AerCap, IADB, Fannie Mae price; Danske notes delayed, remain in pipeline; PG&E softens

By Cristal Cody

Tupelo, Miss., Jan. 9 – A handful of issuers tapped the high-grade bond market on Wednesday, continuing the flow of deals into the primary market. Meanwhile, one issuer delayed its offering.

Tapping the primary market, AerCap Ireland Capital DAC and AerCap Global Aviation Trust priced $1.1 billion of guaranteed senior notes in two fixed-rate tranches on Wednesday.

The company dropped a floating-rate issue from the final offering.

In other issuance, the Inter-American Development Bank priced $3.25 billion of five-year global notes with final book orders of more than $5 billion.

In other issuance, Fannie Mae raised $2.5 billion in an offering of three-year Benchmark Notes.

Danske Bank A/S postponed a two-part offering of senior notes that had book orders of more than $13 billion until Thursday’s session.

Otherwise, market focus was on digesting the minutes from the Federal Reserve’s last monetary policy meeting that were released on Wednesday.

Issuance has been strong week to date following more than $11 billion of volume in the first week of the year.

Week to date, high-grade corporate issuers have priced more than $18 billion of bonds, including $14 billion of issuance on Tuesday.

About $25 billion to $30 billion of overall supply was expected by market sources for the week.

So far, the financial markets are mostly ignoring the U.S. federal government’s shutdown, a source said.

The Markit CDX North American Investment Grade 31 index headed out nearly 1 basis point tighter at a spread of 79 bps.

In the secondary market, Pacific Gas & Electric Co.’s senior notes (Baa2/BB-/BBB-) that priced in August headed out several points weaker on Wednesday. The company’s notes have weakened since mid-November when the company’s power lines were allegedly linked to the deadly California Camp Fire.

The company’s notes had begun to recover slightly in December but have weakened further on the back of S&P Global Ratings’ downgrade of the company and its senior debt to junk on Monday.

Bonds were mixed during the session, a source said.

Volkswagen Group of America Finance LLC’s 4.75% notes due Nov. 13, 2028 were steady on the day but remain well off where the issue priced in November.

AerCap prices $1.1 billion

AerCap Ireland Capital and AerCap Global Aviation priced $1.1 billion of guaranteed senior notes (Baa3/BBB-/BBB-) in two parts on Wednesday, according to a news release and an FWP filing with the Securities and Exchange Commission.

The companies sold $700 million of 4.45% three-year notes at 99.876 to yield 4.497%, or a spread of 195 bps over Treasuries.

A $400 million tranche of 4.875% five-year notes came at 99.833 to yield 4.913%. The notes priced with a Treasuries plus 235 bps spread.

A tranche of floating-rate notes was dropped from the final sale.

The bookrunners were Barclays, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Mizuho Securities USA Inc., Santander Investment Securities Inc., BNP Paribas Securities Corp., BofA Merrill Lynch, Citigroup Global Markets Inc., Credit Agricole CIB, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC, MUFG, RBC Capital Markets LLC, SunTrust Robinson Humphrey Inc., TD Securities (USA) LLC and Wells Fargo Securities LLC.

The notes are guaranteed by AerCap Holdings NV.

Proceeds will be used for general corporate purposes, including to acquire, finance or refinance aircraft assets and to repay debt.

AerCap is an independent aircraft leasing company based in Amsterdam.

IADB prints $3.25 billion

IADB (Aaa/AAA) priced $3.25 billion of 2.625% five-year global notes on Wednesday at mid-swaps plus 10 bps, or a spread of Treasuries plus 17.05 bps, according to market sources.

The notes were initially talked to price in the mid-swaps plus 11 bps area.

Final book orders totaled more than $5 billion.

Barclays, BNP Paribas, HSBC Securities and JPMorgan were the lead managers.

The provider of development financing for Latin America and the Caribbean is based in Washington, D.C.

Fannie Mae sells $2.5 billion

Fannie Mae sold $2.5 billion of 2.625% Benchmark Notes due Jan. 11, 2022 on Wednesday at 99.928 to yield 2.65%, according to a news release.

The notes priced with a spread of 8.5 bps over Treasuries.

Barclays, CastleOak Securities LP, Nomura Securities International, Inc. and TD Securities were the bookrunners.

Fannie Mae is a mortgage credit provider based in Washington, D.C.

Danske delayed a day

Danske Bank is expected to price two tranches of senior notes (Baa2/A/A) on Thursday, a market source said.

The company launched $3 billion of notes with book orders of more than $13 billion before the offering was postponed late Wednesday afternoon.

The deal includes notes due Jan. 12, 2022 with guidance at Treasuries plus 255 bps and notes due Jan. 12, 2024 guided to price at Treasuries plus 285 bps.

BofA Merrill Lynch, Barclays, Danske Markets Inc., Goldman Sachs, JPMorgan and UBS Securities LLC are the lead managers.

On Wednesday, news reports emerged that additional information on the company, which is facing investigations for money laundering by various agencies including the U.S. Department of Justice, was being presented to authorities. A shareholder’s lawsuit over the money laundering allegations also was filed against the company on Wednesday. A press conference by Danish lawmakers will reportedly be held on Thursday.

Danske Bank launched a roadshow and fixed income investor calls for the Rule 144A and Regulation S offering in the U.S. and European markets on Monday.

The bank is based in Copenhagen, Denmark.

PG&E notes soften

Pacific Gas & Electric’s 4.25% notes due Aug. 6, 2023 dropped to 85 bid from 89 bid in secondary trading on Wednesday, a market source said.

The company sold $500 million of the notes on Aug. 2 at 99.76 to yield 4.3% and a spread of 145 bps over Treasuries.

Pacific Gas & Electric’s 4.65% notes due Aug. 6, 2028 softened to the 81.4 bid area from 85.9 bid in the previous session.

The San Francisco electric and natural gas utility sold $300 million of the 10-year notes in the Aug. 2 offering at 99.72 to yield 4.69%, or Treasuries plus 170 bps.

Volkswagen remains weak

Volkswagen Group of America Finance’s 4.75% notes due Nov. 13, 2028 were flat in the secondary market on Wednesday at 246 bps bid, according to a market source.

The company (A3/BBB+) sold $1.25 billion of the 10-year notes on Nov. 7 at a spread of 165 bps over Treasuries.

Volkswagen Group of America is a Herndon, Va.-based financing arm and subsidiary of Volkswagen Group of America, Inc.

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