PECO, PPL Electric price; Santander, CBL drop deal plans; Glencore, Alcoa plummet

By Aleesia Forni and Cristal Cody

Virginia Beach, Sept. 28 – PECO Energy Co. and PPL Electric Utilities Corp. priced new bonds on Monday, while two potential issuers pulled new deal plans during a rocky session for the investment-grade bond market.

Volatile market conditions caused both Santander Holdings USA Inc. and CBL & Associates Properties Inc. to each drop plans for new senior notes offerings during the session.

Santander had initially set talk for benchmark three- and five-year notes, while CBL had eyed a $300 million five-year bond.

The primary market did see utility companies PPL Electric and PECO Energy each price $350 million mortgage bond offerings between 12 basis points to 15 bps tighter than initial talk.

PECO attracted an order book that was more than two times oversubscribed, while PPL Electric garnered a book of more than $1 billion.

Also on Monday, WEA Finance LLC sold $1 billion of five-year senior notes after dropping plans for a 10-year tranche at the deal’s guidance stage, and Landeskreditbank Baden-Wurttemberg-Forderbank (L-Bank) priced $500 million of two-year floaters.

Investment-grade corporate bonds traded mostly flat to weaker, while credit spreads widened over the day.

But there were a couple of notable casualties.

One such name was Glencore plc, whose stock hit a new low Monday amid a commodity sell-off. A trader said its bonds were off 8 to 10 points on the day.

Alcoa Inc. paper also plunged. The aluminum producer, which has a split rating, investment grade from Standard & Poor’s, junk from Moody’s Investors Service, announced Monday that it plans to split itself into two companies.

As a result, those bonds were off “some 10 to 12 points,” according to a trader.

Among other names, Citigroup Inc.’s 3.3% senior notes due 2025 headed out unchanged after opening the session softer.

Oracle Corp.’s senior notes (A1/AA-/A+) widened in secondary trading on Monday.

The Markit CDX North American Investment Grade 25 index ended the day 4 bps weaker at a spread of 92 bps.

WEA sells $1 billion

WEA Finance sold $1 billion of 3.25% senior notes due Oct. 5, 2020 at Treasuries plus 190 bps on Monday after dropping plans for a 10-year piece, a market source said.

The notes (A3/BBB+) priced at 99.657 to yield 3.325%.

Pricing was on top of guidance and wider than earlier talk that was in the range of 170 bps to 175 bps over Treasuries.

Bookrunners were Citigroup Global Markets Inc., Deutsche Bank Securities Inc., HSBC Securities and J.P. Morgan Securities LLC.

Plans for a 10-year tranche of notes, which was talked in the 210 bps to 215 bps range over Treasuries, were dropped prior to the deal’s launch.

The unit of retail property owner and operator Westfield Group is based in Sydney, Australia.

PECO mortgage bonds

PECO Energy sold $350 million of 3.15% 10-year first and refunding mortgage bonds (Aa3/A-/A) on Monday at Treasuries plus 110 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.59 to yield 3.198%.

The notes sold in line with guidance and tighter than initial talk set in the 125 bps area over Treasuries.

The joint bookrunners are Credit Suisse Securities (USA) LLC, MUFG, Scotia Capital (USA) Inc., Mizuho Securities USA Inc. and Morgan Stanley & Co. LLC.

Proceeds will be used for general corporate purposes.

The electric and natural gas transmission subsidiary of Exelon is based in Philadelphia.

PPL Electric offering

Meanwhile, PPL Electric sold a $350 million offering of 4.15% first mortgage bonds (A1/A) due Oct. 1, 2045 at Treasuries plus 132 bps, according to a market source, at the tight end of talk set in the 135 bps area over Treasuries.

Initially, the notes were talked in the Treasuries plus 145 bps area.

The issue priced at 99.388 to yield 4.186%.

Barclays, RBC Capital Markets LLC, Scotia Capital (USA) Inc. and Wells Fargo Securities LLC are the joint bookrunners.

The Allentown, Pa.-based electric company will use the proceeds to repay short-term debt and for other general corporate purposes.

L-Bank floaters

Landeskreditbank Baden-Wurttemberg-Forderbank (L-Bank) priced $500 million of two-year floating-rate notes at par to yield Libor plus 8 bps on Monday, according to an informed source.

Barclays, JPMorgan and Commerzbank AG were the joint bookrunners.

The financial services provider is based in Karlsruhe, Germany.

Santander scraps deal

Boston-based Santander Holdings USA dropped plans to price a benchmark offering of senior notes in two parts on Monday, according to a market source.

The proposed deal (Baa2/BBB) had included a three-year tranche of notes talked in the 175 bps area over Treasuries and a five-year piece talked in the Treasuries plus 190 bps area.

Citigroup, JPMorgan, Santander Investment Securities Inc. and UBS Securities LLC were the bookrunners.

Santander Holdings USA is the parent company of Sovereign Bank. It is a subsidiary of Spain’s Banco Santander, SA.

CBL drops offering

CBL & Associates Properties also dropped a planned $300 million offering of five-year senior notes (Baa3/BBB-/BBB-) during the session, according to a market source.

BofA Merrill Lynch, JPMorgan, U.S. Bancorp Investments Inc. and Wells Fargo were the joint bookrunners for the deal, which was initially talked in the area of 300 bps over Treasuries.

CBL is a Chattanooga, Tenn.-based owner and developer of malls and shopping centers.

Sweden on deck

In forward calendar news, Sweden set price talk for a planned benchmark offering of three-year notes (Aaa/AAA/AAA) on Monday in the mid-swaps plus 4 bps area, according to a market source.

The bookrunners are Barclays, Citigroup and JPMorgan.

The notes will be sold via Rule 144A and Regulation S.

F.N.B. on tap

F.N.B. Corp. also joined the pipeline on Monday, announcing plans to price an offering of subordinated notes due 2025, according to a 424B5 filed with the SEC.

Bookrunners were RBC Capital Markets LLC and Sandler O’Neill + Partners LP.

The Hermitage, Pa.-based bank will use the proceeds for general corporate purposes.

Citigroup stable

Citigroup’s 3.3% senior notes due 2025 headed out unchanged over the afternoon at 149 bps offered, according to a market source.

Citigroup sold $1.5 billion of the notes (Baa2/A-/A) on April 22 at Treasuries plus 135 bps.

The investment bank is based in New York.

Oracle weak

Oracle’s 2.95% notes due 2025 were quoted 10 bps weaker in late afternoon trading at 125 bps bid, a market source said.

The notes were seen flat at the start of the session at 118 bps offered.

Oracle sold $2.5 billion of the notes on April 28 at 100 bps over Treasuries.

Oracle’s 4.125% bonds due 2045 widened to 162 bps bid on Monday, weaker than where the notes traded at 154 bps on Friday. The bonds were seen early in the day on Monday about 1 bp tighter at 149 bps offered.

Oracle sold $2 billion of the bonds in the April 28 offering at Treasuries plus 145 bps.

The computer software and technology company is based in Redwood City, Calif.

-Stephanie N. Rotondo contributed to this report

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