GM, Noble Energy, Sweden continue primary pace; Verizon improves; Bank of America mostly flat

By Aleesia Forni and Cristal Cody

Virginia Beach, Nov. 4 – The investment-grade market’s momentum continued on Tuesday, with General Motors Co., Noble Energy Inc., Sweden and Aflac Inc. bringing new bond offerings to the primary.

Sweden sold a $3 billion offering of three-year notes on Tuesday in the largest new issue of the day.

Meanwhile, General Motors came to market with a $2.5 billion crossover issue of senior notes in three parts during the session.

The deal’s orderbook was nearly three times oversubscribed, according to a market source.

All three tranches of the sale priced at the tight end of talk, which had firmed up to 20 bps compared to initial guidance.

Noble Energy also sold both tranches of its new $1.5 billion two-part issue at the tight end of price talk.

Aflac Inc. priced its $750 million 10-year offering around 8 bps tight of guidance.

The session also saw Canadian National Railway Co. come to market with $600 million of senior notes in two tranches and Owens Corning price an upsized $400 million issue of 10-year senior notes.

National Rural Utilities Cooperative Finance Corp., Public Service Electric & Gas Co. and Southern California Edison Co. each sold bonds on Tuesday tight of price guidance.

In the preferred market, SunTrust Banks Inc. issued $500 million of $1,000-par series F fixed-to-floating-rate noncumulative perpetual preferred stock during the session.

Tuesday’s primary also saw a trio of issuers join the week’s forward calendar.

Both Council of Europe Development Bank and Bank Nederlandse Gemeenten NV set price talk for planned bond offerings during the session.

Meanwhile, Fannie Mae announced plans to bring an issue of Benchmark Notes due 2019 to market.

The flood of new issuance that began on Monday continued as issuers brought $9.4 billion of paper to the primary on Tuesday, bringing the week’s total supply to more than $20 billion in just two sessions.

Investment-grade credit spreads widened over the session, according to market sources.

The Markit CDX North American Investment Grade series 23 index eased 1 basis point to a spread of 65 bps.

In the secondary market, Verizon Communications Inc.’s 4.15% notes due 2024 traded about 4 bps better, a source said.

Wal-Mart Stores Inc.'s 3.3% notes due 2024 have eased 3 bps over the past two sessions, according to a market source.

Bank of America Corp.’s 4% notes due 2024 traded flat to 1 bp weaker, a market source said.

Sweden prices $3 billion

The high-grade primary market hosted the Kingdom of Sweden on Tuesday, as the sovereign priced $3 billion of 1% three-year notes at mid-swaps minus 7 bps, a market source said.

The notes were talked in the mid-swaps minus 6 bps area.

The joint bookrunners were Barclays, Citigroup Global Markets Inc., HSBC Securities and Nordea.

GM prices tight

General Motors sold a $2.5 billion split-rated offering of senior notes (Ba1/BBB-/BB+) in tranches due 2025, 2035 and 2045 on Tuesday, according to a market source and an FWP filed with the Securities and Exchange Commission.

The company sold $500 million of 4% notes due 2025 at Treasuries plus 175 bps, or 99.273, to yield 4.087%.

Pricing was at the tight end of talk, which firmed around 20 bps from initial guidance.

A second tranche was $750 million of 5% notes due 2035 priced at 98.759 to yield 5.099%.

The notes sold with a spread of Treasuries plus 205 bps. Price talk was set in the Treasuries plus 210 bps area, flat from initial guidance.

Finally, $1.25 billion of 5.2% bonds due 2045 priced at 99.266 to yield 5.249%, or Treasuries plus 220 bps.

Pricing was at the tight end of talk, which had firmed around 5 bps compared to guidance.

"Favorable market conditions made now the appropriate time to add liquidity to further strengthen our fortress balance sheet and improve our financial flexibility," said executive vice president and chief financial officer Chuck Stevens in a news release.

J.P. Morgan Securities LLC will bill and deliver and is joined by Goldman Sachs & Co. and Morgan Stanley & Co. LLC as the active joint bookrunners. Barclays and BofA Merrill Lynch are passive bookrunners.

Proceeds will be used to redeem the company’s series A fixed-rate cumulative perpetual preferred stock.

General Motors is a Detroit-based car-maker.

Noble two-parter

Also on Tuesday, Noble Energy sold a $1.5 billion two-part offering of senior notes (Baa2/BBB/) in tranches due 2024 and 2044, according to a market source and an FWP filed with the SEC.

The sale included $650 million of 3.9% notes due 2024 priced at 99.695 to yield 3.937%, or Treasuries plus 160 bps.

Pricing was at the tight end of price talk.

A second tranche was $850 million of 5.05% 30-year bonds priced at 99.265 to yield 5.098%.

The notes sold with a spread of Treasuries plus 205 bps, at the tight end of talk.

BofA Merrill Lynch, Barclays, Deutsche Bank Securities Inc., HSBC Securities, BNP Paribas Securities Corp. and Wells Fargo Securities LLC were the joint bookrunners.

The company intends to use about $1.05 billion of the net proceeds from the offering to repay debt under its revolving credit facility and the balance of the net proceeds for general corporate purposes.

The crude oil and natural gas exploration and production company is based in Houston.

Aflac offering

Aflac sold $750 million of 3.625% 10-year senior notes (A3/A/) on Tuesday with a spread of Treasuries plus 130 bps, according to an FWP filing with the SEC.

Pricing was at 99.899 to yield 3.637%.

Bookrunners are Goldman Sachs & Co., Mizuho Securities USA Inc., Morgan Stanley & Co. LLC and Wells Fargo Securities LLC.

Proceeds will be used for general corporate purposes.

The company provides supplemental health and life insurance through its subsidiaries and is based in Columbus, Ga.

Canadian National’s $600 million

Canadian National Railway sold $600 million of senior notes (A2/A/) in two tranches, according to a market source and an FWP filed with the SEC.

The sale included $250 million of three-year floating-rate notes priced at par to yield Libor plus 17 bps.

The notes sold at the tight end of talk, set in the 20 bps area over Libor.

There was also $350 million of 2.95% notes due 2024 priced at 98.92 to yield 3.076%, or Treasuries plus 75 bps.

Pricing was tight of the Treasuries plus 85 bps area talk.

Citigroup Global Markets, RBC Capital Markets LLC and Wells Fargo Securities were the bookrunners.

Proceeds will be used for general corporate purposes, including the redemption and refinancing of outstanding debt and share repurchases.

The railway transportation company is based in Montreal.

Owens upsizes

In other primary action, Owens Corning priced an upsized $400 million issue of 4.2% 10-year senior notes (Ba1/BBB-/BBB-) at Treasuries plus 210 bps on Tuesday, according to an FWP filed with the SEC.

Pricing was at 98.076 to yield 4.439%.

The notes sold at tight of guidance, which was set in the 225 bps area over Treasuries.

Goldman Sachs, JPMorgan and Wells Fargo Securities were the bookrunners.

Proceeds will be used to fund a tender offer and for general corporate purposes, including the repayment of debt.

The glass fiber technology company and maker of composite and building materials is based in Toledo, Ohio.

National Rural collateral bonds

National Rural Utilities Cooperative Finance priced $300 million of 2.3% five-year collateral trust bonds (A1/A+/) on Tuesday at Treasuries plus 70 bps, according to a market source and an FWP filing with the SEC.

Pricing was at 99.864 to yield 2.329%.

The notes sold tight of guidance set in the 80 bps area over Treasuries.

KeyBanc Capital Markets Inc., Mizuho Securities USA Inc., RBS Securities Inc. and U.S. Bancorp Investments Inc. were the bookrunners.

Proceeds will be used for general corporate purposes, including repayment of short-term debt, primarily consisting of commercial paper, and, along with cash on hand and other funding, to repay $400 million of 1% collateral trust bonds due Feb. 2, 2015.

The market lender for electric cooperatives is based in Herndon, Va.

PSE&G secured notes

Also on Tuesday, Public Service Electric & Gas sold $250 million of 3.05% secured medium-term notes, series J, (Aa3/A/) due Nov. 15, 2024 at 99.52 with a spread of Treasuries plus 78 bps, according to a market source and an FWP filing with the SEC.

Pricing was at the tight end of price talk.

The bookrunners were Barclays and Goldman Sachs.

Proceeds will be used for general corporate purposes.

PSE&G is a Newark-based utility.

SoCal Edison new issue

Southern California Edison was also in Tuesday’s market, pricing a $100 million issue of 1.25% first and refunding mortgage bonds, series 2014C, due 2017 with a spread of Treasuries plus 37.5 bps, according to a market source and an FWP filed with the SEC.

The notes (Aa3/A/A+) sold at 99.816 to yield 1.313%.

Pricing was at the tight end of talk, which had firmed around 10 bps compared to initial guidance.

Citigroup Global Markets and SunTrust Robinson Humphrey Inc. were the bookrunners.

Proceeds will be used to finance fuel inventories.

The electric utility is based in Rosemead, Calif.

SunTrust preferreds

SunTrust Banks priced $500 million of 5.625% $1,000-par series F fixed-to-floating- rate noncumulative perpetual preferred stock, according to a market source on Tuesday.

The preferreds will be issued as depositary shares representing a 1/100th interest.

Goldman Sachs, Morgan Stanley and SunTrust Robinson Humphrey are the joint bookrunners.

The dividend will be fixed until Dec. 15, 2019 and will be payable on a semiannual basis. After that date, the dividend will float at Libor plus 386 bps and will be paid on the 15th day of March, June, September and December.

On or after Dec. 15, 2019, the Atlanta-based bank can redeem the preferreds at par plus accrued dividends.

The company can also redeem the preferreds within 90 days of a regulatory capital treatment event.

Proceeds will be used for general corporate purposes.

Council of Europe sets talk

Council of Europe Development Bank set price talk for a planned $1 billion offering of five-year global bonds (Aa1/AA+/) in the mid-swaps plus 3 bps area during the session on Tuesday, an informed source said.

The bookrunners are Credit Agricole, HSBC Securities, Morgan Stanley and TD Securities.

The financing and development institution for social projects in Europe is based in Paris.

Fannie Mae on deck

Fannie Mae also announced plans to price a new offering of notes, according to a market source and a company news release.

The agency set price talk for the proposed Benchmark Notes issue due Nov. 26, 2019 in the 20 bps area over Treasuries.

The issue will settle on Nov. 7.

Barclays, JPMorgan and Morgan Stanley are the joint lead managers.

The co-managers include FTN Financial Capital Markets, Great Pacific Securities, Mischler Financial Group, TD Securities USA and Williams Capital Group LP.

The government-backed mortgage lender is based in Washington, D.C.

BNG planning notes

In other forward calendar news, Bank Nederlandse Gemeenten set price guidance for its planned offering of 18-month notes in the area of mid-swaps minus 1 bp, according to a market source.

The bookrunners are BofA Merrill Lynch, Credit Suisse Securities, JPMorgan and Nomura.

The local government funding agency is based in the Hague, the Netherlands.

Verizon steady

Verizon’s 4.15% notes due 2024 (Baa1/BBB+/A-) have tightened 4 bps since Friday to 133 bps offered, a market source said on Tuesday.

Verizon sold $1.25 billion of the notes on March 10, 2014 at a spread of Treasuries plus 140 bps.

The telecommunications company is based in New York City.

Wal-Mart eases

Wal-Mart’s 3.3% notes due 2024 (Aa2/AA/AA) were quoted about 3 bps weaker at 72 bps offered on Tuesday, a market source said.

The notes traded at 69 bps offered on Friday.

Wal-Mart priced a $500 million add-on to the existing issue on Oct. 7 at Treasuries plus 73 bps.

The company originally sold $1 billion of the notes at a spread of Treasuries plus 73 bps on April 15, 2014.

The discount retailer is based in Bentonville, Ark.

Bank of America mostly flat

Bank of America’s 4% notes due 2024 (Baa2/A-/A) traded flat to 1 bp weaker at 128 bps offered, a market source said.

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

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.