Chevron, Danaher, Abbott Labs, Oneok, Alabama Power sell bonds; secondary focuses on recently priced deals

By Andrea Heisinger and Paul Deckelman

New York, Feb. 26 - A day that some thought would be a slow one was anything but, with Chevron Corp., Danaher Corp., Abbott Laboratories, Oneok Partners, LP and Alabama Power Co. selling bonds.

A split-rated offering from Williams Cos. Inc. also made an appearance.

In the secondary sphere on Thursday, a market source said the widely followed CDX Series 11 North American high-grade index was 2 basis points wider on the day at a mid bid-asked spread level of 217 bps versus 215 bps on Wednesday.

Advancing issues remained behind decliners, by a nine-to-seven ratio.

Overall market activity, reflected in dollar volumes, fell 7% from the levels seen on Wednesday.

Spreads in general continued to tighten Thursday as Treasury yields rose; for instance, the yield on the benchmark 10-year issue widened out by 7 bps to 2.99%.

Trading in the newly priced issues pretty much dominated the secondary, although the bonds of Chevron, Danaher, and Alabama Power stayed within a few bps of spreads over comparable Treasuries at which they priced.

Oneok's new bonds were seen to have tightened a bit, as did Abbott's longer issue.

Chevron sells $5 billion

The largest sale of the day came from Chevron, which priced an upsized $5 billion in three tranches.

The $1.5 billion of 3.45% three-year notes priced at Treasuries plus 195 bps, while a $2 billion tranche of 3.95% five-year notes also priced at Treasuries plus 195 bps.

The third tranche was $1.5 billion of 4.95% 10-year notes priced flat to the other two pieces at Treasuries plus 195 bps.

A full term sheet was not available at press time.

Barclays Capital Inc. and Morgan Stanley & Co. ran the books.

Abbott prices $3 billion

Abbott Laboratories sold $3 billion of senior bonds in two tranches with 10- and 30-year maturities.

The $2 billion of 5.125% 10-year notes priced at 99.567 to yield 5.18% with a spread of Treasuries plus 220 bps.

This was in line with price talk of 220 bps, a market source said.

The $1 billion of 6% 30-year notes priced at 99.771 to yield 6.016% with a spread of Treasuries plus 235 bps. This was also in line with price talk of 235 bps, the source said.

The 30-year notes were seen pricing 15 bps cheaper than the company's outstanding notes due 2037, the source said.

Active bookrunners were Banc of America Securities LLC, J.P. Morgan Securities and Morgan Stanley & Co. Inc.

Danaher upsizes

Danaher was seen upsizing its issue of senior notes to $750 million from $500 million.

The 5.4% 10-year notes priced at 99.932 to yield 5.409% with a spread of Treasuries plus 245 bps.

Banc of America Securities LLC, Deutsche Bank Securities and Goldman Sachs & Co. were bookrunners.

The deal was about two times oversubscribed, a source close to the deal said.

Alabama Power sells $500 million

Alabama Power, a subsidiary of Southern Co., quickly sold $500 million of 6% 30-year notes Thursday. The deal was done by early afternoon after being announced in the morning.

The notes priced at 99.808 to yield 6.014% with a spread of Treasuries plus 235 bps.

Banc of America Securities LLC, J.P. Morgan Securities Inc., Morgan Stanley & Co. and Scotia Capital ran the books.

Oneok offers 10-years

Natural gas company Oneok Partners sold $500 million of 8.625% 10-year senior notes at 99.665 with a spread of Treasuries plus 570 bps.

The issue is guaranteed by Oneok Partners Intermediate LP.

Bookrunners were SunTrust Robinson Humphrey, J.P. Morgan Securities Inc. and RBS Greenwich Capital.

Williams sells split-rate notes

Williams Cos. sold an upsized $600 million of 8.75% split-rated notes (Baa3/BB-/BBB-) due 2020 to yield 8.875%.

They priced at 99.159 with a spread of Treasuries plus 590.5 bps.

The notes came in at the tight end of price talk for a yield in the 9% area.

J.P. Morgan Securities, Banc of America, Barclays Capital and Citigroup Global Markets were bookrunners for the Rule 144A deal.

The deal was run off the investment-grade desk, a source close to the sale said. He estimated 85% of the accounts partaking in the pricing were on the investment-grade side, with 15% junk.

"Most accounts were IG," he said.

Pace not slowing

The amount of new issues pricing is not set to slow, a syndicate source said Thursday.

Commenting on the lack of the usual end-of-week slowdown, he said "it's not going to end anytime soon. There's a big pipeline for next week."

Sources said there was no particular explanation for the number of companies selling bonds so close to the end of the week.

One source said president Barack Obama's budget outline "may have had something to do with it," but that he couldn't say for sure.

Another said, "I think they just had to go today."

"Companies need to get debt done, and they're not going to wait around for better [market] conditions," he said.

Oneok does OK

When the new Oneok Partners 8.625% notes due 2019 were freed for secondary dealings, a trader saw the new bonds at a spread of 560 bps bid, 555 bps offered, in a little from the 570 bps level at which the $500 million deal had priced earlier in the day.

Longer Abbott seen firmer

Abbott Laboratories' new 6% bonds due 2039 were being quoted at 226 bps bid, 222 bps offered, somewhat tighter than the 235 bps level at which the $1 billion of bonds had priced earlier.

The other half of that two-part deal, the $2 billion of 5.125% notes due 2019, firmed modestly to 215 bps bid, 210 bps offered from 220 bps over at the pricing.

Chevron bonds trade around issue price

Chevron's new $1.5 billion of 4.95% notes due 2019 were seen at 195 bps bid, unchanged from their pricing spread.

A trader said he had not seen any levels on the other two tranches of the three-part, $5 billion mega-deal.

Alabama Power little changed in secondary

Also hovering around their issue price were Alabama Power's 6% bonds due 2039. The utility had priced $500 million of the paper at 235 bps over, and in the aftermarket, they were barely budged, at 234 bps bid, 230 bps offered.

Danaher hangs in

A similar pattern was seen with Danaher Corp.'s new 5.40% notes due 2019, of which an upsized $750 million priced at 245 bps over; those bonds were quoted at 241 bps bid, 236 bps offered when they got to the secondary.

Pepsi has some pop

Among Wednesday's new deals, PepsiCo Inc.'s 3.75% notes due 2014 bubbled up to a spread of 172 bps bid, 168 bps offered. The Purchase, N.Y.-based soft drink and snack foods giant's $1 billion of new bonds had priced at 180 bps over.

Avon Products seen little changed

Avon Products Inc.'s new issues were seen pretty much around their pricing spreads. The New York-based cosmetics company's $500 million of 5.625% notes due 2014 was steady at 374 bps bid, 379 bps offered, versus a 375 bps pricing spread Wednesday, while its $350 million of 6.50% notes due 2019 were seen offered at 370 bps, with no bids, versus their 375 bps spread at pricing.

Nevada Power deal widens

While the other new deals all hung around their pricing spread or traded perhaps a few bps tighter, Nevada Power Co.'s deal was seen going the other way; the $500 million of bonds, which had priced Wednesday at 425 bps over, were seen Thursday at 440 bps bid, 438 bps offered.

Banks bounce on bailout hopes

The prospect of further government assistance for the banking industry, outlined by president Obama, gave the financial sector a boost; among the gainers were Morgan Stanley & Co.'s 6.625% notes due 2018, seen 25 bps tighter at the 465 bps level. Wells Fargo & Co.'s 5.625% notes due 2017 tightened by the same amount, to end at 330 bps over.

CDS measures tighten up

A trader who watches the credit-default swaps market said the cost of insuring holders of big-bank paper against a possible default was anywhere from 10 bps to 15 bps tighter on the day.

He saw brokers' bonds debt-protection costs unchanged to 25 bps tighter.

© 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.