Published on 9/14/2016 in the Prospect News Investment Grade Daily.
New Issue: Altria Group details $2 billion sale of 10-, 30-year guaranteed notes
By Devika Patel
Knoxville, Tenn., Sept. 14 – Altria Group Inc. offered details on a $2 billion offering of guaranteed senior notes (A3/A-/BBB+) in an FWP filing with the Securities and Exchange Commission. The deal priced in two tranches on Tuesday.
The company priced $500 million of 2.625% 10-year notes at 99.59 to yield 2.672% or Treasuries plus 95 basis points.
Altria sold $1.5 billion of 3.875% 30-year notes at 98.515 to yield 3.96% or a spread of 150 bps over Treasuries.
Both tranches priced on the tight side of guidance.
Deutsche Bank Securities Inc., Goldman Sachs & Co., Mizuho Securities USA Inc. and Morgan Stanley & Co. LLC were the lead bookrunners.
The notes will have a make-whole call and then are callable at par, according to a 424B5 filing with the Securities and Exchange Commission.
Proceeds from the deal will be used to repurchase the company’s 9.95% notes due 2038 and outstanding 10.2% notes due 2039 and for general corporate purposes.
The securities are guaranteed by Richmond, Va.-based parent Philip Morris USA Inc., a cigarette and smokeless tobacco product maker.
| Issuer: | Altria Group Inc.
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| Guarantor: | Philip Morris USA Inc.
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| Amount: | $2 billion
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| Description: | Senior notes
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| Bookrunners: | Deutsche Bank Securities Inc., Goldman Sachs & Co., Mizuho Securities USA Inc., Morgan Stanley & Co. LLC
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| Senior co-managers: | Barclays, Citigroup Global Markets Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, Santander Investment Securities Inc., Scotia Capital (USA) Inc., U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC
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| Co-managers: | Credit Suisse Securities (USA) LLC, Loop Capital Markets LLC and Williams Capital Group LP
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| Trade date: | Sept. 13
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| Settlement date: | Sept. 16
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| Ratings: | Moody’s: A3
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| S&P: A-
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| Fitch: BBB+
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| Distribution: | SEC registered
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| Ten-year notes
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| Amount: | $500 million
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| Maturity: | Sept. 16, 2026
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| Coupon: | 2.625%
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| Price: | 99.59
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| Yield: | 2.672%
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| Spread: | Treasuries plus 95 bps
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| Price guidance: | Treasuries plus 100 bps area, plus or minus 5 bps
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| Call: | Make-whole call at Treasuries plus 15 bps until June 16, 2026, then callable at par
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| Thirty-year notes
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| Amount: | $1.5 billion
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| Maturity: | Sept. 16, 2046
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| Coupon: | 3.875%
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| Price: | 98.515
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| Yield: | 3.96%
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| Spread: | Treasuries plus 150 bps
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| Price guidance: | Treasuries plus 155 bps area, plus or minus 5 bps
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| Call: | Make-whole call at Treasuries plus 25 bps until March 16, 2046, then callable at par
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