Primary slows; Patterson-UTI Energy, IADB price notes; KfW, Municipality Finance on deck

By Cristal Cody

Tupelo, Miss., Jan. 10 – Investment-grade primary action slowed on Wednesday as investors took in the news that China may halt or slow its purchases of U.S. Treasuries.

Patterson-UTI Energy, Inc. was the lone reported corporate issuer with an upsized $525 million offering of 10-year senior notes.

Also, Inter-American Development Bank sold $3.75 billion of five-year global notes on Wednesday.

In the Canadian high-grade primary market, Choice Properties Real Estate Investment Trust priced C$650 million of senior debentures in two tranches.

Also on Wednesday, the European Investment Bank priced a Canadian dollar-denominated offering of five-year global notes, a source said. Final pricing details were not immediately available.

Coming up on Thursday, U.S. deal action is expected to include offerings from KfW and Municipality Finance plc.

About $25 billion to $30 billion of supply is expected by market sources for the week.

The Markit CDX North American Investment Grade 29 index closed the day modestly tighter at a spread of 46 basis points.

Patterson-UTI Energy prices

Patterson-UTI Energy priced an upsized $525 million of 3.95% 10-year senior notes (Baa2/BBB/) on Wednesday at a spread of 140 bps over Treasuries in a Rule 144A and Regulation S offering, according to a market source and a company news release.

The notes priced on the tight side of guidance in the Treasuries plus 145 bps area. The deal was upsized from $500 million.

BofA Merrill Lynch, Goldman Sachs & Co. and Wells Fargo Securities, LLC were the lead managers.

The company held fixed-income investor calls on Monday and Tuesday for the offering.

The notes initially will be guaranteed on a senior unsecured basis by each of the company’s domestic subsidiaries that are guarantors under its credit agreement.

Proceeds will be used to repay debt under its credit agreement and for general corporate purposes.

Houston-based Patterson-UTI provides onshore contract drilling and pressure pumping services to exploration and production companies.

IADB raises $3.75 billion

Inter-American Development Bank (Aaa/AAA/) priced $3.75 billion of 2.5% five-year global notes on Wednesday at a spread of Treasuries plus 15.7 bps, according to a market source.

The stabilization managers were BMO Capital Markets Corp., BofA Merrill Lynch and RBC Capital Markets, LLC.

The provider of development financing for Latin America and the Caribbean is based in Washington, D.C.

Municipality Finance to price

Municipality Finance (Aa1/AA+/) plans to price $500 million of three-year floating-rate notes in a Rule 144A and Regulation S offering on Thursday, according to a market source.

The notes due Feb. 17, 2021 were initially talked to price in the Libor plus 6 bps area.

The deal size is not expected to grow.

BofA Merrill Lynch, Deutsche Bank Securities Inc. and RBC Capital Markets, LLC are the lead managers.

Municipality Finance is a Helsinki, Finland-based credit institution that provides funding for the public sector in Finland.

KfW talks benchmark deal

KfW (Aaa/AAA/AAA) plans to price a benchmark sized offering of global notes due Dec. 29, 2022 on Thursday, according to a market source.

The notes were initially talked to price with a spread in the mid-swaps plus 14 bps area.

Barclays, Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC are the lead managers.

KfW is a government-backed bank based in Frankfurt.

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