Verizon, Abbey National, DCP, Discover price; Discover Bank flat, Verizon notes active

By Cristal Cody and Aleesia Forni

Virginia Beach, March 10 - The high-grade bond market kicked off what is expected to be another busy week with more than $10 billion of new deals pricing on Monday.

The day's largest deal came from Verizon Communications Inc., which priced its first U.S. bond deal since its record-breaking $49 billion issue in September.

The company sold $4.5 billion of senior notes in five maturities on Monday.

Verizon sold $500 million of five-year floaters at Libor plus 77 basis points and $500 million of 2.55% notes due 2019 at 95 bps over Treasuries.

There was also a $1 billion tranche of 3.45% seven-year notes sold at 120 bps over Treasuries.

A $1.25 billion tranche of 4.15% notes due 2024 sold with a spread of 140 bps over Treasuries, while a $1.25 billion tranche of 5.05% 20-year notes sold at Treasuries plus 135 bps.

All fixed-rate tranches sold at the tight end of talk.

The session also saw Abbey National Treasury Services plc price $2.5 billion of senior notes in three maturities, an informed source said.

The company sold $400 million of three-year floaters at par to yield Libor plus 51 bps and $1.1 billion of 1.375% three-year notes with a spread of 65 bps over Treasuries.

There was also $1 billion of 4% notes due 2024 priced at 130 bps over Treasuries.

DCP Midstream Operating LP came to market with $725 million of senior notes in two tranches on Monday.

A $325 million tranche of 2.7% five-year notes priced at Treasuries plus 120 bps, while a $400 million tranche of 5.6% 30-year bonds sold with a spread of 195 bps over Treasuries.

Discover Bank sold a $400 million issue of 4.25% 12-year notes at 150 bps over Treasuries on Monday.

Also on Monday, Entergy Arkansas Inc. priced $375 million of 3.7% 10-year first mortgage bonds at 93 bps over Treasuries.

The notes priced at the tight end of talk.

Southern California Gas Co. issued $250 million of 4.45% 30-year first mortgage bonds at 77 bps over Treasuries.

Pricing was at the tight end of talk.

In other market action, Wells Fargo & Co. sold a $200 million issue of floating-rate notes due 2019 on Monday at par to yield Libor plus 50 bps.

Monday's session also saw a new issue from PacifiCorp, though details were not available at press time.

The Bank of England was also in Monday's market with a $2 billion issue of 0.875% notes due 2017, which priced with a spread of mid-swaps minus 2 bps in a Rule 144A and Regulation S deal.

Investment-grade bond spreads traded mostly flat to slightly wider over the day, according to market sources.

The Markit CDX North American Investment Grade series 21 index was unchanged at a spread of 63 bps.

Discover Bank's 4.25% notes due 2026 were wrapped around issuance as the session closed, a trader said.

Abbey National's two new tranches of notes traded better in the secondary market, according to a trader.

Verizon's notes were fairly active in the gray market with the issues about 1 bp tighter, a trader said.

Verizon sells $4.5 billion

Verizon Communications priced $4.5 billion of senior notes (Baa1/BBB+/A-) in five tranches during Monday's session, according to a market source.

The sale included $500 million of five-year floating-rate notes sold with a coupon of Libor plus 77 bps at par.

A second tranche was $500 million of 2.55% notes due 2019 priced at 95 bps over Treasuries, or 99.88, to yield 3.453%.

The company also came to market with a $1 billion tranche of 3.45% seven-year notes with a spread of 120 bps over Treasuries.

Pricing was at 99.982 to yield 3.453%.

A $1.25 billion tranche of 4.15% 10-year notes priced at 140 bps over Treasuries, or 99.838, to yield 4.17%.

Finally, the company sold $1.25 billion of 5.05% notes due 2034 with a spread of Treasuries plus 135 bps.

The notes sold at 99.925 to yield 5.056%.

All fixed-rate tranches sold at the tight end of talk.

In the gray market, Verizon's notes due 2021 were seen at 119 bps bid, 116 bps offered, a trader said.

The notes due 2024 traded in the gray market at 139 bps bid, 136 bps offered.

Verizon's notes due 2034 were quoted at 134 bps bid, 131 bps offered in the gray market, according to the trader.

Citigroup Global Markets Inc., Mitsubishi UFJ Securities (USA) Inc., RBC Capital Markets LLC and Wells Fargo Securities LLC are the joint bookrunners.

Proceeds will be used to fund tender offers.

Verizon, a New York City-based telecommunications company, was last in the U.S. bond market pricing a record breaking $49 billion of bonds in eight tranches on Sept. 11.

Abbey National prices

Abbey National Treasury Services sold $2.5 billion of senior notes (A2/A/A) in three tranches on Monday, an informed source said.

A $400 million tranche of three-year floaters priced at par to yield Libor plus 51 bps.

The company priced $1.1 billion of 1.375% three-year notes with a spread of 65 bps over Treasuries, or 99.883, to yield 1.415%.

There was also $1 billion of 4% 10-year notes priced with a spread of 130 bps over Treasuries, or 99.332, to yield 4.082%.

The notes priced in line with talk.

The company's new notes due 2017 traded at 62 bps bid, 59 bps offered, according to a trader. The company's tranche of notes due 2024 headed out at 128 bps bid, 125 bps offered.

Barclays, Citigroup Global Markets, Morgan Stanley & Co. LLC, RBS Securities Inc. and Santander were the joint bookrunners.

Proceeds will be used for general corporate purposes.

The financial services companies are based in London.

DCP two-parter

DCP Midstream Operating priced $725 million of senior notes in two tranches due 2019 and 2044, according to a market source and an FWP filed with the Securities and Exchange Commission.

There was a $325 million tranche of 2.7% notes due 2019 priced at 99.41 to yield 2.826%, or Treasuries plus 120 bps.

A second tranche was $400 million of 5.6% 30-year bonds sold with a spread of 195 bps over Treasuries.

Pricing was at 99.006 to yield 5.669%.

The notes are guaranteed by DCP Midstream Partners LP.

RBS Securities, SunTrust Robinson Humphrey Inc., U.S. Bancorp Investments Inc., J.P. Morgan Securities LLC, RBC Capital Markets and Wells Fargo Securities were the joint bookrunners.

Proceeds will be used to fund the purchase of a 33.33% membership interest in each of two separate NGL pipeline entities, the remaining 20% interest in DCP SC Texas GP and a 100% interest in two cryogenic natural gas processing plants located in Weld County, Colo., from DCP Midstream LLC through its affiliates.

The unit of DCP Midstream LLC is a Denver-based joint venture between Spectra Energy and ConocoPhillips.

Discover Bank new issue

Discover Bank priced $400 million of 4.25% 12-year senior notes on Monday with a spread of 150 bps over Treasuries, according to a market source.

Discover Bank's 4.25% notes due 2026 traded wrapped around issuance in aftermarket trading at 150 bps bid, 147 bps offered, a trader said.

BofA Merrill Lynch, Deutsche Bank Securities Inc. and RBS Securities were the joint bookrunners.

Discover Bank is the Chicago-based issuer of the Discover credit card and unit of Discover Financial Services.

Entergy sells mortgage bonds

Entergy Arkansas sold $375 million of 3.7% first mortgage bonds due June 1, 2024 on Monday with a spread of 93 bps over Treasuries, according to a market source and an FWP filed with the SEC.

The notes (A3/A-/) priced at the tight end of talk.

Pricing was at 99.928 to yield 3.709%.

BNY Mellon Capital Markets LLC, CIBC World Markets, Mitsubishi UFJ Securities, Stephens Inc., SunTrust Robinson Humphrey and Wells Fargo Securities were the joint bookrunners.

Proceeds will be used to repay all borrowings under the company's $250 million credit facility, to redeem its $115 million of 5% first mortgage bonds due July 2018 and for general corporate purposes.

Entergy Arkansas is a Little Rock, Ark.-based energy provider.

SoCal Gas prices tight

Southern California Gas priced $250 million of 4.45% first mortgage bonds, series OO, due 2044 with a spread of Treasuries plus 77 bps, according to an informed source and an FWP filed with the SEC.

The notes (Aa2/A+/AA-) sold at the tight end of talk.

Pricing was at 99.393 to yield 4.487%.

Citigroup Global Markets, Credit Agricole CIB, Loop Capital Markets LLC and Morgan Stanley were the joint bookrunners.

Proceeds will be used to repay the company's 5.5% first mortgage bonds, series LL, due March 15, 2014.

The natural gas distributor is based in Los Angeles.

Wells Fargo sells floaters

Wells Fargo priced $200 million of medium-term floating-rate notes, series L, due March 18, 2019 on Monday to yield Libor plus 50 bps, according to a 424B2 filing with the SEC.

The notes sold at par.

Wells Fargo Securities was the bookrunner.

The co-manager was HSBC Securities (USA) Inc.

Wells Fargo is a San Francisco-based bank.

Bank of England's $2 billion

Bank of England priced $2 billion of 0.875% notes due 2017 on Monday with a spread of mid-swaps minus 2 bps, an informed source said.

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

The bookrunners were Barclays, Credit Suisse Securities, JPMorgan and RBC Capital Markets.

The central bank of the United Kingdom is based in London.

Bank/brokerage CDS flat to higher

Investment-grade bank and brokerage CDS prices were unchanged to higher, according to a market source.

Bank of America Corp.'s CDS costs eased 1 bp to 65 bps bid, 68 bps offered. Citigroup Inc.'s CDS costs rose 1 bp to 78 bps bid, 81 bps offered. JPMorgan Chase & Co.'s CDS costs were unchanged at 58 bps bid, 61 bps offered. Wells Fargo & Co.'s CDS costs were flat at 39 bps bid, 42 bps offered.

Merrill Lynch's CDS costs eased 1 bp to 67 bps bid, 70 bps offered. Morgan Stanley's CDS costs widened 2 bps to 89 bps bid, 92 bps offered. Goldman Sachs Group, Inc.'s CDS costs were flat at 87 bps bid, 92 bps offered.

Paul Deckelman contributed to this review.

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