Danaher sells four-part deal; companies hold off on selling; AT&T, PepsiCo, Best Buy tighten

By Andrea Heisinger and Cristal Cody

New York, June 20 - Danaher Corp. was in the still-shaky investment-grade market on Monday with a sale in four tranches.

The company was the only one to tap the debt market for the day, driven by the need for financing an acquisition.

Danaher priced $1.8 billion in four parts after the sale took much of the day to get done. A tranche of floating-rate notes was added prior to the launch.

A market source said he "wasn't surprised" at the length of time the offering took.

"There's so much volatility out there right now."

Deals aren't entirely off the table in the primary, but it's likely a company "isn't going to issue unless timing is a factor," as one source said.

Borrowing rates remain "decent," they added, but the volatility will likely keep all but the most desperate out.

Overall trading volume fell to less than $10 billion on Monday.

In secondary trading, bonds from AT&T Inc. and PepsiCo, Inc. firmed over the day, according to sources.

Best Buy Co.'s notes traded a "little bit better" on Monday, according to a trader.

Bank and financial paper was flat to slightly weaker.

"Banks are 1 to 2 basis points wider, but there's not a ton going on there," a trader said.

The Markit CDX Series 15 North American investment-grade index was flat at a spread of 100 bps, according to Markit Group Ltd.

Treasuries were mostly flat with yields up 1 basis point across the mid-range to longer part of the bond curve. The benchmark 10-year note yield rose 1 bp to 2.95%.

Danaher's $1.8 billion trade

Washington D.C.-based Danaher sold $1.8 billion of senior notes (A2/A+) in an increased four maturities, an informed source said late in the day.

The sale was initially announced in three parts, and a tranche of three-year floating-rate notes was added prior to the launch.

That $300 million of three-year floaters sold at par to yield Libor plus 25 bps.

A $400 million tranche of 1.3% three-year notes priced at a spread of Treasuries plus 65 bps.

The next part was $500 million of 2.3% five-year notes sold at Treasuries plus 80 bps.

The final tranche was $600 million of 3.9% 10-year notes priced at 95 bps over Treasuries.

Active bookrunners were Bank of America Merrill Lynch and Deutsche Bank Securities Inc.

Proceeds are being used to pay a portion of the purchase price for Beckman Coulter, Inc. and for general corporate purposes.

Two tranches of bonds were seen trading in the secondary market after pricing, according to traders.

One trader saw the notes due 2014 tighter at 62 bps bid. The tranche of notes due 2021 also firmed to 94 bps bid, 86 bps offered.

Danaher is a diversified medical, industrial and commercial products company.

AT&T tighter

In the secondary market, AT&T's 2.95% notes due 2016 tightened in trading over the day, according to bond sources. The notes were seen 101 bps over Treasuries early in the morning.

Late afternoon, the bonds traded going out at 97 bps bid, 92 bps offered, a trader said.

AT&T sold the five-year notes at a spread of Treasuries plus 97 bps on April 26.

The telecommunications company is based in Dallas.

PepsiCo firms

PepsiCo's 2.5% notes due 2016 also traded stronger, firming from about 65 bps over Treasuries early Monday to 59 bps bid, 54 bps offered "last I saw," a trader said late afternoon.

PepsiCo sold the five-year senior notes (Aa3/A) at Treasuries plus 57 bps on May 3.

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

Best Buy stronger

In other trading, Best Buy's 5.5% notes due 2021 firmed to 255 bps bid, 247 bps offered, a trader said. The notes traded Thursday at 260 bps bid, 250 bps offered.

Best Buy's bonds have been active in trading since the company reported first quarter earnings last week.

The electronics and entertainment retailer is based in Richfield, Minn.

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