Export Development Canada, Airgas price tight; Penske firms; spreads ease

By Cristal Cody and Aleesia Forni

Virginia Beach, June 12 – Export Development Canada and Airgas, Inc. sold new bond offerings on Thursday as high-grade primary activity slowed following three solid days of new issuance.

The quieter session saw more than $1.5 billion new issuance.

Airgas sold its $300 million offering at the tight end of talk, which had firmed around 15 basis points from earlier guidance, a market source said.

In other primary action, Penske Truck Leasing Co. LP priced an offering of five-year notes, though pricing details were unavailable at press time.

The preferred market saw new issues from Bank of America Corp. and Commerce Bancshares Inc. during Thursday’s session.

Despite the lack of activity on Thursday, the week has still seen more than $26 billion of new paper price, besting sources’ earlier expectations of around $20 billion to $25 billion of supply.

Penske Truck Leasing’s new notes due 2019 tightened 2 bps in aftermarket trading, according to a market source.

The 3.65% notes due 2024 that Airgas priced were offered in the secondary market, a trader said.

Spreads headed out mostly wider in the afternoon, sources said.

The Markit CDX North American Investment Grade series 22 index eased 2 bps to a spread of 60 bps.

EDC five-years

Export Development Canada priced $1 billion of 1.75% five-year notes in line with talk on Thursday at mid-swaps flat, or Treasuries plus 13.1 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes (Aaa/AAA/) sold at 99.682 to yield 1.815%, and the company plans to use proceeds for general corporate purposes.

The bookrunners were BNP Paribas Securities Corp., Goldman Sachs & Co., BofA Merrill Lynch and RBC Capital Markets, LLC.

The government-backed agency for exporters is based in Ottawa.

Airgas prices tight

Airgas, Inc. sold its $300 million of 3.65% senior notes due 2024 at Treasuries plus 108 bps, a market source said.

Pricing was at the tight end of the Treasuries plus 110 bps area talk.

The notes (Baa2/BBB/) sold at 99.805 to yield 3.673%.

Airgas’ 3.65% notes due 2024 were quoted at 105 bps offered in aftermarket trading, according to a trader.

BofA Merrill Lynch, Goldman Sachs and Wells Fargo Securities LLC were the joint bookrunners.

The maker of specialty and industrial gases is based in Radnor, Pa.

BofA preferreds

In the preferred market, Bank of America priced $1.5 billion of 5.125% $1,000-par series V fixed-to-floating-rate noncumulative preferred stock, according to an FWP filed with the SEC on Thursday.

BofA Merrill Lynch is the sole bookrunner. Goldman Sachs served as a qualified independent underwriter.

The dividend will be fixed until June 17, 2019, at which time it will reset to Libor plus 338.7 bps. While fixed, and when declared, dividends will be paid semiannually. Once floating, the dividend will be paid quarterly.

The Charlotte, N.C.-based bank can redeem the shares come June 17, 2019 at par plus accrued dividends. The shares also become callable in the case of a regulatory capital treatment event.

The new securities will not be listed on any exchange.

Proceeds will be used for general corporate purposes.

Commerce Bancshares new issue

Also on Thursday, Commerce Bancshares sold $150 million of 6% series B noncumulative perpetual preferred stock (expected ratings: Baa1/BBB), the company said in an FWP filed with the SEC.

The preferreds will be issued as depositary shares representing a 1/1,000th interest.

Morgan Stanley & Co. LLC, BofA Merrill Lynch and J.P. Morgan Securities LLC are the joint bookrunners.

Dividends will be paid on the first day of March, June, September and December, beginning Sept. 1. The company can redeem the preferreds on or after Sept. 1, 2019 or in whole within 90 days of a regulatory capital treatment event.

The call price is par plus accrued dividends.

The Kansas City, Mo.-based bank will use proceeds, along with other available liquidity, to fund a $200 million common stock repurchase pursuant to an accelerated share repurchase agreement entered into with Morgan Stanley.

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