Philip Morris, Statoil lead flurry of issuance; Southwest Airlines, Barclays firm

By Aleesia Forni and Cristal Cody

Virginia Beach, Nov. 3 – Philip Morris International Inc., Statoil ASA and Barclays plc were among the issuers pricing bonds during a frenzied primary session for the investment-grade bond market.

Statoil sold the day’s largest new issue, bringing to market $3 billion of notes in five tranches at the tight end of price talk.

A source noted that the orderbook for the new issue was more than two times oversubscribed.

In other primary happenings, Philip Morris sold $2 billion of senior notes in three tranches, also at the tight end of price talk.

Barclays was also in the market on Monday with a $2 billion offering, attracting an orderbook that was around three times oversubscribed.

Discover Financial Services and Pacific Gas & Electric Co. each priced new $500 million issues of senior notes, respectively.

Georgia Pacific LLC came to market with a $2.1 billion issue of notes, though details of the sale were unavailable at press time.

New deals from Aetna Inc., Southwest Airlines Co. and Commonwealth Edison Co. rounded out the day’s primary activity.

In forward calendar news, Sweden announced price talk ahead of a planned offering of three-year notes.

In total, the high-grade market kicked off the new month with $11.4 billion of new issuance priced on Monday.

“A strong start for what is going to be a busy week,” a market source said.

Around $30 billion of new issuance is expected for the first week of November.

Investment-grade credit spreads were mostly flat on the day, according to market sources.

The Markit CDX North American Investment Grade series 23 index was unchanged at a spread of 64 basis points.

In aftermarket trading, Southwest Airlines’ 2.75% notes due 2019 tightened 8 bps, a trader said.

Barclays’ 2.75% notes due 2019 firmed 6 bps, according to a trader.

The new notes from Aetna and Discover Financial traded wrapped around issuance.

In other new issue trading, Commonwealth Edison’s 3.1% bonds due 2024 eased 2 bps, a trader said.

Georgia Pacific’s new offering was not seen in the secondary market, according to a trader.

Philip Morris’ tranches of notes due 2024 and notes due 2044 were active in aftermarket trading, a trader said.

Statoil offering

Statoil priced $3 billion of senior notes (Aa2/AA-/) in five parts on Monday, a market source said.

The company sold $500 million of three-year floaters at Libor plus 20 bps.

A second tranche was $750 million of 1.25% three-year notes sold at Treasuries plus 40 bps.

Pricing was at the tight end of the Treasuries plus 40 bps to 45 bps talk.

There was also $750 million of 2.25% five-year notes sold at Treasuries plus 63 bps.

The notes sold at the tight end of talk, set in the area of Treasuries plus 65 bps.

The company also priced $500 million of 2.75% notes due 2021 at Treasuries plus 80 bps, the tight end of the Treasuries plus 80 bps to 85 bps talk.

Finally, $500 million of 3.25% 10-year notes sold at 98 bps over Treasuries.

Talk was set in the 100 bps area over Treasuries.

The bookrunners for the deal were BofA Merrill Lynch, Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC.

Proceeds will be used for general corporate purposes.

The oil and gas production company is based in Stavanger, Norway.

Barclays prices tight

Barclays priced $2 billion of 2.75% senior notes (A3/A-/A) due 2019 with a spread of Treasuries plus 120 bps, according to a market source.

Pricing was at 99.648 to yield 2.826%.

The notes sold at the tight end of price talk.

Barclays was the bookrunner.

Proceeds will be used for general corporate purposes.

In secondary trading, Barclays’ 2.75% notes due 2019 firmed to 114 bps bid, 113 bps offered, according to a trader.

The financial services company is based in London.

Philip Morris brings $2 billion

Philip Morris International priced $2 billion of senior notes (A2/A/A) in three tranches, according to a market source.

The sale included $500 million of 1.25% three-year notes priced at 99.722 to yield 1.345%, or Treasuries plus 40 bps.

There was also $750 million of 3.25% 10-year notes priced with a spread of Treasuries plus 105 bps.

The notes priced at 98.771 to yield 3.396%.

A third tranche was $750 million of 4.25% 30-year bonds priced at 97.271 to yield 4.415%, or Treasuries plus 135 bps.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc., HSBC Securities (USA) Inc. and JPMorgan were the bookrunners.

Proceeds will be added to the company's general funds.

Philip Morris’ notes due 2024 traded at 106 bps bid, 103 bps offered, a trader said.

The company’s tranche of notes due 2044 were quoted late afternoon at 136 bps bid, 133 bps offered in the secondary market.

The producer of cigarette and tobacco products is based in New York City.

Aetna new issue

Aetna priced $750 million of 3.5% senior notes (Baa2/A/A-) due 2024 at Treasuries plus 120 bps, according an FWP filing with the Securities and Exchange Commission.

The notes priced at 99.581 to yield 3.55%.

The joint bookrunners were Barclays, Citigroup Global Markets, JPMorgan and Wells Fargo Securities LLC.

Proceeds will be used to redeem all of the company’s outstanding 6.5% senior notes due 2018.

Aetna’s 3.5% notes due 2024 traded flat at 120 bps bid, 117 bps offered, a trader said.

The diversified health-care benefits company is based in Hartford, Conn.

Discover 10-years

Discover Financial Services priced $500 million of 3.95% senior notes (Ba1/BBB-/BBB+) due 2024 on Monday at Treasuries plus 160 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 99.926 to yield 3.959%.

The bookrunners were BofA Merrill Lynch, Citigroup Global Markets and Deutsche Bank Securities.

Proceeds will be used for general corporate purposes.

Discover Financial’s 3.95% notes due 2024 traded mostly flat at 160 bps bid, 159 bps offered, a trader said.

Discover is a Riverwoods, Ill.-based direct banking and payment services company.

PG&E upsizes

Pacific Gas & Electric priced an upsized $500 million of 4.3% senior notes (A3/BBB/A-) due 2045 on Monday at Treasuries plus 130 bps, according to a syndicate source and an FWP filed with the SEC.

The notes sold at the tight end of price talk.

Pricing was at 98.851 to yield 4.369%.

The bookrunners were Barclays, BNP Paribas Securities Corp., Morgan Stanley and U.S. Bancorp Investments Inc.

Proceeds will be used to repay commercial paper and for general corporate purposes.

Southwest prices tight

Southwest Airlines priced $300 million of 2.75% senior notes (Baa2/BBB/BBB) due 2019 at Treasuries plus 115 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 99.796 to yield 2.794%.

The notes were talked in the Treasuries plus 120 bps area.

JPMorgan, Morgan Stanley and Citigroup Global Markets were the bookrunners.

Proceeds will be used for general corporate purposes.

Southwest Airlines’ 2.75% notes due 2019 tightened to 107 bps bid, 103 bps offered, a trader said.

Southwest Airlines is a Dallas-based airline company.

ComEd mortgage bonds

Commonwealth Edison priced $250 million of 3.1% 10-year first mortgage bonds (A2/A-/A-), series 117, on Monday at the tight end of price talk with a spread of Treasuries plus 75 bps, according to a market source and an FWP filing with the SEC.

Pricing was at 99.915 to yield 3.11%.

RBC Capital Markets LLC, U.S. Bancorp Investments, Wells Fargo Securities and CIBC World Markets Corp. were the joint bookrunners.

Proceeds will be used to repay commercial paper and for general corporate purposes.

Commonwealth Edison’s 3.1% bonds due 2024 eased in secondary trading to 77 bps bid, 74 bps offered, a trader said.

ComEd is an electricity provider based in Chicago. It is a subsidiary of Exelon Corp.

Sweden sets talk

Sweden announced price talk for a planned offering of three-year notes in the mid-swaps minus 6 bps area, a market source said.

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

The sale will be done via Rule 144A and Regulation S.

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