Arrow Electronics, Colgate-Palmolive price; two big days in week ahead; financials widen

By Andrea Heisinger

New York, Oct. 29 - Arrow Electronics, Inc. and Colgate-Palmolive Co. closed out the week and month of October Friday with their sales of bonds done in quick order.

Electronic components maker Arrow sold $500 million, split evenly between notes due 2015 and 2021.

Colgate-Palmolive priced $438 million in two tranches of five-year and 10-year maturities. Both tranches priced at the tight end of price guidance, and the issue was more than two times oversubscribed.

The coming week is expected to be about the same as far as volume, but it's unclear about the number of deals upcoming.

The past week saw roughly $15 billion of high-grade bonds sold, and that is expected to be repeated.

One source said there should be "about the same" amount of new bonds, adding, "maybe a little more."

A syndicate source was more precise with an estimate.

"I think we'll be pretty busy, maybe $15 to $20 billion," he said.

Throwing wrenches into the issuance calendar are two important events in the coming week: midterm elections on Tuesday and the Federal Reserve Board Federal Open Market Committee meeting on Wednesday.

"We're kind of at a weird gray area where we're coming out of earnings and Q filings," the syndicate source said. "Then again, there are only five, six, seven weeks to issue yet this year if you count all the holidays coming up."

A split-rated sale from the Seminole Tribe of Florida remains on the calendar. The tribe is expected to price $330 million of seven-year Gaming Division Bonds.

Little secondary activity was seen in the new deals from Arrow Electronics and Colgate-Palmolive, traders said Friday afternoon.

"Seeing nothing on Colgate and just the one offer on ARW," a trader said.

The lack of activity "kind of reflects the corp. market today - pretty quiet," the trader said. "Most are waiting to see what comes of next week."

Overall investment-grade Trace volume declined 10% to about $10 billion, a market source said.

Traders expect some volatility depending on the midterm elections on Tuesday and the Federal Reserve's decision on the quantitative easing program expected on Wednesday.

"Spreads didn't do much this week," a source said.

The Markit CDX Series 14 North American investment-grade index ended Friday unchanged for a second day at a spread of 94 basis points, according to Markit Group Ltd.

Market tone for the day was light.

"There was a little bit going on this morning, and it kind of died out around midday," a trader said. "Microsoft reported earnings yesterday, so the tech base was doing a little bit better on the back of earnings, but even that sector was probably only 2 basis points better. Pretty much everything is unchanged to at most 3 basis points better."

High-grade financial bonds were the standout, though, in secondary trading. Bank paper was seen widening 5 bps, a trader said.

"Yesterday that closed about 5 basis points wider, and then today there's still a pretty weak tone and they closed again another 5 wider," a trader said.

Government bonds remained higher on the day, with yields pushed down. The yield on the 10-year Treasury note fell 6 bps to 2.6%. The 30-year bond yield declined to 3.98% from 4.06%.

Colgate's $438 million

Colgate-Palmolive sold $438 million of notes (Aa3/AA-/AA-) in mid-afternoon, according to a source who worked on the sale.

A $188 million tranche of 1.375% five-year notes priced at a spread of 38 bps over Treasuries. The notes priced at the tight end of guidance in the 40 bps area, plus or minus 2 bps.

The $250 million tranche of 2.95% 10-year notes sold at a Treasuries plus 53 bps spread. This tranche also priced at the tight end of talk in the 55 bps area, plus or minus 2 bps.

There was about $1 billion on the books for the deal. The five-year books were about $350 million, and the 10-year notes had demand of about $650 million.

"They priced at a kind of rarified spread," the source said. "They're kind of up there with the Microsoft and J&J [Johnson & Johnson] bonds - the creme de la creme."

The odd, $188 million size of the five-year tranche was due to shelf capacity, he said.

"They wanted to finish it out."

The bookrunners for the five-year notes were Bank of America Merrill Lynch, Citigroup Global Markets Inc., Goldman Sachs & Co. and RBS Securities Inc.

The 10-year notes had bookrunners Bank of America Merrill Lynch, BNP Paribas Securities Corp., Citigroup, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. Inc.

Proceeds are being used to retire commercial paper and for general corporate purposes, the source said.

No secondary activity was seen on Colgate-Palmolive's first tranche of notes due 2015, several traders reported.

"Nada," one trader said.

The second tranche of notes due 2020 was seen tighter at 48 bps bid, 47 bps offered.

The maker of household, health-care and personal products is based in New York.

Arrow sells two tranches

Arrow Electronics priced $500 million of notes (Baa3/BBB-) in two tranches by early afternoon, a source away from the deal said.

The $250 million of 3.375% five-year notes sold at a spread of 230 bps over Treasuries.

A second tranche was $250 million of 5.125% notes due 2021 that priced at Treasuries plus 255 bps.

The bookrunners were Bank of America Merrill Lynch, JPMorgan and Morgan Stanley.

Proceeds are being used for general corporate purposes, including acquisitions and debt repayment under an $800 million revolving credit facility or $300 million asset-securitization program.

The maker of electronic components and enterprise computing solutions is based in Melville, N.Y.

A bit more secondary activity was seen in the two tranches from Arrow Electronics than in Colgate-Palmolive's notes.

The company's notes due 2015 firmed to 224 bps bid, 222 bps and later to 222 bps bid, 218 bps offered in very slight action, traders said.

"The five-years - there's nothing at all," one trader said.

The notes due 2021 were seen tighter on the offer side at 252 bps and later firmer overall at 255 bps bid, 251 bps offered, according to traders.

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