuries.

The company sold $900 million of 4.25% notes due Oct. 15, 2030 at a 285 bps over Treasuries spread.

Both tranches were talked at the Treasuries plus 350 bps area.

Barclays, Citigroup, J.P. Morgan and Wells Fargo were the bookrunners.

Berkshire-Hathaway is an Omaha, Neb.-based holding company for subsidiaries in businesses including insurance, freight rail transportation, utilities and energy, finance, manufacturing and retail.

3M prices $1.75 billion

3M priced $1.75 billion of notes (A1/A+/) in three tranches on Wednesday, according to a market source and an FWP filing.

The company sold $500 million of 2.65% five-year notes at 99.919 to yield 2.667%, or a spread of Treasuries plus 215 bps.

Initial price talk was at a spread in the Treasuries plus 260 bps area,

A $600 million tranche of 3.05% 10-year notes priced at 99.681 to yield 3.087%, or a 225 bps spread over Treasuries.

The 10-year notes were talked at the Treasuries plus 270 bps area.

3M sold $650 million of 3.7% 30-year notes at 99.656 to yield 3.719% and a spread of 230 bps over Treasuries.

Initial price talk was at the Treasuries plus 285 bps area.

Citigroup, BofA Securities and J.P. Morgan were the bookrunners.

3M is a Maplewood, Minn.-based manufacturer of products including Post-it notes and Scotch Office tape.

Archer-Daniels-Midland prices

Archer-Daniels-Midland priced $1.5 billion of senior notes (A2/A/A) in two parts on Wednesday, according to a market source and an FWP filing.

A $500 million tranche of 2.75% five-year notes priced at 98.811 to yield 3.008% and a Treasuries plus 250 bps spread.

The company sold $1 billion of 3.25% 10-year notes at 99.223 to yield 3.342%, or a spread of 250 bps over Treasuries.

Both tranches were talked to price in the Treasuries plus 312.5 bps area.

Citigroup, J.P. Morgan, BofA Securities, BNP Paribas Securities Corp. and MUFG were the bookrunners.

The Chicago-based company processes agricultural commodities and manufactures food and feed ingredients.

Pfizer sells $1.25 billion

Pfizer sold $1.25 billion of 2.625% 10-year senior notes (A1/AA-/) on Wednesday at a spread of Treasuries plus 185 bps, according to a market source and an FWP filing.

Initial price talk was in the Treasuries plus 237.5 bps area.

The notes priced at 99.65 to yield 2.665%.

BofA Securities, Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC were the bookrunners.

The biopharmaceutical company is based in New York.

O'Reilly Automotive prints

O'Reilly Automotive sold $500 million of 4.2% 10-year senior notes (Baa1/BBB/) on Wednesday at a spread of Treasuries plus 340 bps, according to a market source and an FWP filing.

Initial price talk was in the Treasuries plus 375 bps area.

The notes priced at 99.925 to yield 4.205%.

Bookrunners were J.P. Morgan, U.S. Bancorp Investments Inc., SunTrust Robinson Humphrey Inc. and Wells Fargo.

O'Reilly Automotive is a Springfield, Mo.-based retailer of automotive aftermarket products.

Scotiabank prices $900 million

Bank of Nova Scotia priced $900 million of 1.5% covered bonds due March 31, 2023 (Aaa//AAA) on Wednesday at mid-swaps plus 100 bps, or a Treasuries plus 111.4 bps spread, according to a market source.

Initial price talk was at the mid-swaps plus 100 bps area.

The bookrunners were Scotia Capital (USA) Inc., Credit Suisse, J.P. Morgan and UBS Securities LLC.

The bank is based in Toronto.

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