Svenska Handelsbanken, Charles Schwab, Valero, New Brunswick price notes; Avista firms

By Cristal Cody

Tupelo, Miss., May 17 – Investment-grade supply remained light for a second session on Thursday.

Svenska Handelsbanken AB tapped the primary market with a $2.5 billion two-tranche offering of senior notes.

Charles Schwab Corp. sold $1.95 billion of senior notes in three parts.

Valero Energy Partners LP also priced $750 million of 10-year senior notes on Thursday.

In addition, the Province of New Brunswick sold $500 million of 3.625% 10-year global notes (Aa2/A+/) on top of guidance at a spread of mid-swaps plus 50 basis points.

The Markit CDX North American Investment Grade 30 index closed slightly weaker on the day at a spread of 61 bps.

Investment-grade supply slowed on Wednesday to $1.8 billion of reported volume following more than $25 billion of bond issuance in the first two sessions of the week.

In the meantime, several issuers are marketing bonds.

Vodafone Group plc, Eni SpA and ASB Bank Ltd. all are holding roadshows this week.

Petrofac Ltd.’s split-rated $300 million of five-year notes (Ba1/BBB-/BBB-) that were expected to price on Tuesday remains in the deal pipeline, a source said.

The notes were initially talked in the 6% area to yield a spread in the Treasuries plus 300 bps area.

About $30 billion to $35 billion of investment-grade bond volume was expected by syndicate sources for the week.

Svenska Handelsbanken prices

Svenska Handelsbanken priced $2.5 billion of senior notes (Aa2/AA-/AA) in two parts on Thursday, according to a market source.

The issuer sold $1.25 billion of three-year floating-rate notes at Libor plus 47 bps.

The $1.25 billion of 3.35% three-year fixed-rate notes priced at a Treasuries plus 65 bps spread.

BofA Merrill Lynch, Goldman Sachs & Co., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the bookrunners.

Svenska Handelsbanken is a Swedish bank based in Stockholm.

Schwab brings $1.95 billion

Charles Schwab priced $1.95 billion of senior notes (A2/A/A) in three tranches on Thursday, according to an FWP filing with the Securities and Exchange Commission.

The company priced $600 million of three-year floating-rate notes at par to yield a spread of Libor plus 32 bps.

The $600 million of 3.25% three-year fixed-rate notes priced at 99.997 to yield 3.251%. The notes were sold with a Treasuries plus 50 bps spread.

In the final tranche, Charles Schwab sold $750 million of 3.85% seven-year notes at 99.933 to yield 3.861%, or a Treasuries plus 80 bps spread.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs, J.P. Morgan Securities and BofA Merrill Lynch were the bookrunners.

Charles Schwab is a San Francisco-based company that provides wealth management, securities brokerage, banking, asset management, custody and financial advisory services.

Valero raises $750 million

Valero Energy Partners priced $750 million of 4.35% 10-year senior notes on Thursday at a spread of 125 bps over Treasuries, according to an FWP filing with the SEC.

The notes (Baa2/BBB/BBB) priced at 99.912 to yield 4.361%.

BofA Merrill Lynch, J.P. Morgan Securities, Morgan Stanley, Wells Fargo Securities LLC, Citigroup Global Markets, PNC Capital Markets LLC, RBC Capital Markets, LLC and TD Securities (USA) LLC were the bookrunners.

San Antonio-based Valero is an oil refinery owner and operator.

New issues mixed

In the secondary market, new issues priced this week were mixed, while existing bank and financial paper was mostly flat to modestly tighter, according to market sources on Thursday.

Avista Corp.’s $375 million of 4.35% first mortgage bonds due June 1, 2048 priced on Tuesday have tightened to the 103 bps area in secondary trading, a source said.

The Spokane, Wash.-based energy company sold the bonds (A2/A-/) at a spread of 115 bps over Treasuries.

Royal Bank of Scotland Group plc’s $1.75 billion of 4.892% fixed-to-floating-rate senior notes due May 18, 2029 (Baa3/BBB-/BBB+) priced Tuesday at par to yield a spread of Treasuries plus 182 bps have eased about 3 bps, a market source said.

Funds see big inflow

Investment-grade corporate bond funds saw a substantial $3.069 billion inflow in the week to May 16, according to fund-flow statistics generated by AMG Data Services Inc.

That followed an inflow of $0.804 billion the week before and $0.997 billion before that, as reported by the Arcata, Calif.-based unit of Thomson Reuters Corp’s Lipper analytics division.

The IG funds have now seen 10 straight inflows.

Apart from the Feb. 14 and Feb. 21 weeks, every week so far this year has seen positive flows and in fact before those two weeks in February investment-grade corporates saw a 21-week run of inflows dating back to mid-September, according to a Prospect News analysis of the data.

The latest gains raise the year-to-date inflow for the IG corporates to $42.90 billion from $39.83 billion, another new peak for the year so far.

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