BG Energy, Origin, Joy Global tap market ahead of holiday; bank and telecom paper firm

By Andrea Heisinger and Cristal Cody

New York, Oct. 6 - There were several new investment-grade deals on Thursday, including one totaling $3 billion from BG Energy Capital plc.

The energy company sold paper in three parts with maturities of five, 10 and 30 years. The trade was done under Rule 144A and Regulation S, as was a $500 million deal from Origin Energy.

Origin increased the size of its 10-year note sale to $500 million from $400 million.

Mining services company Joy Global Inc. priced $500 million of 10-year notes.

Southern California Edison Co. was one of the first to sell debt for the day with its $150 million deal of three-year floating-rate notes. It was followed by Public Service Co. of New Mexico, which priced $160 million of 10-year paper.

Sources said it was hard to tell if there was any change in the market by day's end due to the meetings going on in the euro zone to try to find a solution to the debt crisis in Greece and beyond.

"It was a good market, but I think everyone's getting ahead of themselves," said one source in reference to any solution being found already and any boost to the market.

"Let's see them put something into practice and then get excited," the source said.

Friday is expected to be quiet, and although it's not an early market close, many desks will be thinning out early.

"Tomorrow's show numbers come out, and if it's good, then we're off to the races," the source said.

Corporate bonds ended tighter on the day in secondary trading. The Markit CDX Series 17 North American high-grade index firmed 6 basis points to a spread of 139 bps.

"Definitely a strong tone to pretty much everything today," a trader said.

Bonds in the telecom sector were seen 5 bps to 15 bps better.

John Deere Capital Corp.'s 10-year notes firmed nearly 20 bps in trading on Thursday.

"Financials are closing up anywhere from 20 to 50 basis points better," a trader said. "Bank of America and Morgan Stanley are probably the largest outperformers."

BAE Systems plc's three tranches of bonds all traded tighter late afternoon.

In other trading, Kinross Gold Corp.'s 10-year notes have widened about 85 bps since they priced in August, a trader said.

Overall trading volume dropped 10% to about $12 billion.

Government bonds ended lower for a third day on Thursday. The benchmark 10-year Treasury note yield rose 10 bps to 1.99%, while the 30-year bond yield rose to 2.95% from 2.85%.

BG Energy sells $3 billion

BG Energy Capital priced $3 billion of senior notes (A2/A/A) in three tranches, a market source close to the trade said.

The $750 million of 2.875% five-year notes was priced at a spread of Treasuries plus 190 bps.

A second part was $1.35 billion of 4% 10-year notes sold at a spread of 210 bps over Treasuries.

There was a third tranche of $900 million of 5.125% 30-year bonds priced at Treasuries plus 230 bps.

Barclays Capital Inc., Citigroup Global Markets Inc., Mizuho Securities USA Inc. and RBC Capital Markets LLC were the bookrunners.

The notes were priced under Rule 144A and Regulation S. They are guaranteed by BG Energy Holdings Ltd.

Proceeds will be used to make intra-group loans to the guarantor to use for general corporate purposes.

The natural gas company is based in Reading, United Kingdom.

Joy Global's $500 million

Joy Global priced $500 million of 5.125% 10-year senior notes (Baa2/BBB) at a spread of Treasuries plus 325 bps, according to an FWP with the Securities and Exchange Commission.

Bookrunners were Bank of America Merrill Lynch, Goldman Sachs & Co. and J.P. Morgan Securities LLC.

Proceeds are being used to fund the 41.1% acquisition of common stock of International Mining Machinery Holdings Ltd. and for a tender offer for the remaining shares of that company's common stock. Any remainder will be used for general corporate purposes.

The deal is guaranteed by the subsidiaries that guarantee the company's revolving unsecured credit agreement.

The equipment, parts and service provider for the mining industry is based in Milwaukee, Wis.

Origin Energy upsizes

Australia's Origin Energy sold an upsized $500 million of 5.45% 10-year notes to yield Treasuries plus 350 bps, a source close to the trade said.

The deal size was increased slightly from $400 million.

The notes (Baa1/BBB+) were priced under Rule 144A and Regulation S.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC were bookrunners.

The coal-seam gas producer is based in Sydney.

Two utilities sell debt

There were two electric companies in the market for the day, each pricing less than $200 million.

Southern California Edison sold $150 million of three-year floating-rate first mortgage bonds, series 2011D, (A1/A/A+) at par to yield Libor plus 45 bps, according to an FWP with the SEC.

Bank of America Merrill Lynch and Citigroup Global Markets Inc. were active bookrunners. Proceeds will be used to finance fuel inventories.

The electric utility is based in Rosemead, Calif.

There was also a deal from Public Service Co. of New Mexico. The company sold $160 million of 5.35% 10-year senior notes (Baa3/BBB-) to yield Treasuries plus 340 bps, according to an FWP with the SEC.

J.P. Morgan Securities LLC and Mitsubishi UFJ Securities (USA) Inc. were bookrunners.

Proceeds are being used to repay outstanding borrowings under an unsecured revolving credit facility.

The electric company is based in Albuquerque, N.M.

Toyota gives terms

Toyota Motor Credit Corp. gave terms of its $275 million of one-year floating-rate notes (Aa3/AA-) priced the previous day at par to yield Libor plus 20 bps, according to a 424B2 filing with the Securities and Exchange Commission.

Agents were RBC Capital Markets LLC and Toyota Financial Services Securities USA Corp.

The U.S. financing arm of Toyota Financial Services is based in Torrance, Calif.

John Deere stronger

John Deere Capital's 3.15% notes due 2021 priced the previous day firmed nearly 20 bps to 112 bps bid, 107 bps offered, a trader said Thursday.

The company sold $500 million of the 10-year notes (A2/A) at Treasuries plus 130 bps.

The financing arm of heavy equipment maker Deere & Co. is based in Reno, Nev.

Financials improve

Bank paper traded better, with Morgan Stanley's notes stronger but still weaker on the week, a trader said.

The bank's notes due 2021 were better Thursday at 560 bps bid, 530 bps offered, the trader said.

Morgan Stanley priced the notes on July 21 at 250 bps over Treasuries.

The investment bank is based in New York City.

BAE Systems firms

The three tranches of bonds (Baa2/BBB+/BBB+) that BAE Systems sold the previous day all firmed in secondary trading on Thursday, according to a trader.

The 3.5% notes due 2016 traded at 256 bps bid, 251 bps offered. The company sold $350 million of the five-year notes at a spread of Treasuries plus 262.5 bps.

The tranche of 4.75% notes due 2021 was seen at 283 bps bid, 278 bps offered late afternoon, firmer than where the notes priced at a spread of 287.5 bps over Treasuries in the $500 million offering.

The last tranche of $400 million of 5.8% 30-year bonds priced at a spread of Treasuries plus 300 bps. In trading, the bonds due 2041 firmed to 292 bps bid, 287 bps offered.

The multinational aerospace and defense company is based in London.

Kinross Gold cheapens

Kinross Gold's high-grade senior notes (Baa3/BBB-/BBB-) moved out in trading, a trader said.

The 5.125% notes due 2021 were seen early in the day at 375 bps bid, 355 bps offered.

The company sold $500 million of the notes on Aug. 16 at a spread of 290 bps over Treasuries.

The mining and gold ore processing company is based in Toronto.

CDS costs down

Bank and brokerage credit default swaps costs dropped sharply on Thursday, indicating increased investor confidence n the financial sector, a trader said.

Bank of America's CDS costs dropped 60 bps to 380 bps bid, 400 bps offered. Wells Fargo's CDS costs firmed 25 bps to 140 bps bid, 155 bps offered.

Morgan Stanley's brokerage CDS costs ended 65 bps tighter at 455 bps bid, 475 bps offered.

Merrill Lynch's CDS costs dropped 60 bps to 430 bps bid, 450 bps offered.

Goldman Sachs' CDS costs fell 50 bps on the day to 335 bps bid, 355 bps offered.

Paul Deckelman contributed to this review

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