Financial names storm primary market; Exxon Mobil tightens; MUFG firms; credit spreads improve

By Cristal Cody and Aleesia Forni

New York, March 1 – Financial issuers dominated the high-grade primary space to open the new month on Tuesday.

Issuers brought $12.5 billion of new investment-grade paper to market during the session, bringing the week’s total supply to $29.2 billion.

HSBC Holdings plc’s new $7 billion offering saw an order book that was more than 2.5 times oversubscribed, with all tranches coming in around 22.5 basis points to 25 bps from initial price thoughts.

Elsewhere in Tuesday’s primary, Manulife Financial Corp. priced $1.75 billion of notes in two parts, Citigroup Inc. priced $1.5 billion of subordinated notes around 20 bps inside initial talk and PNC Bank NA priced $1 billion of three-year bank notes.

Auto parts retailer O'Reilly Automotive, Inc., meantime, was able to price its $500 million offering around 5 bps tight of final price guidance.

The new deals come on the heels of the $121.01 billion of new issuance seen during the month of February, and sources are expecting another $110 billion to $115 billion of supply for March.

Exxon Mobil Corp.’s notes (Aaa/AAA) that priced in a $12 billion eight-tranche offering on Monday improved in secondary trading over the day Tuesday.

The company’s five-year bonds headed out 5 bps tighter than where the notes traded earlier in the day, a trader said.

In the bank and financial sector, Citigroup’s existing subordinated notes were flat.

Mitsubishi UFJ Financial Group, Inc.’s 3.85% senior notes due 2026 came in 5 bps over the session.

Goldman Sachs Group Inc.’s 3.75% senior notes due 2026 were unchanged in the secondary market.

Morgan Stanley’s 3.875% senior notes due 2026 ended flat.

Credit spreads were strong at the market close. The Markit CDX North American Investment Grade index tightened 5 bps to a spread of 102 bps on Tuesday.

HSBC three-parter

In Tuesday’s largest offering, HSBC Holdings sold a $7 billion offering of senior notes (A1/A/AA-) in three tranches all inside price guidance, according to a market source.

There was $3 billion of 3.4% five-year bonds sold at Treasuries plus 215 bps. Pricing was at 99.772 to yield 3.45%.

The bank guided the five-year tranche of notes in the 220 bps area, having firmed from the 237.5 bps area over Treasuries.

And $1 billion of five-year floaters sold at par to yield Libor plus 224 bps.

The notes were talked at the Libor equivalent to the five-year fixed-rate tranche.

A $3 billion tranche of 4.3% 10-year notes sold at 99.855 to yield 4.318%, or Treasuries plus 250 bps.

Pricing was at the tight side of the Treasuries plus 255 bps area guidance. The notes were talked in the 275 bps area over Treasuries.

HSBC Securities (USA) Inc. is the bookrunner.

The London-based banking and financial services group plans to use the proceeds for general corporate purposes.

EIB sells $3.5 billion

European Investment Bank priced $3.5 billion of 1.625% five-year notes on Tuesday at mid-swaps plus 46 bps, an informed source said.

The notes (Aaa/AAA/AAA) sold in line with talk.

Bookrunners were Barclays, Goldman Sachs & Co. and TD Securities.

The lender for the European Union is based in Kirchberg, Luxembourg.

Manulife offering

Manulife Financial priced a $1.75 billion offering of senior notes (/A/A-) in two tranches on Tuesday, according to a market source and an FWP filed with the Securities and Exchange Commission.

The sale included $1 billion of 4.15% 10-year bonds at 99.757 to yield 4.18%, or Treasuries plus 235 bps.

A $750 million tranche of 5.375% 30-year bonds priced with a spread of Treasuries plus 270 bps. Pricing was at 99.645 to yield 5.399%.

Both tranches sold at the tight side of guidance.

Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC are the bookrunners.

Proceeds will be used for general corporate purposes, including future refinancing requirements.

Manulife is a financial services group based in Toronto.

Citi subordinated notes

Citigroup sold $1.5 billion of subordinated notes (Baa3/BBB/A-) due March 9, 2026 on Tuesday at Treasuries plus 280 bps, an informed source said.

Pricing was at 99.802 to yield 4.625%.

The notes sold on top of guidance and around 20 bps inside initial price thoughts.

The New York-based banking and financial services company plans to use proceeds for general corporate purposes.

Citigroup was the bookrunner.

PNC bank notes

And PNC Bank priced $1 billion of three-year senior bank notes (A2/A) at Treasuries plus 102 bps, at the tight side of the Treasuries plus 105 bps area guidance, which tightened from the 115 bps area over Treasuries.

Bookrunners were Citigroup, Morgan Stanley and PNC Capital Markets.

Proceeds will be used for general corporate purposes.

PNC is a Pittsburgh-based bank and holding company.

John Deere new issue

John Deere Capital Corp. sold $750 million of senior medium-term notes (A2/A), series F, on Tuesday at Treasuries plus 120 bps, according to an FWP filed with the SEC.

Pricing was at 99.88 to yield 2.819%.

Bookrunners were Citigroup, Goldman Sachs & Co. and MUFG.

The funding arm of agriculture and industrial equipment maker Deere & Co. is based in Moline, Ill.

O’Reilly prices tight

O'Reilly Automotive was in Tuesday’s market with a $500 million offering of 3.55% 10-year senior notes (Baa1/BBB+) priced at Treasuries plus 175 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 99.832 to yield 3.57%.

The notes sold tighter than the Treasuries plus 185 bps area guidance.

J.P. Morgan Securities LLC, U.S. Bancorp Investments Inc., BofA Merrill Lynch and Wells Fargo Securities LLC are the bookrunners.

The Springfield, Mo.-based auto parts retailer plans to use the proceeds for general corporate purposes, which may include working capital, repurchases of common stock, repayment of debt and to invest in other business opportunities, including acquisitions, and to pay related fees and expenses.

Sumitomo preps deal

Sumitomo Mitsui Financial Group Inc. joined the pipeline on Tuesday, announcing plans to offer a three-part offering of senior notes that may price on Wednesday, according to an informed source and a 424B5 filed with the SEC.

The offering includes fixed- and floating-rate notes due March 2021, along with a fixed-rate tranche of notes due March 2026.

Goldman Sachs, SMBC Nikko, Citigroup, Barclays, BofA Merrill Lynch and JPMorgan are the bookrunners.

The banking and financial company is based in Tokyo.

Exxon Mobil tightens

Exxon Mobil’s 2.222% notes due 2021 headed out 5 bps better over the session at 64 bps offered in the secondary market, a trader said.

The company sold $2.5 billion of the notes on Monday at a spread of 100 bps over Treasuries.

Exxon Mobil’s 3.043% notes due 2026 tightened to 118 bps bid, 119 bps offered in secondary trading.

The bonds priced on Monday in a $2.5 billion tranche at 130 bps over Treasuries.

Exxon Mobil is an energy company based in Irving, Texas.

Citigroup unchanged

Citigroup’s 3.7% notes due 2026 were unchanged on Tuesday at 175 bps bid, a market source said.

Citigroup sold $2 billion of the notes (Baa1/BBB+/A) on Jan. 5 at a spread of Treasuries plus 148 bps.

The financial services company is based in New York.

MUFG firms

MUFG’s 3.85% notes due 2026 traded 5 bps better on Tuesday at 195 bps bid, a source said.

MUFG sold $2.5 billion of the notes (A1/A) on Feb. 23 at a spread of Treasuries plus 215 bps.

The financial services company is based in Tokyo.

Goldman steady

Goldman Sachs’ 3.75% notes due 2026 were flat on the day at 195 bps bid, according to a market source.

Goldman Sachs sold $1.75 billion of the notes (A3/BBB+/A) on Feb. 22 at 203 bps over Treasuries.

The financial services company is based in New York City.

Morgan Stanley flat

Morgan Stanley’s 3.875% notes due 2026 traded flat on Tuesday at 183 bps bid, a market source said.

Morgan Stanley sold $3 billion of the notes (A3/BBB+/A) on Jan. 22 at 185 bps over Treasuries.

The financial services company is based in New York City.

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