Norfolk, Lear, Celanese, AEP, Fannie Mae among high-grade issuers; Bristol-Myers eyed

By Cristal Cody

Tupelo, Miss., April 29 – High-grade issuers kicked the week off with strong deal activity on Monday.

Norfolk Southern Corp. priced $800 million of senior notes in three tranches.

Lear Corp. priced a $700 million two-part offering of senior notes.

Celanese US Holdings LLC sold $500 million of five-year senior notes.

AEP Texas Inc. priced $300 million of 30-year senior notes during the session.

Philip Morris International Inc. also was offering two tranches of fixed-rate notes.

In addition, Fannie Mae sold $2.5 billion of 18-month floating-rate notes based on the Secured Overnight Financing Rate in its fourth SOFR-linked deal.

“Today's transaction is an opportunity to maintain a SOFR curve out to 18 months,” Nadine Bates, senior vice president and treasurer of Fannie Mae, said in a news release. “We recently hit the one-year anniversary of the first publication of SOFR and, in a short amount of time, have seen significant growth in this market.”

Bates noted that it is “important to continue the momentum toward developing alternatives” to Libor, which is expected to be phased out by 2021.

“The only way to build further liquidity in the SOFR market is if market participants remain actively engaged,” Bates said.

Since the SOFR rate was first published in April 2018, there are now more than $80 billion of SOFR-linked securities in the marketplace, according to the release.

About $15 billion to $20 billion of investment-grade issuance is expected by market sources this week, compared to more than $6 billion of bonds priced last week.

For May, syndicate sources said they expect about $125 billion of new supply.

The total could be higher, depending on whether any mergers-and-acquisitions-related funding comes during the month, sources said.

A deal from Bristol-Myers Squibb Co. (A2/A+/A-) to help fund its acquisition of Celgene Corp. is being eyed to hit the market in May, one source said.

The offering is being targeted in the $10 billion to $15 billion area and may include dollar- and euro-denominated notes.

The biopharmaceutical companies announced in January the cash and stock transaction valued at about $74 billion will be funded through cash on hand and debt financing.

The merger is expected to close in the third quarter.

The Markit CDX North American Investment Grade 32 index closed the day modestly softer at a spread of 57 basis points.

Norfolk Southern prices

Norfolk Southern priced $800 million of senior notes (Baa1/BBB+/) in three tranches on Monday, according to an FWP filing with the Securities and Exchange Commission.

In the new issue, Norfolk Southern sold $400 million of 4.1% 30-year notes at 99.264 to yield 4.143%, or a spread of 118 bps over Treasuries.

Norfolk Southern also priced a $200 million add-on to its 3.8% senior notes due Aug. 1, 2028 at 103.299 to yield 3.371%, or a Treasuries plus 83 bps spread.

The company originally sold $400 million of the 3.8% notes on July 30, 2018 at 99.778 to yield 3.827% and with a spread of 85 bps over Treasuries. The total outstanding is now $600 million.

The company also priced a $200 million add-on to its 5.1% senior notes due Aug. 1, 2118 at 104.187 to yield 4.893%. The bonds priced with a Treasuries plus 193 bps spread.

Norfolk Southern first sold $600 million of the 5.1% notes in on July 30, 2018 at 99.806 to yield 5.11%, or a spread of 200 bps over Treasuries. The total outstanding is now $800 million.

Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC were the bookrunners.

Norfolk Southern is a Norfolk, Va.-based freight railroad company.

Lear raises $700 million

Lear priced $700 million of new senior notes (Baa2/BBB-/) in two parts on Monday, according to an FWP filing with the SEC.

The company priced $375 million of 4.25% 10-year notes at 99.691 to yield 4.288%, or a spread of Treasuries plus 175 bps.

Lear sold $325 million of 5.25% 30-year notes at 98.32 to yield 5.363%. The bonds priced with a Treasuries plus 240 bps spread.

Citigroup Global Markets, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, Barclays and BofA Merrill Lynch were the bookrunners.

Lear is a Southfield, Mich.-based manufacturer and distributor of automotive seating and electrical systems.

Celanese brings five-year notes

Celanese US Holdings priced $500 million of 3.5% five-year senior notes on Monday at 99.895 to yield 3.523%, according to an FWP filing with the SEC.

The notes priced at a spread of 120 bps over Treasuries.

Citigroup Global Markets, J.P. Morgan Securities, BofA Merrill Lynch, Deutsche Bank Securities Inc. and HSBC Securities were the bookrunners.

The notes are guaranteed by Celanese Corp. and certain other subsidiaries of the issuer.

Celanese is a Dallas-based chemicals company.

AEP Texas prints

AEP Texas priced $300 million of 4.15% 30-year senior notes on Monday at a spread of Treasuries plus 120 bps, according to an FWP filing with the SEC.

The notes (Baa1/A-/) priced at 99.864 to yield 4.158%.

Citigroup Global Markets, Scotia Capital (USA) Inc. and TD Securities (USA) LLC were the bookrunners.

AEP Texas is a Corpus Christi, Texas-based electric company.

Fannie Mae prices $2.5 billion

Fannie Mae sold $2.5 billion of 18-month floating-rate notes on Monday at the Secured Overnight Financing Rate plus 7.5 bps, according to a news release.

Barclays, Nomura Securities International, Inc. and Wells Fargo Securities, LLC were the bookrunners.

The majority of the notes, at 77.5%, was purchased by 2a7 investors, while 16.6% went to fund managers, 6.4% were purchased by commercial banks and 5.6% of the notes were bought by state and local investors, according to the release.

The offering is Fannie Mae’s fourth issuance of SOFR-linked securities.

Fannie Mae is a mortgage credit provider based in Washington, D.C.

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