High-grade primary hosts Ford, IBM, Penske; Ford Motor Credit soft; Citi, Kraft Heinz firm

By Aleesia Forni and Cristal Cody

Virginia Beach, Nov. 4 – Another hodgepodge of issuers stormed Wednesday’s primary market, with Ford Motor Credit Co. LLC, International Business Machines Corp. and Swedish Export Credit Corp. among the names pricing deals in the high-grade space during the session.

The day’s activity brings the week’s total new issuance of bonds to $13 billion.

Ford Motor Credit saw an “impressive” order book that was more than 2.5 times oversubscribed for its new $2 billion two-part offering, a market source said, adding that the book remained substantial as both tranches launched around 14.5 basis points inside the midpoint of initial spread thoughts.

The offering included new and reopened tranches of notes.

IBM priced its $900 million offering at the tight side of guidance.

And Penske Truck Leasing Co. LP upsized its newly printed seven-year tranche of notes to $650 million from an initial size of $500 million due to strong investor reception.

While the week’s current supply has some ground to cover to reach earlier estimates of $30 billion, sources continue to note that Thursday has the potential to be a busy day for the investment-grade primary market.

Ford Motor Credit’s existing 4.134% senior notes due 2025 widened 10 bps in secondary trading on Wednesday.

Bank and financial paper was mixed going out the door.

Citigroup Inc.’s 2.65% notes due 2020 traded 3 bps tighter.

JPMorgan Chase & Co.’s 2.55% senior notes due 2020 were unchanged over the day.

In other secondary trading, Kraft Heinz Co.’s 3.95% notes due 2025 edged 1 bp tighter after the company announced on Wednesday that it will close seven factories and cut about 2,600 jobs to trim costs.

The Markit CDX North American Investment Grade 25 index closed about 2˝ bps wider at a spread of 78 bps.

Ford sells $2 billion

Ford Motor Credit sold a $2 billion offering of senior notes (Baa3/BBB-/BBB-) in new and reopened tranches in Wednesday’s largest new issue, according to a market source and an FWP filed with the Securities and Exchange Commission.

The sale included $1.3 billion of 3.2% notes due Jan. 15, 2021, which priced at 99.927 to yield 3.214%, or Treasuries plus 158 bps.

Pricing came at the tight side of guidance, which was set in the Treasuries plus 160 bps area. This was tightened from initial talk set in the Treasuries plus 170 bps to 175 bps range.

A $700 million add-on to the company’s existing 4.134% notes due 2025 sold at 101.397 to yield 3.959% with a 173 bps spread over Treasuries.

The notes were guided in the Treasuries plus 175 bps area after having tightened from talk in the range of Treasuries plus 185 bps to 190 bps.

The original $700 million of 4.134% notes sold at par with a spread of Treasuries plus 187.5 bps on July 30.

The bookrunners are BofA Merrill Lynch, Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co., Morgan Stanley & Co. LLC and SG Americas Securities LLC.

Proceeds will be added to the general funds of Ford Credit and will be available for the purchase of receivables, for loans and for use in connection with the retirement of debt.

Ford Motor Credit is the financing arm of Dearborn, Mich.-based automaker Ford Motor Co.

TransCanada taps market

TransCanada PipeLines Ltd., meantime, sold $1 billion of 1.625% three-year senior notes (A3/A-) at Treasuries plus 83 bps after dropping plans for an additional floating-rate tranche, according to an FWP filing with the SEC.

The notes sold at the tight end of the Treasuries plus 85 bps area guidance and priced at 99.959 to yield 1.646%.

HSBC Securities and J.P. Morgan Securities LLC are the bookrunners.

Proceeds will be used for general corporate purposes and to repay short-term debt.

The natural gas and oil pipeline and storage company is based in Calgary, Alta.

IBM does deal

Information technology company IBM sold a $900 million offering of 2.875% seven-year notes (Aa3/AA-/A+) on Wednesday at Treasuries plus 95 bps, according to a market source.

Price guidance was set in the range of Treasuries plus 95 bps to 100 bps following talk set in the range of 105 bps to 110 bps over Treasuries.

The issue sold at a price of 99.585 with a yield of 2.941%.

Goldman Sachs, RBC Capital Markets LLC, Santander and U.S. Bancorp Investments Inc. are the bookrunners.

The Armonk, N.Y.-based company will use proceeds for general corporate purposes.

Penske upsizes

Penske Truck Leasing priced an upsized $650 million of 3.3% notes (Baa3/BBB-/BBB+) due Aug. 1, 2021 on Wednesday at Treasuries plus 175 bps, according to an informed source.

The issue was upsized from $500 million and sold at the tight end of talk set in the Treasuries plus 180 bps area.

Pricing was at 99.543 to yield 3.394%.

The bookrunners were BofA Merrill Lynch, JPMorgan, PNC Capital Markets LLC, U.S. Bancorp and Wells Fargo Securities LLC.

Proceeds will be used to repay debt and for general corporate purposes.

The global transportation services provider is based in Reading, Pa.

Swedish Export floaters

Also during the session, Swedish Export Credit priced a $500 million issue of two-year floating-rate bonds at par to yield Libor plus 18 bps on Wednesday, according to an FWP filed with the SEC.

BofA Merrill Lynch, Goldman Sachs and Scotiabank Europe plc are the bookrunners.

Based in Stockholm, Swedish Export Credit is the lender to Sweden’s export industry.

AvalonBay new issue

AvalonBay Communities, Inc. also entered Wednesday’s primary market, pricing $300 million of 3.5% 10-year medium-term notes (Baa1/A-) at Treasuries plus 130 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 99.674 to yield 3.539%.

Barclays, Goldman Sachs and Wells Fargo are the joint bookrunners.

Proceeds will be used for working capital, capital expenditures and other general corporate purposes.

The manager and developer of apartment communities is based in Arlington, Va.

CMS sells 10-year notes

And CMS Energy Corp. priced $250 million of 3.6% 10-year senior notes (Baa2/BBB/BBB-) on Wednesday at Treasuries plus 140 bps, according to a market source and an FWP filing with the SEC.

Pricing was at 99.638 to yield 3.628%.

The notes sold at the tight end of the Treasuries plus 145 bps area guidance. Initially, talk was in the 170 bps area over Treasuries.

Barclays, BofA Merrill Lynch, JPMorgan and MUFG are the bookrunners.

Proceeds from the offering will be used for general corporate purposes.

The parent company of electric and gas utility subsidiaries is based in Jackson, Mich.

Ford Credit widens

Ford Motor Credit’s 4.134% notes due 2025 traded 10 bps wider during the session to head out at 178 bps bid, a market source said.

The company sold $700 million of the notes (Baa3/BBB-/BBB-) on July 30 at a spread of Treasuries plus 187.5 bps.

Ford Motor Credit is the financing arm of Dearborn, Mich.-based automaker Ford Motor Co.

Citi paper firms

Citigroup’s 2.65% notes due 2020 firmed 3 bps to 111 bps bid over the day, a market source said.

Citigroup sold $2.7 billion of the notes (Baa1/A-/A) on Oct. 19 at 133 bps over Treasuries.

The financial services company is based in New York.

JPMorgan stable

JPMorgan’s 2.55% notes due 2020 were flat in secondary trading at 123 bps bid, according to a market source.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Oct. 22 at a spread of Treasuries plus 123 bps.

The financial services company is based in New York City.

Kraft Heinz modestly better

Kraft Heinz’s 3.95% notes due 2025 firmed 1 bp to 155 bps bid in the secondary market on Wednesday, a source said.

The notes (Baa3/BBB-/) were sold in a $2 billion offering on June 23 at 155 bps over Treasuries before Kraft and Heinz merged on July 2.

The combined food and beverage company is based in Pittsburgh and Northfield, Ill.

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