Sonoco, PerkinElmer, Pernod Ricard sell on momentum; financials widen; new bonds firm

By Andrea Heisinger and Cristal Cody

New York, Oct. 20 - The high-grade bond market showed a bit more life on Thursday than it had earlier in the week with three new corporate deals pricing from a variety of sectors.

Sonoco Products Co. sold $500 million of notes in two tranches. The deal was divided evenly between 10-year notes and a reopening of 5.75% notes due 2040. Both were sold at the tight end of price guidance.

There was an upsized $500 million sale of 10-year paper from laboratory and diagnostics technology company PerkinElmer, Inc., which is using proceeds to partially fund an acquisition.

France's Pernod Ricard SA sold $1.5 billion of notes due 2022 in its first deal since being raised to investment grade from junk. The notes were priced at the tight end of guidance.

The primary got a boost from the previous day when JPMorgan Chase & Co. and Goldman Sachs Group Inc. successfully priced deals.

"That gave us a little momentum," a source who worked on one of the day's deals said. "It looked good this morning, so we went ahead."

Two of the day's issuers are infrequent or have never been rated high-grade before, and Sonoco hadn't priced debt for a year.

"Rates are still good so, if they need to, they're going to issue for M&A or whatever," a syndicate source said. "It's just if you're in earnings that you're shut out."

In the secondary market, the new bonds from Sonoco and PerkinElmer traded stronger and Pernod Ricard's notes came in more than 20 basis points, traders said.

JPMorgan Chase's paper reopened the previous day traded flat on Thursday.

Other bank and financial names widened with some paper "as much as 15 basis points wider," a trader said.

Morgan Stanley's notes due 2021 traded about 10 bps wider on the day.

Investment-grade bank and brokerage credit default swaps costs widened on Thursday, a source said. Bank CDS costs traded 5 bps to 14 bps wider. Brokerage CDS costs moved out 5 bps to 15 bps.

Overall trading volume dropped nearly 20% to about $12.5 billion.

"It's been quiet. Everything has kind of been all over the place, anywhere from a couple basis points tighter to a couple basis points wider," a trader said.

The Markit CDX Series 17 North American high-grade index ended the day unchanged at a spread of 134 bps.

Treasuries fell, sending yields up. The benchmark 10-year note yield rose 3 bps to 2.19%. On the long end, the 30-year bond yield closed up 4 bps to 3.22%.

"Everyone is just waiting to see how the macro picture pans out," a source said.

Sonoco sells two tranches

Sonoco Products priced $500 million of notes (Baa2/BBB+) in two tranches, an informed source said.

The $250 million of 4.375% 10-year paper was priced at a spread of Treasuries plus 225 bps. The notes were priced tighter than whispered guidance in the 235 bps area and at the tight end of revised talk in the 230 bps area, plus or minus 5 bps.

The company also reopened its tranche of 5.75% notes due 2040 to add $250 million. The notes were priced at Treasuries plus 245 bps.

The tranche was priced tighter than talk in the 255 bps area.

Total issuance is $600 million, including $350 million sold on Oct. 25, 2010 at Treasuries plus 190 bps.

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

Proceeds are being used partly to fund the acquisition of Tegrant Holding Corp. and for general corporate purposes.

There is a change-of-control put at 101 on the notes if the Tegrant acquisition is not done, or a related stock purchase agreement terminated by March 31, 2012.

In the secondary market, the notes due 2021 traded tighter at 217 bps bid, 213 bps offered, a trader said.

The bonds due 2040 firmed 7 bps to 238 bps bid, 228 bps offered, one trader said. Another trader saw the bonds at 238 bps bid, 234 bps offered.

The consumer and industrial packaging products manufacturer is based in Hartsville, S.C.

PerkinElmer upsizes

PerkinElmer sold an upsized $500 million of 5% 10-year senior notes (Baa3/BBB/BBB-) to yield Treasuries plus 290 bps, a market source said.

The size was increased from $400 million due to demand, the source said.

Active bookrunners were Bank of America Merrill Lynch and Barclays Capital Inc.

Proceeds will be used to fund, in part, the $600 million cash consideration for the acquisition of Caliper Life Sciences, Inc. along with certain costs associated with the transaction, or for general corporate purposes.

In secondary trading, the notes firmed 5 bps on the bid side to 285 bps bid, a trader said.

The laboratory and diagnostics technology company is based in Waltham, Mass.

Pernod's $1.5 billion

Pernod Ricard priced $1.5 billion of 4.45% notes due 2022 at a spread of 230 bps over Treasuries, a syndicate source said.

The notes were sold at the tight end of talk in the 235 bps area, plus or minus 5 bps.

The securities (Baa3/BBB-) were priced under Rule 144A and Regulation S.

Bookrunners were Barclays Capital Inc. and J.P. Morgan Securities LLC.

Proceeds will be used for general corporate purposes.

Pernod last sold $1 billion of 5.75% 10-year notes in the high-yield market on April 4 at a spread of Treasuries plus 245 bps.

Pernod Ricard's notes ended stronger in the secondary market firming in the afternoon to 207 bps bid, 203 bps offered, a trader said.

Another trader saw the notes tighter going out at 205 bps bid, 204 bps offered.

The distillery is based in Paris.

JPMorgan flat

JPMorgan Chase's reopened 4.35% notes due 2021 traded flat at 225 bps bid, 223 bps offered on Thursday, a trader said.

JPMorgan Chase sold $1.75 billion in an add-on to the 10-year notes (Aa3/A+/AA-) on Wednesday at Treasuries plus 225 bps.

The company first sold the issue on Aug. 3 in a $1.25 billion offering at 175 bps over Treasuries.

The financial services company is based in New York City.

Morgan Stanley weaker

Morgan Stanley's 5.5% notes due 2021 widened about 10 bps on Thursday to 425 bps bid, 415 bps offered, a trader said.

Morgan Stanley priced the notes on July 21 at 250 bps over Treasuries.

The investment bank is based in New York City.

Stephanie N. Rotondo contributed to this review

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