Primary activity resumes with Cardinal Health, Union Pacific new issues; AT&T widens

By Aleesia Forni and Cristal Cody

Virginia Beach, June 16 – Cardinal Health Inc., Union Pacific Corp., International Bank for Reconstruction and Development (World Bank) and Bank Nederlandse Gemeenten NV entered the primary market on Tuesday as the Federal Reserve kicked off its two-day policy meeting.

Cardinal Health was in the market with a $1.5 billion offering of notes in order to fund its acquisition of the Cordis business of Johnson & Johnson.

Tranches of the company’s three-part new issue sold between 15 basis points to 20 bps tight of initial price thoughts.

Union Pacific attracted more than $1.5 billion of orders for its $700 million two-part offering.

Meanwhile, World Bank sold a $3.5 billion issue of global notes in line with price talk, while Bank Nederlandse Gemeenten issued $1.5 billion of three-year notes at the tight end of guidance.

Svensk Exportkredit AB priced a $500 million issue of five-year green bonds.

Also on Tuesday, Ipalco Enterprises Inc. sold a $405 million crossover issue of five-year senior secured notes to fund a tender offer.

The session also hosted new issues from PacifiCorp and Valley National Bancorp.

The busier session follows a quiet Monday primary in which only $720 million of paper hit the primary.

In total, roughly $9.1 billion of new investment-grade issuance has priced so far this week.

Sources were initially calling for around $25 billion of supply for the week, though volatile market conditions have caused that figure to be revised down to around $15 billion.

Investment-grade bonds traded mostly flat to weaker ahead of the conclusion of the Federal Reserve’s policy meeting on Wednesday.

AT&T Inc.’s (/BBB+/A-) notes traded 4 bps to 6 bps wider over the day.

Verizon Communications Inc.’s 3.5% notes due 2024 were unchanged.

Time Warner Inc.’s bonds (Baa2/BBB) traded 3 bps to 5 bps weaker.

Wal-Mart Stores Inc.’s bonds (Aa2/AA/AA) were mixed in the secondary market.

The Markit CDX North American Investment Grade series 23 index firmed 1 bp to a spread of 69 bps.

The CDX IG index has ranged from a low of 59.4 bps to a high of 76.4 bps over the past 12 months, according to a Barclays Bank plc report on Tuesday.

World Bank global notes

International Bank for Reconstruction and Development (World Bank) priced $3.5 billion of 1% global notes (Aaa/AAA/AAA) due 2017 on Tuesday in line with price talk at mid-swap minus 10 bps, a market source said.

Pricing was at 99.991 to yield 1.004%.

The bookrunners were BNP Paribas Securities Corp., Citigroup Global Markets Inc., Goldman Sachs & Co. and J.P. Morgan Securities LLC.

The issuer is based in Washington, D.C.

Cardinal acquisition finance

The primary also saw Cardinal Health price $1.5 billion of notes (Baa2/A-) in three tranches, according to a market source.

A $550 million tranche of 1.95% three-year notes priced at 99.922 to yield 1.977%, or Treasuries plus 90 bps.

The notes priced at the tight end of guidance set in the Treasuries plus 95 bps area after having tightened from the Treasuries plus 110 bps area talk.

Also priced was $500 million of 3.75% 10-year notes at 99.928 to yield 3.759%. The notes sold with a spread of Treasuries plus 145 bps.

Price guidance was set in the Treasuries plus 150 bps area. Initial talk was set in the area of Treasuries plus 160 bps area.

Finally, $450 million of 4.9% 30-year notes priced at 99.898 to yield 4.907%, or Treasuries plus 185 bps.

Pricing was at the tight end of the Treasuries plus 190 bps area after having tightened from the Treasuries plus 200 bps area.

Goldman Sachs, Barclays, BofA Merrill Lynch and MUFG are the bookrunners.

Cardinal Health intends to use the proceeds from the deal to fund the acquisition of the Cordis business of Johnson & Johnson.

The health care services company is based in Dublin, Ohio.

BNG prices tight

Bank Nederlandse Gemeenten priced $1.5 billion of 1.25% three-year notes (Aaa/AA+/AAA) at mid-swaps plus 4 bps, according to a market source.

The notes priced at the tight end of talk set in the mid-swaps plus 5 bps area.

The bookrunners are BNP Paribas, Daiwa, Morgan Stanley & Co. LLC and RBC Capital Markets LLC.

The local government funding agency is based in the Hague, the Netherlands.

Union Pacific two-parter

Also on Tuesday, Union Pacific sold $700 million of senior notes (A3/A/) in tranches due 2020 and 2025 on Tuesday, according to a market source and an FWP filed with the Securities and Exchange Commission.

The sale included $400 million of 2.25% five-year notes priced at 99.92 to yield 2.267%, or Treasuries plus 60 bps.

The notes sold at the tight end of price guidance set in the 65 bps area over Treasuries after having tightened from initial talk in the Treasuries plus 80 bps area.

A second tranche was $300 million of 3.25% 10-year notes priced at 99.387 to yield 3.322%, or Treasuries plus 100 bps.

Pricing was at the tight end of the Treasuries plus 105 bps area. Initial talk was set in the Treasuries plus 115 bps area.

BofA Merrill Lynch, JPMorgan and Wells Fargo Securities LLC are the joint bookrunners.

Proceeds from the offering will be used for general corporate purposes, including the repurchase of common stock.

The railroad transportation company is based in Omaha.

SEK green bonds

Svensk Exportkredit priced a $500 million issue of 1.875% five-year green bonds (Aa1/AA+/) at mid-swaps plus 14 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 99.588 to yield 1.962%.

The notes sold in line with price guidance.

BofA Merrill Lynch, Credit Agricole, HSBC Securities and SEB Securities Inc. are the bookrunners.

Based in Stockholm, Svensk is the lender to Sweden’s export industry.

Ipalco crossovers

The session also hosted Ipalco Enterprises, which priced $405 million of split-rated 3.45% five-year senior secured notes (Baa3/BB+/BB+) on Tuesday at Treasuries plus 180 bps, according to an informed source.

Pricing was at 99.929 to yield 3.465%.

Proceeds will be used to fund a tender offer.

Bookrunners for the Rule 144A and Regulation S deal were JPMorgan and Morgan Stanley.

Ipalco is the holding company of Indianapolis Power & Light Co., a regulated electric utility engaged primarily in generating, transmitting, distributing and selling electric energy in Indiana.

PacifiCorp mortgage bonds

PacifiCorp priced $250 million of 3.35% 10-year first mortgage bonds (A1/A) on Tuesday to yield Treasuries plus 105 bps, according to a market source and an FWP filed with the SEC.

The notes sold at the tight end of price talk set in the 110 bps area over Treasuries.

Pricing was at 99.872 to yield 3.365%.

MUFG and Scotia Capital (USA) Inc. are the bookrunners.

The Portland, Ore.-based electric utility plans to use the proceeds to fund capital expenditures and for general corporate purposes.

Valley subordinated debentures

Valley National Bancorp sold an upsized $100 million of 4.55% 10-year subordinated debentures (/BBB/BBB) on Tuesday at Treasuries plus 225 bps, according to a market source.

The notes sold in line with price talk.

Pricing was at 99.958 to yield 4.555%.

Sandler O'Neill + Partners LP, Keefe Bruyette & Woods and Deutsche Bank Securities Inc. were the joint bookrunners.

The company plans to use the proceeds to pay related fees and expenses and for general corporate purposes, potential strategic acquisitions and investments in the bank as regulatory capital.

Valley National was also in Tuesday’s market with a sale of noncumulative preferred stock.

Valley National Bancorp is a bank holding company based in Wayne, N.J. Its principal subsidiary is Valley National Bank.

AT&T widens

AT&T’s 3.4% notes due 2025 eased 4 bps to 174 bps bid in the secondary market, a source said.

The company sold $5 billion of the notes on April 23 at a spread of Treasuries plus 150 bps.

AT&T’s 4.75% bonds due 2046 traded about 6 bps weaker over the day in the 221 bps area.

AT&T sold $3.5 billion of the bonds on April 23 at Treasuries plus 215 bps.

The telecommunications company is based in Dallas.

Verizon unchanged

Verizon’s 3.5% notes due 2024 were unchanged at 145 bps bid, according to a source.

The company sold $2.5 billion of the notes (Baa1/BBB+/A-) on Oct. 22 at Treasuries plus 135 bps.

The telecommunications company is based in New York City.

Time Warner soft

Time Warner’s 3.6% notes due 2025 eased 3 bps to 160 bps bid, according to a market source.

The company sold $1.5 billion of the notes on May 28 at Treasuries plus 150 bps.

Time Warner’s 4.85% debentures due 2045 widened 5 bps to head out at 194 bps bid.

The company sold $600 million of the debentures in the May 28 offering at Treasuries plus 195 bps.

The media company is based in New York.

Wal-Mart mixed

Wal-Mart’s 3.25% notes due 2020 widened 6 bps to 60 bps bid on Tuesday, a market source said.

The company sold $1.75 billion of the notes on Oct. 18, 2012 at a spread of 78 bps over Treasuries.

Wal-Mart’s 3.3% notes due 2024 widened 8 bps to 87 bps bid, the source said.

The company brought a $500 million add-on to the notes on Oct. 7, 2014 at Treasuries plus 68 bps.

Wal-Mart originally sold $1 billion of the notes at Treasuries plus 73 bps on April 15, 2014.

The company’s 4.3% bonds due 2044 firmed 1 bp to 122 bps bid.

Wal-Mart sold $1 billion of the bonds on April 15, 2014 at Treasuries plus 90 bps.

The discount retailer is based in Bentonville, Ark.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.