PepsiCo, Credit Suisse, Prudential, Praxair sell notes, Nasdaq plans deal; Praxair tightens

By Andrea Heisinger and Cristal Cody

New York, Jan. 11 - Credit Suisse AG, New York branch, PepsiCo, Inc., Prudential Financial Inc. and Praxair, Inc. each sold notes on an otherwise unexciting Monday in the investment-grade market.

PepsiCo was the largest deal of the day at $4.25 billion in four tranches, and was the last to price. The size was increased by $250 million from a previously announced $4 billion.

Prudential Financial sold $1.25 billion of three- and five-year notes.

The second-largest deal of the day came from Switzerland's Credit Suisse, which priced $2.5 billion in 10-year notes through its New York branch.

Industrial gas maker Praxair sold an upsized $500 million of three-year notes. The sale was increased by $150 million from $350 million and priced at the tight end of price guidance.

Nasdaq OMX Group, Inc. announced a $700 million sale in two tranches early in the day, but syndicate desks working on the deal decided to take it overnight because it is the first bond sale for the company.

Pricing is expected Tuesday morning.

It is not expected to be a high-volume week, sources said. Those offerings that are expected to price will likely not be mega-deals.

While the secondary had plenty to chew on Monday, activity was off until late in the day, sources said.

In fact, earlier on Monday, a trader said that "today is being called the day of the living dead by some market participants. It seems like a holiday lull without the holiday."

According to a source, TradeWeb volume was "60% off the norm" despite about a substantial amount of new deals pricing Monday.

"It was a quiet day, especially considering the new issuance market," one trader said.

Treasuries were mixed on Monday.

The Treasury's auction of 10-year TIPS "went pretty good, especially for the size," a source said.

The yield on the Treasury's 10-year note tightened 1 bp to 3.82%. The yield on the 30-year bond eased 2 bps to 4.73%.

Still, despite participants' lack of enthusiasm about the level of activity, overall dollar volume rose about 18% to more than $12 billion compared to Friday, according to a source.

Advancing issues continued ahead of decliners.

Also, the CDX Series 13 North American high-grade index tightened 2 bps to a mid bid-asked spread level of 76 bps.

Meanwhile, secondary levels firmed slightly by late Monday on the new deals from Credit Suisse, Praxair and PepsiCo.

PepsiCo sells upsized $4.25 billion

PepsiCo priced a benchmark, upsized $4.25 billion of notes in four tranches late in the day, an informed source said.

The size was increased from $4 billion, with $250 million added to the tranche of floating-rate notes.

There was about $7.5 billion total on the books, the source said. The tranche of floaters was upsized because there were the orders to support it, and the company was "happy to get another $250 million done," he said.

The $1.25 billion of floaters due in 2011 priced at par to yield three-month Libor plus 3 bps.

A $1 billion tranche of 3.1% five-year notes sold at Treasuries plus 57 bps.

The $1 billion of 4.5% 10-year notes priced at a spread of Treasuries plus 73 bps.

The final tranche of $1 billion in 5.5% 30-year bonds priced at a spread of Treasuries plus 85 bps.

Interest was "fairly evenly split" among the four tranches, the informed source said, adding that it was "slightly weighted toward the 30-year."

Bank of America Merrill Lynch, Citigroup Global Markets and RBS Securities were active bookrunners.

Proceeds will be used to finance a portion of the purchase price of Pepsi Bottling Group, Inc. and PepsiAmericas, Inc.

The beverage and food company is based in Purchase, N.Y.

Prudential prices two tranches

Insurance and financial services company Prudential Financial priced $1.25 billion of notes in two tranches, a source close to the deal said.

A $500 million tranche of 2.75% three-year notes priced at a spread of Treasuries plus 130 bps.

The $750 million tranche of 3.875% five-year notes priced at a spread of Treasuries plus 135 bps.

Bookrunners for the deal from the Newark, N.J.-based issuer were Bank of America Merrill Lynch, Deutsche Bank Securities and UBS Investment Bank.

Credit Suisse sells 10-years

Credit Suisse AG, through its New York branch priced $2.5 billion in 5.4% 10-year subordinated notes at Treasuries plus 162 bps, with Credit Suisse Securities on the books.

Proceeds are being used for general corporate purposes, including refinancing existing debt outside Switzerland.

Praxair offers upsized $500 million

Industrial gas maker Praxair offered an upsized $500 million in 2.125% three-year unsecured notes at 65 bps over Treasuries, an informed source said.

The size was increased from an original $350 million, the source said, and was priced at the tight end of guidance for a spread in the 70 bps area.

There was a lot of interest in the sale, which the source called "phenomenal" due to the company being well known by investors.

Citigroup Global Markets, HSBC Securities and RBS Securities ran the books for the Danbury, Conn.-based issuer.

Proceeds are being used to repay short-term debt, including $500 million in floating-rate notes due on May 26, to fund share repurchases and for general corporate purposes.

Primary busy, dull

Despite a healthy amount of new deals coming to the market, there was little in the way of excitement for the day, market sources said.

The $4.25 billion PepsiCo sale in four parts was about the only thing to break the lull.

"Even that was kind of cut and dry," one market source said. "They did upsize, but not that much."

Some market participants were calling Monday "the day of the living dead," a trader said, adding that it "seems like a holiday lull without the holiday."

Another market source said that he "wouldn't call it boring," but added that there weren't many large sales expected for the week.

Deals already announced for the week include a two-tranche sale from Nasdaq OMX Group expected to price on Tuesday, and a split-rated sale from Brocade Communications Systems, Inc. expected to price on Thursday.

"It should be pretty quiet out there," a syndicate source said of his desk's calendar for the remainder of the week. "We have one or two small things."

Nasdaq plans first bond sale

Nasdaq OMX Group announced a $700 million sale of senior notes in two tranches, with pricing expected Tuesday morning, a source close to the sale said.

It was decided Monday morning that the sale would go overnight because it is a new credit and investors are not familiar with the name. The issuer has no outstanding bonds, and price talk has not been set for the sale in five-year and 10-year tranches.

Bank of America Merrill Lynch, J.P. Morgan Securities and Wells Fargo Securities are bookrunners.

Proceeds are going to repay amounts under a senior secured credit facility and to terminate an associated credit agreement.

The holding company for the Nasdaq Stock Market, Inc. and OMX AB is based in New York City.

Brocade plans split-rated deal

Brocade Communications Systems announced on Monday that it plans to sell $300 million of split-rated senior secured notes due in 2018.

The notes (Ba2/BBB-) are being sold under Rule 144A and Regulation S.

Cash at hand plus $150 million in proceeds will be used to retire $173 million in outstanding subordinated convertible notes originally issued by wholly-owned subsidiary McDATA Corp.

The deal is expected to price on Thursday, following a road show that began on Monday.

J.P. Morgan Securities and Goldman Sachs & Co. were tapped as bookrunners by the San Jose, Calif.-based developer and manufacturer of networking technologies.

Credit Suisse tightens

In trading, the 5.4% 10-year notes from Credit Suisse, which priced at Treasuries plus 162 bps on Monday, tightened "just a couple better" by the end of the day, according to a trader.

The notes were seen by one trader at 157 bps bid, 155 bps offered.

Another trader saw the notes at 158 bps bid, 153 bps offered.

PepsiCo five-years tighten

In other secondary activity, PepsiCo's $4 billion in bonds that priced Monday started to narrow.

"All are a couple tighter than initial guidance," a source said.

The five-year notes were seen at 52 bps over, 58 bps bid, according to a trader. The notes priced at 57 bps over Treasuries.

The 10-year notes, which priced at Treasuries plus 73 bps, were quoted at 76 bps bid, 70 bps offered.

The 30-year bonds were unchanged from a price of 85 bps over, according to a source.

Prudential seen at 125 bps

Some traders did not see much in secondary of Prudential Finance's five-year notes sold on Monday, sources said.

One source saw the three-year notes "offered at 125 bps" over.

Praxair firms

Praxair's 2.125% three-year notes tightened in the secondary after they priced earlier at Treasuries plus 65 bps. A trader "saw the bonds offered at 61 bps" over.

The deal was upped to $500 million from $350 million.

Meanwhile, in the industrial sector, the "overall tone is better today," a source said. "Maybe 1 to 2 basis points across the board."

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