PepsiCo, Woodside, Highmark, Westfield among names in primary; new bonds firm; Altria tighter

By Andrea Heisinger and Cristal Cody

New York, May 3 -Woodside Finance Ltd., Province of Ontario, Highmark, Inc., WEA Finance LLC and PepsiCo, Inc. sold bonds on Tuesday as more corporate names come into the market following earnings announcements. There was also overseas representation from two Australian issuers that tapped the market.

PepsiCo had the largest corporate sale of the day at $1.75 billion in two parts. The sale consisted of $1 billion of five-year notes and an added $750 million tranche of two-year floaters.

Woodside Finance sold an upsized $700 million of guaranteed 10-year notes at the tight end of guidance. The deal size was increased from $500 million.

Medical insurance company Highmark priced $600 million in two tranches. The sale was made up of $350 million of 10-year notes and $250 million of 30-year bonds. Both priced at the low end of guidance.

Australia-based WEA Finance priced $1 billion of guaranteed 10-year notes under Rule 144A. They priced at the tight end of guidance.

Ontario priced $3 billion of five-year global notes in line with talk.

In the preferred stock market, Kayne Anderson MLP Investment Co. announced a sale of mandatory redeemable preferred shares.

Nearly $8 billion of new corporate bonds priced in the high-grade market during the first two days of the week. This is around half of the projected $15 billion to $20 billion expected.

The conservative tone of the market was considered a positive following the volatility of recent weeks.

"I think today we had some upside on the comments from Obama," said one syndicate source.

Although Japan was out for a holiday, those in Europe were back in, perhaps contributing to the number of sales in the market for the day, the source said.

"It was one of the first days the market was back in," the source said.

The calendar for Wednesday is up in the air, although there are at least a couple of new trades expected.

"We have some momentum going," said a syndicate source, who expects to see some more corporates in the market this week.

In the secondary market, the new bonds from PepsiCo and Highmark firmed, and Woodside Finance's notes traded mostly flat, sources said.

Also in the secondary, Altria Group, Inc.'s new 10-year notes traded about 1 basis point to 2 bps better, a source said.

The series 14 Markit CDX North American Investment Grade index was unchanged at a spread of 89 bps, according to Markit Group Ltd.

"Very quiet. Most of investment grade is 2 to 4 basis points weaker," one trader said.

Overall investment-grade Trace volume was stronger on the day at more than $12 billion, according to a market source.

Treasuries ended with moderate gains, sending yields down 3 bps to 4 bps on the longer end of the curve, as stocks dropped and global worries kicked in. The 10-year benchmark note yield dropped 4 bps to 3.24%, and the 30-year bond yield fell 3 bps to 4.35%.

Woodside's upsized 10-years

Woodside Finance sold an upsized $700 million of 4.6% 10-year notes to yield Treasuries plus 135 bps, an informed source said.

The deal size was increased from $500 million. The notes priced at the tight end of guidance in the 140 bps area, plus or minus 5 bps.

"The issuer left room for modest growth, so we went for it," a source said of the $200 million upsizing.

There was about $3 billion on the books for the notes (Baa1/BBB+), which were sold under Rule 144A.

The bookrunners were Citigroup Global Markets Inc. and Morgan Stanley & Co., Inc.

Proceeds are being used for general corporate purposes.

The sale is guaranteed by parent company Woodside Petroleum Ltd.

Woodside Finance's notes were mostly flat in secondary trading, sources said.

The notes were seen at 135 bps bid, 132 bps offered by two traders.

The finance arm of the hydrocarbon exploration and production company is based in Perth, Australia.

PepsiCo prices $1.75 billion

PepsiCo priced $1.75 billion of senior notes (Aa3/A) in two parts after a tranche of floating-rate notes was added, an informed source said.

"We went out with the five-year and there was interest in a two-year [floater], and the company was receptive," the source said.

There was about $3.5 billion on the books for the sale including $1 billion for the floating-rate tranche and $2.5 billion for the five-year notes.

That $750 million of two-year floaters priced at par to yield Libor plus 8 bps.

The second part was the original $1 billion of 2.5% five-year notes priced at Treasuries plus 57 bps.

The bookrunners were Citigroup, Merrill Lynch and RBS Securities Inc.

Proceeds are being used for general corporate purposes.

In the gray markets, the notes due 2016 traded at 53 bps bid, 52 bps offered.

In secondary trading, a trader quoted the five-year notes at 56 bps bid, 50 bps offered.

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

Highmark's two tranches

Highmark priced $600 million of notes (Baa2/A/BBB+) in two tranches, a source away from the sale said.

The $350 million of 4.75% 10-year notes priced at a spread of Treasuries plus 155 bps. Guidance was in the 160 bps area, and the notes priced at the tight end of that.

A second tranche was $250 million of 6.125% 30-year bonds priced at 180 bps over Treasuries. The notes were talked in the 185 bps area and also sold at the tight end of that.

The notes feature a change-of-control put at 101. They were sold under Rule 144A.

The bookrunners were J.P. Morgan Securities LLC, Merrill Lynch and PNC Capital Markets LLC.

Proceeds will be used for general corporate purposes.

Highmark's notes firmed in the secondary market, a trader said.

The notes due 2021 were seen at 150 bpd bid, 146 bps offered. Another trader quoted the notes at 152 bps bid, 149 bps offered.

The bonds due 2041 traded stronger at 178 bps bid, 170 bps offered and later at 173 bps bid, 168 bps offered, the traders said.

The health insurance company is based in Pittsburgh.

WEA Finance's $1 billion

WEA Finance priced $1 billion of 4.625% 10-year notes to yield Treasuries plus 147 bps, according to a source who worked on the trade.

They sold at the tight end of guidance in the 150 bps area.

The notes (A2/A-) priced under Rule 144A. The sale is guaranteed by Westfield Holdings Ltd.

BNP Paribas Securities Corp., Citigroup, Merrill Lynch and RBS Securities were the bookrunners.

The retail property owner of shopping centers is based in Sydney, Australia.

Ontario's $3 billion

The Province of Ontario sold $3 billion of 2.3% five-year global notes (Aa1/AA-) to yield Treasuries plus 39 bps, or mid-swaps plus 20 bps, said a syndicate source.

They were priced in line with talk of mid-swaps plus 20 bps.

The bookrunners were Credit Suisse Securities, Goldman Sachs & Co., Merrill Lynch and RBC Capital Markets LLC.

The issuer is based in Toronto.

Kayne Anderson plans preferreds

Kayne Anderson MLP Investment is planning to issue series D mandatory redeemable preferred shares, according to a preliminary prospectus filed with the Securities and Exchange Commission.

A market source said he heard 2 million preferreds would be sold, with price talk in the 5% area. He noted that the deal would "most likely" price on Wednesday.

The preferreds have a $25 per share liquidation preference and are mandatorily redeemable on June 1, 2018. The company can also elect to call the shares early after the first anniversary of issuance.

Proceeds will be used to make investments in portfolio companies, to repay debt and for general corporate purposes.

Merrill Lynch, Citigroup, Wells Fargo Securities LLC and RBC Capital Markets are the joint bookrunners.

Kayne Anderson is a closed-end investment company with offices in Houston and Los Angeles.

Montpelier sells preferreds

Montpelier Re Holdings Ltd. priced an upsized $150 million, or 6 million shares, of 8.875% perpetual non-cumulative preferred stock, series A, (BB+/BB+) at par of $25, according to a market source.

Price talk was whispered in the 9% area Monday. The sale was doubled in size from an initial $75 million, or 3 million shares.

Merrill Lynch was the bookrunner.

Proceeds are being used to support the underwriting activities of insurance and reinsurance subsidiaries.

The insurance and reinsurance company is based in Pembroke, Bermuda.

Altria 1-2 bps better

The new notes from Altria were only slightly firmer in secondary trading, a source said Tuesday. The company sold $1.5 billion of 4.75% 10-year notes (Baa1/BBB/BBB+) to yield Treasuries plus 152 bps on Monday.

Altria's notes traded in the late afternoon at 151 bps bid, 149 bps offered.

The holding company for tobacco subsidiaries is based in Richmond, Va.

Stephanie Rotondo contributed to this review

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