Liberty Mutual, EPR price upsized trades; Liberty, Pacific Gas notes trade tighter

By Aleesia Forni and Andrea Heisinger

New York, June 13 - Two new offerings from Liberty Mutual Group Inc. and EPR Properties were priced in the investment-grade bond market Thursday.

Liberty Mutual sold $600 million of 10-year notes via Rule 144A and Regulation S. The deal size was increased from $350 million.

The offering was joined by a crossover trade from EPR. The real estate investment trust tapped the market for $275 million of 10-year notes after the size was increased slightly from $250 million.

The lack of high-grade issuers for the week as well as the lower ratings - and therefore higher yield - of the day's sales left investors clamoring to buy, sources said.

"I mean, we almost doubled the size and didn't have a lot of drops," a source close to the Liberty Mutual sale said of the books.

Friday is expected to have little-to-no issuance as companies looking to sell bonds wait until the coming week.

"At this point, it's a waiting game to see if [market conditions] improve," the source said.

Roughly $3.7 billion of bonds have been sold so far this week - not coming close to the lowest estimates of $10 billion of supply.

Liberty's new notes traded 2 basis points tighter near the end of the day's trading, one market source said.

Wednesday's two-part deal from Pacific Gas & Electric Co. traded tighter on Thursday, according to another market source, as the secondary market tone was positive to open the session.

"Looks like spreads [are] doing a little better today," the source said at midday, adding that the Markit CDX Series 20 North American Investment Grade index was 1.8 bps tighter.

The index closed the session at 82 bps, 5 bps tighter compared to Wednesday's close.

EPR's crossover

EPR Properties sold $275 million of 5.25% 10-year notes (Baa3/BB+/BBB-) to yield 312.5 bps over Treasuries, an informed source said.

The sale was upsized from $250 million. The trade was done in line with guidance in the 312.5 bps area.

Bookrunners were Citigroup Global Markets Inc., J.P. Morgan Securities LLC and RBC Capital Markets LLC.

Proceeds will be used to repay about C$90.9 million of outstanding fixed-rate mortgage debt secured by four entertainment retail centers located in Ontario, to repay roughly $56.7 million of outstanding fixed-rate mortgage debt secured by an entertainment retail center located in New Rochelle, N.Y., to pay costs associated with the early repayment of the mortgage debt, to repay the outstanding principal balance of an unsecured revolving credit facility and for general business purposes, which may include funding the acquisition, development or financing of properties, including the potential acquisition of a company that indirectly owns 11 theatre properties.

The notes will be guaranteed by EPR's current and future restricted subsidiaries that guarantee the company's unsecured revolving credit facility, unsecured term loan facility and existing notes.

The real estate investment trust for entertainment properties is based in Kansas City, Mo.

Liberty upsizes

Liberty Mutual Group priced an upsized $600 million of 4.25% 10-year senior notes (Baa2/BBB-/) to yield Treasuries plus 215 bps, a market source said.

A trader quoted the notes at 213 bps bid.

The size was increased from $350 million, the source said.

The sale was done under Rule 144A and Regulation S.

Active bookrunners were BofA Merrill Lynch and Wells Fargo Securities LLC. Passives were Citigroup Global Markets and JPMorgan.

The company was last in the U.S. bond market with a $500 million reopening of two sets of notes on Aug. 14, 2012.

Liberty Mutual is a Boston-based property and casualty insurance company.

Baltimore Gas & Electric terms

Baltimore Gas & Electric Co. gave further terms of its $300 million offering of 3.35% 10-year notes (Baa1/BBB+/BBB+) in an FWP filing with the Securities and Exchange Commission.

Pricing was at 99.957 to yield 3.355%. There is a make-whole call at Treasuries plus 20 bps until April 1, 2023, with a par call after that date.

JPMorgan, BNP Paribas Securities Corp. and Scotia Capital (USA) Inc. were the bookrunners on the deal.

The company plans to use the proceeds to partially refinance its $400 million of 6.125% notes due July 1, 2013 and for general corporate purposes.

The Baltimore-based electric and natural gas utility was last in the market with $250 million of 2.8% 10-year senior notes, which priced on Aug. 14, 2012 to yield Treasuries plus 112 bps.

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