GM Financial, Charter, FedEx, CPPIB tap primary market; heavy supply eyed; PG&E slides

By Cristal Cody

Tupelo, Miss., Jan. 14 – Investment-grade issuers priced $7 billion of bonds on Monday, including $5 billion of corporate issuance.

General Motors Financial Co. Inc. brought $2.5 billion of senior notes in three tranches to the primary market. The company dropped an offering of floating-rate notes due 2024 from the final deal.

Charter Communications, Inc. subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. sold $2 billion of senior secured notes in two tranches.

FedEx Corp. raised $500 million in a sale of three-year guaranteed senior notes on Monday. The company also tapped the euro-denominated market with a €640 million sale of long three-year notes.

In other issuance, CPPIB Capital Inc. priced $2 billion of long two-year notes.

Supply is expected to be heavy this week and could hit $40 billion or more, according to market sources.

Issuers including Western and Southern Life Insurance Co. and Fox Corp. are marketing bond deals.

Western and Southern Life Insurance started a two-day round of investor calls on Monday for a Rule 144A- and Regulation S-eligible dollar-denominated bond offering of fixed-to-floating rate surplus notes due 2069.

Fox is holding fixed income investor calls that started on Friday for a possible deal.

The Markit CDX North American Investment Grade 31 index was unchanged to modestly tighter on Monday at a spread of 78 basis points.

In the secondary market, Pacific Gas & Electric Co.’s notes softened further following the company’s announcement that it plans to file for Chapter 11 bankruptcy protection. The company said on Monday it intends to file Jan. 29 in the wake of liability claims from the 2017 and 2018 northern California wildfires.

Pacific Gas & Electric’s senior notes (Ba3/BB-/BBB-) were downgraded to junk last week by Moody’s Investors Service and S&P Global Ratings.

The utility’s 4.25% notes due Aug. 6, 2023 traded on Monday morning at 79.5 and headed out another point lower at 78.5, a market source said. The notes went out on Friday at 86.75.

The notes priced in a $500 million offering 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 saw light trading at 82 on Monday. The notes traded on Friday at 84.75.

The San Francisco-based electric and natural gas company sold $300 million of the notes on Aug. 2 at 99.72 to yield 4.69% and a Treasuries plus 170 bps spread.

Pacific Gas & Electric has become the “first fallen angel of 2019 and one of the largest in history relative to the size of the U.S. high yield market, as $17.5 [billion] of bonds will travel to the U.S. HY corporate index in February,” according to a BofA Merrill Lynch report released on Monday.

GM prices $2.5 billion

General Motors Financial (Baa3/BBB/BBB) priced $2.5 billion of senior notes in three tranches on Monday, according to an FWP filing with the Securities and Exchange Commission.

General Motors Financial priced a $500 million reopening of its 4.2% senior notes due Nov. 6, 2021 at 100.029 to yield 4.187% and a Treasuries plus 165 bps spread.

The company previously sold $1 billion of the notes on Nov. 1, 2018 at 99.978 to yield 4.208% and a spread of 130 bps over Treasuries. The total outstanding is now $1.5 billion.

A $1.5 billion tranche of 5.1% five-year notes priced at 99.786 to yield 5.149%. The notes priced with a spread of 262.5 bps over Treasuries.

The company also sold $500 million of 5.65% 10-year notes at 99.955 to yield 5.656% and at a spread of 295 bps over Treasuries.

Barclays, J.P. Morgan Securities LLC, RBC Capital Markets LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America Inc. and Wells Fargo Securities LLC were the bookrunners.

General Motors Financial is the Fort Worth-based finance subsidiary of General Motors Co.

Charter prints notes

Charter Communications priced $2 billion of senior secured notes (Ba1/BBB-/BBB-) in two tranches on Monday, according to a market source.

A $1.25 billion tranche of 5.05% notes due March 30, 2029 priced at spread of Treasuries plus 235 bps. Guidance was in the Treasuries plus 240 bps area, plus or minus 5 bps. The notes were initially talked to print in the 240 bps area.

A $750 million add-on to the 5.75% senior secured notes due April 1, 2048 priced at a 305 bps over Treasuries spread, on the tight side of guidance in the Treasuries plus 310 bps area, plus or minus 5 bps. Initial talk was in the Treasuries plus 325 bps area.

Charter previously sold $1.7 billion of the notes at 99.846 to yield 5.471% with a spread of 245 bps over Treasuries on April 3, 2018. The total outstanding is now $2.45 billion.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC, Mizuho Securities USA Inc., Morgan Stanley & Co. LLC, BofA Merrill Lynch, Goldman Sachs & Co. LLC, RBC Capital Markets, UBS Securities LLC and Wells Fargo were the bookrunners.

Charter is a Stamford, Conn.-based broadband communications company.

FedEx taps U.S., Europe

FedEx sold $500 million of 3.4% guaranteed senior notes due Jan. 14, 2022 (Baa2/BBB) on Monday at a spread of Treasuries plus 93 bps, according to an FWP filing with the SEC.

The notes priced at 99.884 to yield 3.441%.

BNP Paribas Securities Corp., Citigroup, Deutsche Bank, ING Financial Markets LLC and Wells Fargo were the bookrunners.

The notes are guaranteed by Federal Express Corp., FedEx Ground Package System, Inc., FedEx Freight Corp., FedEx Freight, Inc., FedEx Corporate Services, Inc., FedEx Office and Print Services, Inc., Federal Express Europe, Inc., Federal Express Holdings SA and Federal Express International, Inc.

The company also sold €640 million of 0.7% notes due May 13, 2022 at mid-swaps plus 75 bps on Monday, according to a separate FWP filing.

FedEx is a Memphis, Tenn.-based package and freight transportation company.

CPPIB raises $2 billion

CPPIB Capital (Aaa/AAA/AAA) priced $2 billion of 2.75% notes due July 22, 2021 on Monday on top of guidance at mid-swaps plus 16 bps, or a spread of Treasuries plus 28 bps, according to a market source.

BofA Merrill Lynch, Citigroup, Deutsche Bank, JPMorgan and TD Securities (USA) LLC were the lead managers of the Rule 144A and Regulation S offering.

CPPIB Capital is a Toronto-based investment management company for the Canada Pension Plan Investment Board.

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