Patterson-UTI prices downsized notes; FHLBank prints; Hasbro considers deal; inflows reported

By Cristal Cody

Tupelo, Miss., Nov. 7 – Patterson-UTI Energy, Inc. priced a downsized $350 million of 10-year senior notes on Thursday as the sole reported issuer in the corporate market.

In other supply at the start of the day, the Federal Home Loan Bank System priced $2 billion of two-year Global notes.

In other action over Thursday’s session, toy and game maker Hasbro, Inc. (Baa1/BBB+/BBB-) held fixed income investor calls for a possible bond deal, a source said.

BofA Securities, Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are the arrangers.

Hasbro plans to acquire Entertainment One Ltd. in a $4 billion all-cash transaction. The company was last in the investment-grade bond market in September 2017.

Also on Thursday, AbbVie Inc. started a two-day round of investor calls for a Rule 144A and Regulation S private offering of senior notes (Baa2/A-/) with proceeds earmarked to fund its acquisition of Allergan plc.

The benchmark deal was launched on Wednesday and is expected to total as much as $30 billion, according to a market source.

BofA Securities, Barclays and Morgan Stanley & Co. LLC are the lead managers.

Deal volume week to date totals more than $20 billion from new corporate and sovereign, supranational and agency issuance.

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

Corporate investment-grade funds saw inflows of $2.29 billion for the past week ended Wednesday, Lipper US Fund Flows reported on Thursday.

The Markit CDX North American Investment Grade 33 index tightened modestly to a spread of 51.2 basis points on Thursday.

Energy bonds

Energy issues have been in the forefront of supply over the week. In addition to Patterson-UTI Energy, other issuers have included Shell International Finance BV, Xcel Energy Inc., Baker Hughes, a GE co., LLC and co-issuer Baker Hughes Co-Obligor, Inc., National Oilwell Varco, Inc., Commonwealth Edison Co., Consolidated Edison Co. of New York, Inc., Cheniere Energy, Inc. subsidiary Cheniere Corpus Christi Holdings, LLC and Vistra Energy Corp. subsidiary Vistra Operations Co. LLC.

New energy bonds have traded mostly better in the secondary market.

Cheniere Corpus Christi’s $1.5 billion of split-rated senior secured notes due Nov. 15, 2029 (Ba1/BBB-/BBB-) that priced on Wednesday improved about 4 bps, a source said.

The Houston-based energy company priced an upsized $1.5 billion of the 10-year notes on the tight side of guidance at a spread of 190 bps over Treasuries.

The Rule 144A and Regulation S deal was upsized from $1 billion.

Shell International Finance’s $4 billion of guaranteed senior notes (Aa2/AA-) priced in five-, 10- and 30-year tranches on the tight side of guidance on Monday firmed about 1 bp to 4 bps.

The $1.5 billion tranche of 2.375% notes due Nov. 7, 2029, which priced at a 68 bps over Treasuries spread, traded about 1 bp better in the secondary market, a source said.

Patterson-UTI Energy prices

Patterson-UTI Energy sold $350 million of 5.15% 10-year senior notes on Thursday at a spread of 325 bps over Treasuries, according to a market source and an FWP filing with the Securities and Exchange Commission.

Initial price talk was in the 300 bps area.

Goldman Sachs & Co. LLC, RBC Capital Markets LLC, Scotia Capital (USA) Inc. and Wells Fargo Securities LLC were the bookrunners.

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

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