FirstEnergy, Dow Chemical, Coca-Cola Enterprises, GE Capital price bonds; new deals tighten

By Andrea Heisinger

New York, Aug. 4 - New corporate bond supply flowed into the high-grade market Tuesday with issuance from FirstEnergy Solutions Corp., Dow Chemical Co., Coca-Cola Enterprises Inc. and General Electric Capital Corp.

At least two of the sales, from Dow Chemical and GE Capital, were several times oversubscribed. The recent streak of deals is set to continue for the next couple of days, sources said.

Dow Chemical and Coca-Cola's bonds gained once they hit the secondary, a trader said. The previous day's issue from International Paper Co. lost some of its gains but remained tighter than where it priced.

And outstanding bonds from PepsiCo were effectively unchanged in trading on the news of its acquisition of the company's two bottlers.

Spreads were tighter as Treasury yields remained slightly wider by late afternoon. The five-year note was 2 basis points wider at a yield of 2.68% while the 30-year bond was out 6 bps to yield 4.46%.

GE Capital sells $2 billion

GE Capital priced $2 billion of 6% 10-year notes to yield Treasuries plus 235 bps.

Bookrunners were Barclays Capital Inc., Bank of America Merrill Lynch, Deutsche Bank Securities Inc. and RBS Securities Inc.

The sale was "very oversubscribed" with a "lot of interest," a source close to the sale said. He added that it "went very well, obviously."

It was the first deal from the financing arm of General Electric since the company announced it would not be doing further issues with the backing of the Federal Deposit Insurance Corp.

The issuer is based in Fairfield, Conn.

Dow upsizes sale, adds tranche

Dow Chemical sold $2.75 billion of senior unsecured notes in an upsized three tranches, an informed source said.

The $1.25 billion of 4.85% notes due Aug. 15, 2012 priced at a spread of Treasuries plus 312.5 bps.

The $1.25 billion of 5.9% notes due Feb. 15, 2015 priced at a spread of Treasuries plus 325 bps.

Both of these tranches came in line with guidance, the informed source said, which was the spread at which each priced, plus or minus 12.5 bps.

The diversified chemical company added a $250 million tranche of two-year floating-rate notes priced at par to yield three-month Libor plus 225 bps.

The sale was "severely" oversubscribed, the informed source said.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., HSBC Securities (USA) Inc. and Morgan Stanley & Co. Inc. ran the books.

Proceeds will be used to repay a portion of borrowings under a term loan and for refinancing, renewal, replacements and refunding of outstanding debt.

"Once again, investor confidence in Dow's long-term strategic direction has been underscored with the completion of yet another oversubscribed debt offering," said Andrew N. Liveris, chairman and chief executive officer of Dow Chemical, in a news release.

"When combined with proceeds from the asset sales we have already announced, this offering will enable us to fully pay down our bridge loan.

"It is further evidence of the company's commitment to enhancing liquidity and financial flexibility. At the same time, this provides us with more options in how we execute future non-core divestitures in order to further de-lever our balance sheet and free up capital for ongoing investments in our advanced materials, agricultural sciences and performance portfolios."

Dow Chemical is based in Midland, Mich.

Primary to stay active

The primary market is set to keep rolling with new industrial issues, sources said late Tuesday, as market conditions remain upbeat and companies need to issue debt.

"It's great right now," a source said, adding that it's "better than being slow."

Another source cited the name-recognition of the issuers in Tuesday's market.

"We saw a lot of big names today," he said. "Dow was a big deal; GE was a big one."

The next couple of days should remain active, the sources said.

"We have a few trades, but [we're] not going to be overly busy," one source said.

The other source said his desk "has a calendar" and added "I wouldn't say it's really busy."

FirstEnergy offers three tranches

FirstEnergy Solutions priced $1.5 billion of notes in three tranches late Tuesday, a market source said.

The $400 million of 4.8% notes due 2015 priced to yield Treasuries plus 212.5 bps.

The $600 million of 6.05% 12-year notes priced at a spread of Treasuries plus 237.5 bps.

The $500 million of 6.8% 30-year notes priced at Treasuries plus 237.5 bps.

The notes were sold via Rule 144A.

Barclays Capital, Credit Suisse Securities, Morgan Stanley and RBS Securities were bookrunners.

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

Coca-Cola offers 10-year

Beverage manufacturer and distributor Coca-Cola Enterprises priced $250 million 4.5% 10-year notes early in the day at Treasuries plus 90 bps.

Bookrunners were Bank of America Merrill Lynch, BNP Paribas Securities Corp., HSBC Securities and J.P. Morgan Securities Inc.

Proceeds are going for general corporate purposes, including repayment of debt and the company's $131 million in 7.125% notes due in September.

The company is based in Atlanta.

Coca-Cola 10-year better

Coca-Cola Enterprises priced its 4.5% bond due 2019 at Treasuries plus 90 bps, and it improved once being freed for trading, a secondary source said.

The issue was at 82 bps bid, 79 bps offered late Tuesday, he said.

Dow Chemical fixed bonds tighten

The two fixed-rate tranches of Dow Chemical bonds were better soon after pricing, a trader said. The 4.85% bond due 2012 was the better of the two, tightening to 307 bps bid from the 312.5 bps price over Treasuries.

The 5.9% bond due 2015 was in about 5 bps to 320 bps bid from the Treasuries plus 325 bps pricing level.

International Paper loses gains

The new 7.5% bond due 2021 from International Paper Co. lost some of its earlier gains in trading, a trader said, although the issue remained tighter than its price.

The bond sold at Treasuries plus 387.5 bps and was quoted at 360 bps bid, 350 bps offered. This was weaker than the quote of 353 bps bid, 348 bps offered that was spotted soon after pricing.

Niagara Mohawk tightens

Niagara Mohawk Power Corp.'s 4.881% bond due 2019 was slightly better than its trading level the previous day. The bonds priced at 125 bps over Treasuries and were quoted late Tuesday at 117 bps bid, 116 bps offered, a trader said. This was better than the 119 bps bid, 116 bps offered quote heard soon after pricing the previous day.

GE Capital, Verizon lead trading

An outstanding bond from General Electric Capital was at the top of trading as of mid-afternoon, a secondary source said.

The company's 3% bond due 2011, which was backed by the Federal Deposit Insurance Corp., was one of the most heavily traded of the day. GE Capital priced a new bond on Tuesday.

A 7.35% bond due 2039 from Verizon Communications Inc. broke up the top of the most-traded list that was otherwise dominated by FDIC-backed bonds.

PepsiCo bonds unchanged

News came early in the day of PepsiCo buying outstanding shares of its two main bottlers in an acquisition worth about $7.8 billion, according to a press release from the drink and snack food company.

A trader said there was "not really" any change in the company's bonds as of late afternoon, adding that they "traded too tight anyway."

PepsiCo plans to acquire Pepsi Bottling Group and PepsiAmericas in a definitive merger agreement with the purchase of outstanding shares in the two bottlers. It's expected to close by the end of the year.

GE Capital, Wyeth top movers

Bonds from GE Capital and drug maker Wyeth were among the day's top movers late Tuesday, a source said.

A 5.45% bond due 2013 from GE Capital was about 45 bps better than a week ago, likely aided by its successful bond issue Tuesday.

A 5.5% bond due 2014 from Wyeth was about 25 bps worse than the previous week. The company recently announced solid earnings for the second quarter.

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