SunTrust sells $1 billion; Xcel, Northrop, Pacific Gas price; FHLB markets; Duke Energy firms

By Cristal Cody

Eureka Springs, Ark., Nov. 28 – High-grade issuers priced more than $3 billion of bonds on Monday in the first full session following the Thanksgiving Day holiday.

SunTrust Banks, Inc. priced $1 billion of five-year senior notes.

Xcel Energy Inc. tapped the primary market with an $800 million two-part offering of senior notes.

Northrop Grumman Corp. priced $750 million of long 10-year senior notes.

Pacific Gas & Electric Co. raised $650 million in two tranches of senior notes.

Coming up, the Federal Home Loan Bank System expects to price five-year Global Notes on Tuesday.

About $20 billion to $25 billion of volume is forecast for the week, according to market sources.

The Markit CDX North American Investment Grade index closed mostly unchanged at a spread of 74 basis points.

In the secondary market, energy bonds were mixed on Monday.

Duke Energy Corp.’s 2.65% senior notes due 2026 traded about 1 bp tighter on the day.

Entergy Corp.’s 2.95% senior notes due 2026 softened about 1 bp.

SunTrust sells $1 billion

SunTrust Banks brought a $1 billion offering of 2.7% senior notes due Jan. 27, 2022 to market on Monday, according to an informed source and an FWP filing with the Securities and Exchange Commission.

The notes (Baa1/BBB+/A-) priced at 99.872 to yield 2.726% and a spread of 93 bps over Treasuries.

SunTrust Robinson Humphrey Inc., Barclays, Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC were the bookrunners.

The Atlanta-based financial holding company for SunTrust Bank will use the proceeds and cash on hand to redeem $750 million of its outstanding 3.5% senior notes due 2017 and for general corporate purposes.

Xcel Energy prices

Xcel Energy sold $800 million of senior notes (A3/BBB+/BBB+) in two parts on Monday, according to a market source and an FWP filing with the SEC.

The company priced $300 million of 2.6% notes due March 15, 2022 at 99.973 to yield 2.606% and a spread of 80 bps plus Treasuries.

Xcel Energy sold $500 million of 3.35% notes due Dec. 1, 2026 at 99.806 to yield 3.373%. The bonds priced with a spread of 105 bps over Treasuries.

Both tranches priced on the tight side of guidance.

Barclays, Morgan Stanley, MUFG, BMO Capital Markets Corp. and TD Securities (USA) LLC were the bookrunners.

Proceeds will be used to repay short-term debt, for the redemption of $253.98 million of the company’s 5.613% series B senior notes due 2017 on Dec. 19 and for other general corporate purposes.

The public utility holding company is based in Minneapolis.

Northrop raises $750 million

Northrop Grumman priced $750 million of 3.2% senior notes due Feb. 1, 2027 on Monday on the tight side of guidance at a spread of 90 bps over Treasuries, according to a market source and an FWP filing with the SEC.

The notes (Baa2/BBB/BBB+) priced at 99.839 to yield 3.218%.

Goldman Sachs & Co., J.P. Morgan Securities LLC, Citigroup, Mizuho Securities USA Inc. and Wells Fargo Securities LLC were the bookrunners.

Proceeds will be used for general corporate purposes, including debt repayment, pension plan funding and working capital.

The security company is based in Falls Church, Va.

PG&E sells two tranches

Pacific Gas and Electric sold $650 million of senior notes (A3/BBB+/A-) in two tranches on Monday, according to a market source and an FWP filing with the SEC.

The $250 million tranche of floating-rate notes due Nov. 30, 2017 priced at par to yield Libor plus 20 bps. The rate will reset quarterly starting on Feb. 28.

The company sold $400 million of 4% notes due Dec. 1, 2046 at 98.164 to yield 4.107% and a spread of 110 bps plus Treasuries.

The tranches priced on the tight side of talk.

Citigroup, JPMorgan, BofA Merrill Lynch and Mizuho were the bookrunners.

Proceeds will be used to repay the company’s commercial paper, to redeem $160 million of variable-rate pollution control bonds due Dec. 1, 2016 and for general corporate purposes.

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

FHLBank to price

Looking to Tuesday’s session, the Federal Home Loan Bank System announced on Monday that it plans to price five-year Global Notes, according to a news release.

The bonds will be due Nov. 29, 2021.

HSBC Securities (USA) Inc., TD Securities and Wells Fargo Securities are the lead managers. The syndication team includes seven co-managers and a distribution group.

FHLBank System is a Washington, D.C.-based government-sponsored enterprise that provides member financial institutions funding support for mortgage lending and community investment.

Duke Energy firms

Duke Energy’s 2.65% notes due 2026 improved about 1 bp to 111 bps bid in the secondary market on Monday, a source said.

The company sold $1.5 billion of the 10-year notes (Baa1/BBB+/BBB+) on Aug. 9 at a spread of 115 bps plus Treasuries.

The diversified energy company is based in Charlotte, N.C.

Entergy eases

Entergy’s 2.95% senior notes due 2026 eased about 1 bp to 129 bps bid during the session, according to a market source.

The company sold $750 million of the notes (Baa3/BBB/) on Aug. 16 at a spread of 140 bps over Treasuries.

The energy company is based in New Orleans.

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