Novartis, Illinois Tool, PG&E lead $7.25 billion session; Ryder firms; Novartis eases

By Cristal Cody and Aleesia Forni

Virginia Beach, Feb. 18 - Novartis Capital Corp., Illinois Tool Works Inc. and Pacific Gas & Electric Co. came to the high-grade primary market to kick off the holiday-shortened week on Tuesday.

The session saw $7.25 billion of paper price on Tuesday, the first session of the week.

The largest deal of the day came from Novartis Capital, which sold $4 billion of notes in tranches due 2024 and 2044.

The company sold $2.15 billion of 3.4% 10-year notes sold with a spread of Treasuries plus 77 basis points and $1.85 billion of 4.4% 30-year bonds with a spread of Treasuries plus 77 bps.

Pricing was tight of guidance.

Illinois Tool Works also came to market on Tuesday, pricing $2 billion of notes in three tranches, a source said.

There was $650 million of 0.9% notes due 2017 sold at 28 bps over Treasuries and $650 million of 1.95% five-year notes priced at 50 bps over Treasuries.

Finally, a $700 million tranche of 3.5% 10-year notes sold with a spread of Treasuries plus 83 bps.

All three tranches sold at the tight end of talk.

Meanwhile, PG&E priced an upsized $900 million of senior notes during the session.

The utility priced $450 million of 3.75% notes due 2024 at 105 bps over Treasuries and a $450 million tranche of 4.75% 30-year notes priced at 110 bps over Treasuries.

Ryder System, Inc. sold $350 million of 2.55% notes due 2019 on Tuesday with a spread of Treasuries plus 110 bps.

The notes priced at the tight end of talk, which had tightened around 15 bps from earlier price guidance.

Also on Tuesday, KfW announced price talk for its proposed benchmark issue of notes at mid-swaps plus 3 bps.

"Everything looked very good today," one market source said after the session's close.

He added that there seem to be "no signs of a slowdown," and issuance should continue during the rest of the week.

Sources are predicting around $15 billion to $20 billion of supply for the holiday-shortened week.

New issues traded mostly better in the aftermarket late afternoon, according to market sources.

Ryder System's 2.55% notes due 2019 tightened 3 bps, a trader said.

PG&E's 3.75% notes due 2024 firmed 3 bps, while the tranche of 4.75% bonds due 2044 tightened 1 bp, a trader said.

Illinois Tool's notes traded flat to about 1 bp better, a source said.

Novartis Capital's two tranches of notes eased 1 bp to 2 bps in secondary trading, according to a trader.

Investment-grade bond spreads headed out flat, sources said.

The Markit CDX North American Investment Grade series 21 index was unchanged at a spread of 64 bps.

Novartis' $4 billion issue

Novartis Capital priced a $4 billion sale of notes (Aa3/AA-/) in two tranches on Tuesday, according to an FWP filed with the Securities and Exchange Commission.

A $2.15 billion tranche of 3.4% 10-year notes sold at 99.287 to yield 3.484% with a spread of Treasuries plus 77 bps.

A second part was $1.85 billion of 4.4% 30-year bonds priced at 99.196 to yield 4.449% with a spread of Treasuries plus 77 bps.

Novartis Capital's 3.4% notes due 2024 eased 1 bp to 78 bps bid, 76 bps offered going out on the day, a trader said.

The 4.4% bonds due 2044 widened 2 bps to 79 bps bid, 77 bps offered in the secondary market.

Goldman Sachs & Co., BofA Merrill Lynch, Barclays, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC were the joint bookrunners.

Proceeds are being used for general corporate purposes outside of Switzerland, including refinancing of short-term and long-term debt.

The notes are guaranteed by Basel, Switzerland-based parent company Novartis AG.

The issuer is a holding company for pharmaceuticals and health-care subsidiaries and is based in New York City.

Illinois Tool three-parter

Illinois Tool Works priced a $2 billion three-part offering of senior notes (A2/A+/) during Tuesday's session, according to a market source and an FWP filing with the SEC.

The sale included a $650 million issue of 0.9% notes due 2017, which priced at 28 bps over Treasuries.

The notes sold at 99.861 to yield 0.947%.

A $650 million tranche of 1.95% notes due 2019 sold with a spread of 50 bps over Treasuries, or 99.871, to yield 1.977%.

There was also $700 million of 3.5% 10-year notes priced at Treasuries plus 83 bps.

Pricing was at 99.648 to yield 3.542%.

All three tranches were sold at the tight end of talk.

In the secondary market, Illinois Tool's 1.95% notes due 2019 traded at 49 bps bid, 46 bps offered, a trader said.

The 3.5% notes due 2024 were wrapped around issuance at 83 bps bid, 80 bps offered.

BofA Merrill Lynch, Citigroup Global Markets, Goldman Sachs and JPMorgan were the joint bookrunners.

Proceeds will be used to repay short-term debt under the company's commercial paper program and for other general corporate purposes.

Based in Glenview, Ill., Illinois Tool Works manufactures industrial products and equipment.

PG&E upsizes

Pacific Gas & Electric sold an upsized $900 million two-part issue of senior notes (A3/BBB/A-) on Tuesday, according to a market source and an FWP filing with the SEC.

The utility sold a $450 million issue of 3.75% 10-year notes at 105 bps over Treasuries, or 99.901, to yield 3.762%.

A second tranche was $450 million of 4.75% notes due 2044 sold with a spread of 110 bps over Treasuries.

Pricing was at 99.573 to yield 4.777%.

PG&E's 3.75% notes due 2024 firmed to 102 bps bid, 99 bps offered in secondary trading, a trader said.

The 4.75% bonds due 2044 traded at 109 bps bid, 106 bps offered.

JPMorgan, Morgan Stanley & Co., Ramirez & Co. Inc. and RBS Securities Inc. were the joint bookrunners.

Proceeds will be used to repay the company's 4.8% notes due March 1, 2014. Remaining proceeds will be used for general corporate purposes, including the repayment of commercial paper.

The electric and natural gas utility is based in San Francisco.

Ryder new issue

Ryder System priced a $350 million issue of 2.55% five-year notes (Baa1/BBB/) on Tuesday with a spread of Treasuries plus 110 bps, according to a market source.

Pricing was at 99.88 to yield 2.574%.

The notes sold at the tight end of talk.

Ryder System's 2.55% notes due 2019 firmed to 107 bps bid, 102 bps offered in the secondary market, according to a trader.

BNP Paribas Securities Corp., BofA Merrill Lynch, Mizuho Securities, Morgan Stanley and RBC Capital Markets LLC were the joint bookrunners.

The transportation and logistics company is based in Miami.

KfW sets talk

KfW set talk for its planned benchmark issue of notes at mid-swaps plus 3 bps on Tuesday, according to an informed source.

Deutsche Bank Securities, Nomura Securities Co. Ltd. and TD Securities are the joint bookrunners.

The German government-owned development bank is based in Frankfurt.

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