Total, Sumitomo Mitsui, TD Bank, Alexandria, FS KKR price; credit spreads ease

By Cristal Cody

Tupelo, Miss., July 8 – Investment-grade issuers flooded into the primary market on Monday with nearly $12 billion of new issue supply after the first week of July stayed quiet.

Total Capital International priced a $4 billion four-part offering of guaranteed notes.

Sumitomo Mitsui Financial Group Inc. brought $4 billion of senior notes in two tranches.

Toronto-Dominion Bank priced $1.75 billion of three-year covered bonds.

Alexandria Real Estate Equities, Inc. sold $1.25 billion of guaranteed senior notes in two tranches.

Virginia Electric and Power Co. placed $500 million of 10-year senior notes.

Also, FS KKR Capital Corp. priced an upsized $400 million of five-year notes.

Investment-grade supply was expected to ramp up to about $15 billion to $20 billion or higher this week, according to syndicate sources.

Corporate issuers were quiet over the first week of July with the markets closed on Thursday for the Independence Day holiday.

A deal is being eyed in the near future from Panasonic Corp., which started a global roadshow on Friday in the U.S., Europe and Asia markets for a Rule 144A and Regulation S dollar-denominated note offering.

Indexes, inflows, Fed

The Markit CDX North American Investment Grade 32 index headed out more than 1 basis point softer on Friday and continued to ease over Monday’s session. The index closed Monday more than 1 bp wider at a spread of 55 bps.

For the week ended July 3, inflows to U.S. investment-grade bond funds and ETFs jumped to $3.97 billion from $2.66 billion in the prior week, Yunyi Zhang, a credit strategist with BofA Merrill Lynch, said in a research note released on Monday.

The figure was led by a jump in high-grade fund inflows to $3.97 billion from $700 million in the previous week and partially offset by a decline in ETF inflows to $380 million from $1.96 billion a week earlier.

Short-term high-grade inflows rose to $3.97 billion from $2.66 billion, while excluding-short-term inflows increased to $3.05 billion from $2.46 billion a week earlier, Zhang said.

Meanwhile, market sources are eying a potential rate cut at the Federal Reserve’s July 30-31 monetary policy meeting and looking toward Fed chairman Jerome Powell’s twice-annual monetary policy report to Congress on Wednesday and Thursday.

The minutes from the Federal Open Market Committee’s June meeting also will be released on Wednesday.

“Although the strong labor market data on Friday quelled some of the ardor for rate cuts, the financial markets are still leaning toward a cut at the end of the month,” according to a Confluence Investment Management, LLC report on Monday. “If Powell wants to affect that assessment, he will likely do so on Wednesday.”

Total prices $4 billion

Total Capital International priced a $4 billion four-part offering of guaranteed notes (Aa3/A+) on the firm side of deal guidance on Monday, according to a market source.

A $750 million tranche of 2.218% two-year notes priced with a spread of 33 bps over Treasuries.

Total Capital sold $1 billion of 2.434% long five-year notes at a Treasuries plus 58 bps spread.

The company placed $1.25 million of 2.819% notes due Jan. 10., 2030 with a Treasuries plus 78 bps spread.

The final tranche of $1 billion of 3.461% 30-year notes priced at a 93 bps over Treasuries spread.

Barclays, Credit Agricole Securities (USA) Inc., J.P. Morgan Securities LLC, Mizuho Securities USA Inc. and Morgan Stanley & Co. LLC were the bookrunners.

The notes are unconditionally guaranteed by parent company Total SA.

Total Capital is a financing arm of the Courbevoie, France-based oil and gas company.

Sumitomo Mitsui sells $4 billion

Sumitomo Mitsui Financial Group priced a $4 billion offering of fixed-rate senior notes (A1/A-) in two tranches on the tight side of guidance on Monday, according to a market source.

The company sold $2 billion of 2.696% five-year notes at a spread of Treasuries plus 85 bps.

Sumitomo Mitsui Financial priced $2 billion of 3.04% 10-year notes with a Treasuries plus 100 bps spread.

SMBC Nikko Securities America Inc., Goldman Sachs & Co. LLC, Citigroup Global Markets Inc. and J.P. Morgan Securities were the bookrunners.

The banking and financial company is based in Tokyo.

TD Bank brings $1.75 billion

Toronto-Dominion Bank (Aa1/AA-/AA-) priced $1.75 billion of 2.1% three-year covered bonds on Monday at mid-swaps plus 28 bps, or a 28.7 bps spread over Treasuries, according to a market source.

Initial price talk for the Rule 144A and Regulation S offering was in the mid-swaps plus 30 bps area.

BMO Capital Markets Corp., Citigroup Global Markets, ING Financial Markets LLC, TD Securities (USA) LLC and nabSecurities LLC were the bookrunners.

The bank and financial services company is based in Toronto.

Alexandria Real Estate prints

Alexandria Real Estate Equities priced $1.25 billion of guaranteed senior notes (Baa1/BBB+) in two tranches on Monday, according to an FWP filing with the Securities and Exchange Commission.

A $750 million tranche of 3.375% notes due Aug. 15, 2031 priced at 99.859 to yield 3.389% and with a spread of 135 bps over Treasuries.

The company sold $500 million of 4% notes due Feb. 1, 2050 at 99.578 to yield 4.024%, or a Treasuries plus 150 bps spread.

Goldman Sachs, Citigroup Global Markets, J.P. Morgan Securities and RBC Capital Markets, LLC were the bookrunners.

The notes are guaranteed by Alexandria Real Estate Equities, LP.

Pasadena, Calif.-based Alexandria Real Estate Equities is a real estate investment trust focused on life science and technology campuses.

Virginia Electric prices

Virginia Electric and Power sold $500 million of 2.875% 10-year senior notes (A2/BBB+/A) at a spread of 85 bps over Treasuries on Monday, according to an FWP filing with the SEC.

The notes priced at 99.965 to yield 2.879%.

BofA Securities, Inc. and Deutsche Bank Securities Inc. were the bookrunners.

The electric utility is based in Richmond, Va.

FS KKR upsizes

FS KKR Capital (Baa3//BBB-) priced an upsized $400 million of 4.625% five-year notes on Monday at a spread of 287.5 bps over Treasuries, according to a market source.

The deal was upsized from $300 million.

Price guidance was in the Treasuries plus 287.5 bps to 300 bps area.

J.P. Morgan Securities, SunTrust Robinson Humphrey, Inc., BMO Capital Markets, SMBC Nikko Securities, ING Financial Markets, Mizuho Securities, MUFG, RBC Capital Markets and KKR Capital Markets LLC were the bookrunners.

The Philadelphia-based business development company invests mainly in senior secured and subordinated debt of private middle-market U.S. companies.

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