Baxter sells to fund acquisition; Allstate, SEK tap market; recent deals mixed in secondary

By Aleesia Forni and Andrea Heisinger

New York, June 4 - New issues from Baxter International Inc. and Allstate Corp. graced the investment-grade bond market on Tuesday, slowing the pace from the previous day.

Baxter sold $3.5 billion of notes in five parts to help finance its acquisition of Gambro AB.

Insurance company Allstate tapped the market for $1 billion of notes in tranches due 2023 and 2043. The size was increased from $750 million prior to the launch.

A source away from the Allstate sale said that both of the tranches sold "a couple of bps [basis points] less than talk."

Swedish Export Credit Corp. priced $300 million of four-year floating-rate notes early in the day after the sale went overnight from Monday.

The market was once again "not that great," with issuers only eyeing the market if they have specific financing needs.

"It's definitely day by day," a source said, referring to issuers looking at the market.

In the preferred stock market, AmTrust Financial Services Inc.'s new $115 million of 6.75% series A noncumulative perpetual preferreds were seen around $24.70 at midday.

The deal priced late Monday, coming in line with price talk and upsized from $100 million.

The Markit CDX Series 20 North American Investment Grade index was 3 bps wider on the day at a spread of 82 bps.

In secondary market action, Allstate's new deal traded tighter near the end of the day, as the market's tone was slightly better compared to Monday's "rough" session, sources said.

Meanwhile, recent deals that priced earlier during the week were mixed in trading.

Aflac Inc.'s upsized deal was quoted 2 basis points weaker at midday, a trader said, while Monday's new issues from NextEra Energy Inc. and Buckeye Partners, LP traded 4 bps and 3 bps better, respectively.

Baxter prices tight

Baxter International sold $3.5 billion of senior notes (A3/A/A) in five tranches during the day's session, an informed source said.

The sale included $500 million of floating-rate notes due 2014 priced at par to yield Libor plus 17 bps. Talk was in the Libor plus high 20 bps area.

There was also $500 million of 0.95% three-year notes sold at a spread of Treasuries plus 50 bps. Guidance was in the high 50 bps area over Treasuries.

A $750 million tranche of 1.85% five-year bonds priced at Treasuries plus 80 bps. There was talk in the high 80 bps area.

The $1.25 billion tranche with a 3.2% 10-year maturity sold at a spread of Treasuries plus 110 bps. Talk was in the Treasuries plus 120 bps area.

A $500 million tranche of 4.5% 30-year bonds sold at 122 bps over Treasuries. There was guidance at the 10-year spread plus 12.5 bps.

Bookrunners were BofA Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC.

Proceeds are being used to pay for about $3 billion of the cost of acquiring dialysis services company Gambro AB, to pay related fees and expenses and for general corporate purposes, including repayment of commercial paper.

There is a mandatory redemption at 101 if the acquisition is not completed by March 17, 2014.

Baxter was last in the U.S. bond market with a $1 billion sale of notes in two tranches on Aug. 8, 2012. That offering included a 2.4% 10-year note priced at 80 bps over Treasuries and a 3.65% 30-year bond sold at Treasuries plus 95 bps.

The medical products and health-care company is based in Deerfield, Ill.

Allstate upsizes

Allstate priced an upsized $1 billion of notes (A3/A-/) in two parts, an informed source said.

The size was increased from $750 million.

The sale included a $500 million tranche of 3.15% 10-year notes priced at a spread of Treasuries plus 102 bps.

A trader quoted the notes 2 bps better at 100 bps bid, 97 bps offered.

In addition, a $500 million tranche of 4.5% 30-year bonds sold at Treasuries plus 122 bps.

The notes traded 1 bp better later during the session at 121 bps bid, 117 bps offered.

Bookrunners for the 10-year notes were Deutsche Bank Securities Inc., Goldman Sachs & Co., Wells Fargo Securities LLC, BofA Merrill Lynch, Citigroup Global Markets and Credit Suisse Securities (USA) LLC.

Those for the 30-year bonds were Barclays, Deutsche Bank, Goldman Sachs, JPMorgan, Credit Suisse and U.S. Bancorp Investments Inc.

Proceeds, along with cash on hand, are being used to fund concurrent tender offers and for general corporate purposes.

Allstate last tapped the U.S. bond market in a $500 million sale of 5.2% 30-year bonds priced at 225 bps over Treasuries on Jan. 9, 2012.

The holding company for insurance subsidiaries is based in Northbrook, Ill.

SEK sells floater

Swedish Export Credit sold $300 million of floating-rate notes due 2017 (Aa1/AA+/) at par to yield Libor plus 18 bps, a market source said Tuesday.

The sale was announced on Monday.

Goldman Sachs International, HSBC Securities (USA) Inc. and JPMorgan were bookrunners.

The lender to Sweden's export industry is based in Stockholm.

PacifiCorp gives terms

PacifiCorp released terms of its $300 million of 2.95% 10-year first mortgage bonds (A2/A/A-) priced at a spread of 85 bps over Treasuries in an FWP filing with the Securities and Exchange Commission on Tuesday.

Bookrunners were RBS Securities Inc., Scotia Capital (USA) Inc. and Wells Fargo Securities.

Proceeds are being used to fund capital expenditures and for general corporate purposes, including paying a portion of a $350 million dividend payable to PPW Holdings LLC on June 26.

PacifiCorp was last in the U.S. bond market with a $100 million add-on to 2.95% mortgage bonds due 2022. The reopened bonds were sold on Feb. 28, 2012.

The electric utility is based in Portland, Ore.

Lexington releases details

Lexington Realty Trust gave the terms of its $250 million offering of 4.25% 10-year notes (Baa2/BBB-/), which were sold at a spread of 225 bps over Treasuries, an informed source said Tuesday.

The sale was done under Rule 144A and Regulation S.

JPMorgan and Wells Fargo Securities were active bookrunners. Passive was Barclays.

The real estate investment trust for office, industrial and retail properties is based in New York City.

AmTrust details terms

AmTrust Financial Services priced $115 million of 6.75% series A noncumulative perpetual preferreds, the company said in an FWP filed with the SEC.

Morgan Stanley & Co. Inc., UBS Securities LLC, Goldman Sachs and JPMorgan were bookrunners.

The New York-based reinsurance company intends to list the new series of preferreds on the New York Stock Exchange.

Proceeds will be used for general corporate purposes.

Aflac widens

Aflac's $700 million trade of 3.625% 10-year senior notes, which priced at 150 bps over Treasuries, traded 2 bps wider on the day, a trader said.

The notes were quoted at 152 bps bid, 148 bps offered on Tuesday.

The company provides supplemental health and life insurance through its subsidiaries and is based in Columbus, Ga.

NextEra trades tighter

Monday's new issue from NextEra Energy Capital Holdings traded better on the day, the trader noted.

The company came to market with a $250 million offering of 3.625% 10-year notes, which priced at a spread of Treasuries plus 150 bps.

The trader quoted the notes 4 bps better compared to levels seen late Monday at 147 bps bid, 142 bps offered.

The energy company is based in Juno Beach, Fla.

Buckeye notes firm

In other secondary action, Buckeye Partners' $500 million of 4.15% 10-year senior notes also traded better on the day, with the trader seeing the notes 3 bps tighter at 202 bps bid, 201 bps offered.

The company priced the issue on Monday to yield Treasuries plus 205 bps.

The master limited partnership owns a refined petroleum products pipeline system and is based in Houston.

Stephanie N. Rotondo contributed to this review.

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