Santander, Packaging, NextEra price bonds; deal pipeline thins; credit spreads improve

By Cristal Cody

Tupelo, Miss., Dec. 11 – Santander Holdings USA, Inc. tapped the high-grade bond market on Monday with $1.25 billion of senior notes in two tranches.

Packaging Corp. of America also priced $1 billion of senior notes in two parts.

In addition, NextEra Energy Capital Holdings Inc. sold $500 million of five-year debentures.

Light deal action is forecast over the week with about $10 billion of total supply expected by market sources.

Volume is expected to be front-loaded for the week with an anticipated mid-week rate hike by the Federal Reserve following its two-day meeting on Wednesday, a source said. The Federal Reserve is forecast to raise rates by 25 basis points, a source said.

The Markit CDX North American Investment Grade 29 index closed about 1 bp tighter at a spread of 50 bps.

Santander raises $1.25 billion

Santander Holdings USA priced $1.25 billion of senior notes (Baa3/BBB+/) in two tranches on Monday in a private Rule 144A, Regulation S offering, according to a market source and a press release.

The company sold $1 billion of 3.4% five-year notes at a spread of Treasuries plus 130 bps, on the tight side of talk in the Treasuries plus 135 bps area.

The company priced a $250 million add-on to its 4.4% notes due July 13, 2027 with a Treasuries plus 170 bps spread. The notes were talked to price in the 175 bps spread over Treasuries area.

The company initially priced $800 million of the 4.4% notes on July 10 at a spread of 205 bps over Treasuries. The total outstanding now is $1.05 billion.

Barclays, J.P. Morgan Securities, LLC, Santander Investment Securities Inc. and Wells Fargo Securities, LLC were the bookrunners.

Proceeds from the deal will be used for general corporate purposes.

Boston-based Santander Holdings USA is the U.S. holding company for Madrid-based Banco Santander, SA.

Packaging sells $1 billion

Packaging Corp. of America priced $1 billion of fixed-rate senior notes (Baa2/BBB/) in two tranches on Monday, according to a market source and an FWP filing with the Securities and Exchange Commission.

The company sold $500 million of 2.45% three-year notes at 99.893 to yield 2.487%, or a spread of Treasuries plus 55 bps.

The $500 million tranche of 3.4% 10-year notes came at 99.672 to yield 3.439%. The notes priced at a spread of 105 bps over Treasuries.

Both tranches priced on the tight side of guidance.

Deutsche Bank Securities Inc. and Wells Fargo Securities were the bookrunners.

Proceeds will be used to repay all debt under the company’s term loans, consisting of $626 million outstanding under the 2020 term loan and $350 million under the 2021 term loan, and for general corporate purposes.

The Lake Forest, Ill.-based company manufactures containerboard and corrugated packaging products.

NextEra brings bonds

NextEra Energy Capital Holdings sold $500 million of 2.8% debentures due Jan. 15, 2023 on Monday at a spread of 65 bps over Treasuries, according to a market source and an FWP filing with the SEC.

The bonds (Baa1/BBB+/A-) priced at 99.96 to yield 2.808%.

CIBC World Markets Inc., Credit Suisse Securities (USA) LLC, BofA Merrill Lynch, RBC Capital Markets, LLC and Regions Securities LLC were the bookrunners.

The debentures are guaranteed by NextEra Energy Capital Holdings’ parent company, NextEra Energy, Inc.

Proceeds will be used to redeem all $500 million of the company’s 6% debentures due March 1, 2019 on Dec. 28, for investments in energy and power projects and for other general corporate purposes.

NextEra Energy is an energy company based in Juno Beach, Fla.

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