Sweden, Owens & Minor price as primary pace settles; spreads soften; Apple eases; AT&T flat

By Aleesia Forni and Cristal Cody

Virginia Beach, Sept. 11 – The investment-grade primary market slowed on Thursday following three solid days of issuance at the week’s start.

The market saw the Kingdom of Sweden, Owens & Minor Inc. and Harley-Davidson Financial Services Inc. each price new bond offerings.

Sweden sold the largest offering of the day, pricing a new $2 billion two-year note at the tight end of price guidance.

Meanwhile, Owens & Minor issued $500 million of senior notes in two tranches due 2021 and 2024, a market source said.

Both parts of the split-rated deal sold at the tight end of price talk.

Details of Harley-Davidson’s offering were unavailable at press time.

Roughly $27.7 billion of new investment-grade paper has priced this week, topping what sources had expected to be around a $25 billion week.

The figure also brings September’s total supply to more than $84 billion.

Investment-grade bond spreads headed out modestly softer on the day, sources said.

The Markit CDX North American Investment Grade series 22 index eased 1 basis point to a spread of 59 bps.

In the secondary market, Apple Inc.’s bonds traded about 4 bps wider from a week ago and about 5 bps weaker from where the notes priced in April, according to a market source.

AT&T Inc.’s 3.9% notes due 2024 were mostly unchanged in secondary trading, a source said.

Sweden sells $2 billion

Kingdom of Sweden priced $2 billion of 0.625% two-year notes (Aaa/AAA/) at mid-swaps minus 12 bps, according to a market source.

The notes sold at the tight end of talk, which was set in the area of mid-swaps minus 10 bps.

Credit Suisse Securities, Goldman Sachs & Co. and J.P. Morgan Securities LLC were the bookrunners.

Owens two-parter

Owens & Minor sold a $500 million two-part issue of senior notes in tranches due 2021 and 2024, a market source said.

There was $275 million of 3.875% seven-year notes priced at 99.539 to yield 3.951%, or Treasuries plus 172 bps.

A $275 million tranche of 4.375% notes due 2024 sold with a spread of Treasuries plus 187 bps.

Pricing was at 99.622 to yield 4.422%.

BofA Merrill Lynch, JPMorgan and Wells Fargo Securities LLC were the bookrunners.

Proceeds will be used to fund the acquisition of Medical Action Industries Inc., to fund the redemption of all of the company’s outstanding 6.35% senior notes due 2016 and for other general corporate purposes.

The Mechanicsville, Va.-based company is a distributor of medical and surgical supplies.

Apple notes ease

Apple’s 3.45% notes due 2024 (Aa1/AA+/) traded wider at the 82 bps area on Thursday, a source said.

The notes were quoted ending the previous week at 78 bps offered.

Apple sold $2.5 billion of the notes at a spread of Treasuries plus 77 bps on April 29.

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

AT&T firms

AT&T’s 3.9% notes due 2024 (A3/A-/A) traded mostly unchanged at 94 bps offered, according to a market source.

The notes were quoted a week ago at 95 bps offered.

AT&T sold $1 billion of the 10-year notes on March 5 at Treasuries plus 125 bps.

The telecommunications company is based in Dallas.

Bank/brokerage CDS costs mixed

Investment-grade bank and brokerage CDS prices were mixed, according to a market source.

Bank of America Corp.’s CDS costs were 1 bp lower at 66 bps bid, 69 bps offered. Citigroup Inc.’s CDS costs were flat at 66 bps bid, 69 bps offered. JPMorgan Chase & Co.’s CDS costs were also flat at 53 bps bid, 57 bps offered. Wells Fargo & Co.’s CDS costs ended unchanged at 40 bps bid, 45 bps offered.

Merrill Lynch’s CDS costs decreased 1 bp to 68 bps bid, 72 bps offered. Morgan Stanley’s CDS costs ended 1 bp higher at 75 bps bid, 78 bps offered. Goldman Sachs Group, Inc.’s CDS costs were flat at 78 bps bid, 81 bps offered.

Paul Deckelman contributed to this review.

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