Weyerhaeuser, Pennsylvania Electric, Dexus, Italy, NIB sell notes; Unum, Weyerhaeuser firm

By Andrea Heisinger

New York, Sept. 28 - Weyerhaeuser Co., Pennsylvania Electric Co., Dexus Diversified Trust, the Republic of Italy and Nordic Investment Bank each priced bonds on an otherwise uneventful and slow Monday in the investment-grade primary market.

Weyerhaeuser priced an upsized $500 million of split-rated 10-year notes. The size was increased from $300 million.

Pennsylvania Electric priced two tranches of notes, also totaling $500 million. The tranches priced in the middle and at the wide end of price talk, despite a lack of competing supply for investors' attention.

Dexus Diversified priced $300 million of five-year notes in a Rule 144A deal.

Two offerings from overseas were also sold. Italy priced the largest offering of the day, doing $2.5 billion in three-year notes. Nordic Investment Bank did a comparatively smaller $1 billion in a five-year maturity.

The secondary side of the market was relatively low on volume.

A trader quoted the new Weyerhaeuser bond as 5 to 15 basis points better soon after it priced.

A bond sold Friday by Unum Group did much better, with a trader in the financial sector quoting it as upwards of 25 bps tighter.

Spreads were generally wider by late in the day as Treasury yields contracted. The 10-year note was tighter by 4 bps, quoted at 3.28%. The 30-year bond made one of the strongest moves, tightening to a yield of 4.03%.

Weyerhaeuser sells split-rated 10-year

Pulp and paper products company Weyerhaeuser sold an upsized $500 million of 7.375% 10-year senior unsecured notes (Ba1/BBB-/BB+) at Treasuries plus 420 bps, an informed source said.

The deal tightened significantly from price guidance of 450 bps, the source said. The size was originally $300 million.

The offering was priced off the high-grade syndicate desk, a source said.

Bookrunners were Morgan Stanley & Co. Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc.

Proceeds are being used for general corporate purposes, including working capital, capital expenditures and repayment or repurchase of debt.

The company is based in Federal Way, Wash.

Pennsylvania Electric prices two tranches

Pennsylvania Electric priced $500 million of senior notes in two tranches late in the day, an informed source said.

A $250 million tranche of 5.2% notes due 2020 priced at Treasuries plus 195 bps. The tranche priced in the middle of guidance of 187.5 bps to 200 bps, the source said. It was launched at 195 bps.

The $250 million of 6.15% notes due 2029 priced at a spread of Treasuries plus 212.5 bps.

This tranche was sold at the wide end of guidance of 200 to 212.5 bps, the source said.

"There really wasn't any competing supply," the source said of the sale.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., JPMorgan and Wells Fargo Securities were tapped as bookrunners.

Proceeds will be used to repay short-term borrowings.

The electric subsidiary of FirstEnergy Corp. is based in Akron, Ohio.

Dexus Diversified offers five-year

Dexus Diversified Trust, a subsidiary of Dexus Property Group, sold $300 million 7.125% five-year notes at Treasuries plus 487.5 bps, a market source away from the sale said.

The notes were priced via Rule 144A.

Bookrunners were JPMorgan and Morgan Stanley.

The subsidiary of the owner and operator of retail, office and industrial properties is based in Sydney, Australia.

Volume off at top of week

An expected lull materialized on Monday as the Yom Kippur holiday put most new deals on hold until later in the week.

A market source termed the week "a wash," attributing it to "the month-end, the quarter-end, employment figures at the end of the week."

Predictions from the end of the previous week from those on syndicate desks were that the week could be as busy as the last couple have been.

One syndicate source said there's "plenty of supply out there."

"Today was misleading," he said. "You have Yom Kippur. No one wanted to come today."

He said his desk has deals lined up to price in the next two days, and that "other desks probably have twice that."

A source from a larger desk confirmed this, saying "unless something happens, we have an active calendar."

Nordic Investment Bank offers $1 billion

Nordic Investment Bank priced $1 billion of 2.625% five-year global notes at 99.568, according to an FWP filing with the Securities and Exchange Commission.

Bookrunners were Citigroup, HSBC Securities, Nomura Securities and RBC Capital Markets.

The international financing provider to Nordic countries is based in Helsinki, Finland.

Italy prices three-year notes

Italy priced $2.5 billion of 2.125% three-year notes at Treasuries plus 68.7 bps, according to an FWP filing with the SEC.

Bank of America Merrill Lynch, Morgan Stanley and RBS Securities ran the books.

The issuer is based in Rome.

Weyerhaeuser note trades better

Soon after it was freed for the secondary, the new 7.375% split-rated 10-year bond priced at 420 bps over Treasuries by Weyerhaeuser was tighter by 5 to 15 bps, a trader said.

He quoted the issue at 415 bps bid, 405 bps offered.

Total Capital 2015 loses ground

The 3.125% bond due 2015 priced Friday by Total Capital SA lost some of the small gains it had made soon after being sold, a trader said.

The bond priced at 88 bps over Treasuries and was later quoted at 83 bps bid. By late Monday it was mostly back to its pricing level, quoted at 87 bps bid, 83 bps offered.

Unum Group bond firms

A recently priced bond from Unum Group firmed nicely in trading a day after it was priced. The 7.125% note due 2016 was sold at 416.5 bps over Treasuries. By late Monday it had tightened considerably to 390 bps bid, 380 bps offered, a trader said.

Bank bonds top trading

Outstanding notes from three different banking names were at the top of trading by early afternoon, a trader said.

A 5% bond due 2016 priced recently by Barclays Bank plc sat at the top in terms of volume. It priced in mid-September and was also seen trading heavily on Friday.

Also popular was an 8.5% note due 2019 from Citigroup Inc. The bank has had several bonds in heavy trading in previous weeks.

Goldman Sachs Capital II's 5.793% note due 2043 was also trading at high volume.

A trader in the financial sector said there was "nothing that I've heard of" to explain why so many bank bonds were being traded heavily.

A 6.125% note due 2018 from Kraft Foods Inc. also garnered a lot of attention at the top of the week. The company is expected to have its bid for candy maker Cadbury accepted after it raised the amount offered.

Bank, broker CDS tighter

Credit-default swaps for bank and brokerage names were tighter by a small amount in late afternoon, a trader said.

Brokerage names were 5 to 10 bps better, he said, with banks in by 2 to 8 bps.

Developers Diversified, Xerox active

After successfully pricing a deal on Friday, an outstanding bond from Developers Diversified Realty Corp. was among those making big moves from the previous week by late Monday.

The 5.5% note due 2015 from the real estate investment trust was tighter by more than 85 bps a day after the company sold $300 million of bonds due 2016.

A bond from office products company Xerox Corp. moved wider than a week ago after it was announced that it would buy Affiliated Computer Services Inc. for about $5.8 billion in cash. The 5.5% bond due 2012 from Xerox was about 35 bps wider.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.