American Honda, Petrofac see demand despite shutdown; bonds mixed in thin trading; IP&L weaker

By Cristal Cody and Aleesia Forni

Virginia Beach, Oct. 3 - Issuers continued to push deals into the high-grade primary market on Thursday despite the ongoing U.S. government shutdown.

Kicking off the day's activity, American Honda Finance Corp. sold $2.75 billion of new paper in three parts, according to an informed source.

The deal included $750 million of three-year floating-rate notes sold at par to yield Libor plus 50 basis points and $1 billion of 1.125% three-year notes sold at Treasuries plus 65 bps.

There was also $1 billion of 2.125% notes due 2018 priced at Treasuries plus 85 bps.

Petrofac Ltd. brought an upsized issue of $750 million of 3.4% notes due 2018 to Thursday's primary.

The deal priced with a spread of Treasuries plus 212.5 bps.

The primary also saw NiSource Finance Corp. bring a new deal, pricing $500 million of 5.65% notes due 2045 at 195 bps over Treasuries.

Magellan Midstream Partners, LP priced $300 million of 5.15% notes at Treasuries plus 145 bps.

In other primary action, Interstate Power & Light Co. priced $250 million of 4.7% senior notes with a spread of 100 bps over Treasuries.

Weingarten Realty Investors hit the market with $250 million of 4.45% senior notes due 2024 priced at 190 bps over Treasuries.

The North American Development Bank was also in Thursday's market with an offering of five-year notes, a market source said, though details were not available at press time.

One syndicate source said he does not expect any new deals to price on Friday, which would bring the week's total to roughly $9.95 billion.

This falls far short of earlier estimates of a week with up to $20 billion of new deals.

Bonds were mixed on Thursday in light trading on the third day of the partial government shutdown, market sources said.

"Volume's light," a trader said. "It feels more like a Friday than a Thursday."

The Markit CDX North American Investment Grade series 21 index eased 1 bps to a spread of 81 bps.

In the secondary market, both Weingarten Realty's notes due 2023 and Interstate Power & Light's 4.7% notes due 2043 traded about 1 bp wider, a trader said.

Magellan Midstream's notes due 2043 firmed 2 bps headed toward the session close, a trader said.

NiSource Finance's new 5.65% notes due 2045 were not seen in the afternoon secondary market.

American Honda prices tight

American Honda Finance priced $2.75 billion of notes (A1//) in three parts on Thursday, according to an informed source.

The deal included $750 million of three-year floating-rate notes sold at par to yield Libor plus 50 bps.

A $1 billion part of 1.125% three-year notes was sold at a spread of Treasuries plus 65 bps, or 99.652, to yield 1.244%.

Finally, $1 billion of 2.125% five-year notes priced at Treasuries plus 85 bps.

Pricing was at 99.614 to yield 2.207%.

The fixed-rate tranches sold at the tight end of talk.

Proceeds will be used for general corporate purposes.

Barclays, BofA Merrill Lynch and Deutsche Bank Securities Inc. were the joint bookrunners.

The U.S. arm of Honda Financial Services is based in Torrance, Calif.

Petrofac upsizes

In other primary news, Petrofac priced an upsized $750 million of 3.4% notes (Baa1/BBB+/) due 2018 with a spread of Treasuries plus 212.5 bps, according to an informed source.

Pricing was at 99.627 to yield 3.482%.

The notes priced on top of talk.

Proceeds will be used for general corporate purposes.

Barclays and J.P. Morgan Securities LLC were the joint bookrunners for the Rule 144A and Regulation S offering.

The oilfield services company is based on London.

NiSource sells $500 million

Also on Thursday, NiSource Financepriced $500 million of 5.65% notes (Baa3/BBB-/) due Feb. 1, 2045 with a spread of 195 bps over Treasuries, according to an FWP filed with the Securities and Exchange Commission.

The notes sold at 99.341 to yield 5.696%.

Citigroup Global Markets Inc., Mitsubishi UFJ Securities (USA), Inc. and Wells Fargo Securities LLC are the joint bookrunners.

Proceeds will be used to repay short-term borrowings under the company's commercial paper program and for general corporate purposes.

NiSource is an energy holding company based in Merrillville, Ind.

Magellan goes long

Magellan Midstream Partners sold $300 million of 5.15% senior notes due 2043 with a spread of Treasuries plus 145 bps, according to a market source and a filing with the SEC.

Pricing was at 99.56 to yield 5.179%.

The 30-year notes tightened to 143 bps bid, 140 bps offered in secondary trading, a trader said.

JPMorgan, BofA Merrill Lynch, RBC Capital Markets LLC and Citigroup Global Markets were the bookrunners.

Proceeds will be used to repay borrowings under the company's revolving credit facility and for general partnership purposes, including capital expenditures and investments in interest-bearing securities or accounts.

The energy transportation, storage and distribution company is based in Tulsa, Okla.

Weingarten prints $250 million

Meanwhile, Weingarten Realty Investors came to Thursday's market with a $250 million offering of 4.45% senior notes (Baa2/BBB/) due 2024 priced with a spread of Treasuries plus 190 bps, according to an informed source and an FWP filing with the SEC.

Pricing was at 99.583 to yield 4.499%.

In the secondary market, Weingarten's notes eased to 191 bps bid, 189 bps offered, a trader said.

Bookrunners were JPMorgan, RBC Capital Markets and Wells Fargo Securities.

Proceeds will be used to repay amounts outstanding under a $500 million unsecured revolving credit facility borrowed for general corporate purposes.

The real estate investment trust for shopping centers is based in Houston.

IP&L new issue

Interstate Power & Light sold $250 million of 4.7% senior debentures (A3/A-/) on Thursday with a spread of Treasuries plus 100 bps, according to an FWP filing with the SEC.

Pricing was at 99.378 to yield 4.739%.

Interstate Power & Light's 4.7% notes due 2043 eased to 101 bps bid, 99 bps offered in the secondary market, a source said.

Goldman Sachs & Co., Mitsubishi UFJ Securities and RBS Securities Inc. were the joint bookrunners.

The company plans to use proceeds to reduce outstanding capital under the company's receivables purchase and sale program, to reduce long-term debt and for general corporate purposes.

Interstate Power & Light is a Cedar Rapids, Iowa-based public utility.

Bank/brokerage CDS costs widen

Investment-grade bank and brokerage CDS costs ended mostly wider, according to a market source.

Bank of America Corp.'s CDS costs widened 3 bps to 103 bps bid, 107 bps offered. Citigroup Inc.'s CDS costs eased 1 bp to 93 bps bid, 96 bps offered. JPMorgan Chase & Co.'s CDS costs eased 1 bp to 89 bps bid, 92 bps offered. Wells Fargo & Co.'s CDS costs closed unchanged at 58 bps bid, 62 bps offered.

Merrill Lynch's CDS costs widened 3 bps to 97 bps bid, 107 bps offered. Morgan Stanley's CDS costs ended flat at 132 bps bid, 137 bps offered. Goldman Sachs Group, Inc.'s CDS costs eased 1 bp to 125 bps bid, 129 bps offered.

Paul Deckelman contributed to this review

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