Starbucks, Williams, Phillips 66, Burlington, Cargill among issuers; strong supply forecast

By Cristal Cody

Tupelo, Miss., Feb. 26 – The high-grade bond market kicked the week off with strong issuance ahead of what is expected to be an active week of deal supply, according to market sources on Monday.

Issuers including Starbucks Corp., Williams Partners LP, Duke Energy Carolinas, LLC, CenterPoint Energy Houston Electric, LLC, Stryker Corp., Phillips 66, Burlington Northern Santa Fe, LLC, Florida Power & Light Co., Enbridge Inc., Cargill Inc. and the Bank of England tapped the primary market during the session.

Deal volume is expected in the $25 billion to $30 billion range over the week with the potential for more, sources report.

Looking ahead, March high-grade supply volume “should increase nearly 70% increase from February,” according to a BofA Merrill Lynch research note released on Monday.

BofA Merrill Lynch analysts forecast $130 billion of supply with a range of $110 billion to $150 billion over the month.

“The risk to the $130 [billion] middle of that range stems from a number of larger M&A deals that may or may not go in March, depending on regulatory approvals and other developments,” the analysts said.

Elsewhere on Monday, credit spreads tightened. The Markit CDX North American Investment Grade 29 index firmed about 1.5 basis points to a spread of 54 bps.

Starbucks prices $1.6 billion

Starbucks priced $1.6 billion of senior notes (A3/A-/A-) in two tranches on Monday, according to an FWP filing with the Securities and Exchange Commission.

The company sold $1 billion of 3.1% five-year notes at 99.968 to yield 3.107%. The notes priced with a spread of 50 bps over Treasuries.

Starbucks priced $600 million of 3.5% 10-year notes at 99.757 to yield 3.529%, or a Treasuries plus 67 bps spread.

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

Starbucks is a Seattle-based specialty coffee retailer.

Phillips 66 brings three tranches

Phillips 66 priced a $1.5 billion three-part offering of guaranteed senior notes (A3/BBB+/) on Monday, according to an FWP filing with the SEC.

The company sold $500 million of three-year floating-rate notes at par to yield Libor plus 60 bps.

Phillips 66 priced $800 million of 3.9% 10-year notes at 99.90 to yield 3.912%, or a spread of Treasuries plus 105 bps.

In the final tranche, the company priced a $200 million add-on to its 4.875% bonds due Nov. 15, 2044 at 104.688 to yield 4.566%, or a spread of Treasuries plus 140 bps.

The company originally sold $1.5 billion of the 4.875% notes on Nov. 12, 2014 at 98.099 to yield 4.998% and a spread of 190 bps over Treasuries. The total outstanding now is $1.7 billion.

Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Goldman Sachs & Co., Mizuho Securities USA Inc., Scotia Capital (USA) Inc., BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC, MUFG, TD Securities (USA) LLC, BofA Merrill Lynch, Pierce, Barclays, J.P. Morgan Securities and RBC Capital Markets, LLC were the bookrunners.

The notes are guaranteed by Phillips 66 Co.

Phillips 66 is a Houston-based energy manufacturing and logistics company with midstream, chemicals, refining, and marketing and specialties businesses.

Duke prints $1 billion

Duke Energy Carolinas priced $1 billion of first and refunding mortgage bonds (Aa2/A/) in two tranches on Monday, according to an FWP filing with the SEC.

The company placed $500 million of 3.05% five-year bonds at 99.883 to yield 3.075%, or a spread of Treasuries plus 47 bps.

Duke Energy Carolinas sold $500 million of 3.95% 30-year bonds with a Treasuries plus 82 bps spread. The bonds priced at 99.527 to yield 3.977%.

The bookrunners were Credit Suisse Securities (USA) LLC, Goldman Sachs., Mizuho Securities USA Inc., MUFG and U.S. Bancorp Investments Inc.

The Charlotte, N.C.-based company generates, transmits, distributes and sells electricity and is a wholly owned subsidiary of Duke Energy Corp.

Florida Power sells $1 billion

Florida Power & Light sold $1 billion of 3.95% 30-year first mortgage bonds (Aa2/A/AA-) on Monday at 99.46 to yield 3.981%, according to an FWP filed with the SEC.

The bonds priced with a spread of 82 bps over Treasuries.

Barclays, Goldman Sachs, MUFG, Scotia Capital (USA) Inc., Wells Fargo Securities, BNY Capital Markets Inc., Credit Agricole CIB, Mizuho Securities USA Inc., SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey Inc., TD Securities, U.S. Bancorp Investments Inc. and UBS Securities LLC were the bookrunners.

Florida Power & Light is a Juno Beach, Fla.-based electric utility.

Enbridge sells fixed/floaters

Enbridge sold $850 million of split-rated fixed-to-floating rate subordinated notes due March 1, 2078 on Monday at par to yield 6.25%, according to an FWP filing with the SEC.

The series 2018-A notes (Ba2/BBB-/BBB-) will convert to a floating rate of Libor plus 364.1 bps beginning March 1, 2028 and every following March 1, June 1, Sept. 1 and Dec. 1 until March 1, 2048 when the notes will convert to Libor plus 439.1 bps on March 1, 2048 and every interest reset date until the final maturity.

Credit Suisse Securities (USA) LLC, Citigroup Global Markets and Deutsche Bank Securities were the bookrunners.

The notes will be converted automatically into series 2017-A preference shares upon an automatic conversion event, which occurs if the company files for bankruptcy.

The oil and gas distribution and transportation company is based in Calgary, Alta.

Williams places bonds

Williams Partners priced $800 million of 4.85% 30-year senior notes (Baa3/BBB/BBB-) on Monday at a spread of 172 bps over Treasuries, according to a market source and an FWP filing with the SEC.

The issue was talked to price in the Treasuries plus 175 bps area.

The notes priced at 99.515 to yield 4.881%.

Citigroup Global Markets, Morgan Stanley, MUFG, BBVA Securities Inc., Credit Suisse Securities (USA) LLC and PNC Capital Markets LLC were the bookrunners.

Williams Partners is an energy infrastructure master limited partnership based in Tulsa, Okla.

Burlington Northern prices

Burlington Northern Santa Fe (A3/A/) sold $750 million of 4.05% long 30-year senior debentures (A3/A/) on Monday at 99.745 to yield 4.065%, or a spread of 90 bps over Treasuries, according to a market source and an FWP filing with the SEC.

The debentures due June 15, 2048 were talked to price in the Treasuries plus 90 bps to 95 bps area.

Citigroup Global Markets, Goldman Sachs, BofA Merrill Lynch, J.P. Morgan Securities and Wells Fargo Securities were the bookrunners.

The holding company for railroad transportation subsidiaries is based in Fort Worth, Texas.

Stryker sells 10-year notes

Stryker priced $600 million of 3.65% 10-year notes at 99.958 to yield 3.655% on Monday, according to an FWP filing with the SEC.

The notes (Baa1/A/) priced with a spread of 80 bps over Treasuries.

Goldman Sachs, Morgan Stanley and Wells Fargo Securities were the bookrunners.

Stryker is a Kalamazoo, Mich.-based medical technology company.

Cargill brings notes

Cargill sold $500 million of 3.25% five-year senior notes (A2/A/A) on Monday at a spread of Treasuries plus 67 bps, a market source said.

The notes priced on the tight side of guidance in the Treasuries plus 70 bps area.

BNP Paribas Securities, Deutsche Bank Securities and J.P. Morgan Securities were the bookrunners.

Cargill is a Minneapolis, Minn.-based food and agriculture company.

CenterPoint in primary

CenterPoint Energy Resources sold $400 million of 3.95% 30-year senior notes on Monday at a spread of 82 bps over Treasuries, according to an FWP filing with the SEC.

The notes (A1/A/A+) priced at 99.564 to yield 3.975%.

Mizuho Securities USA Inc., RBC Capital Markets, Wells Fargo Securities, Regions Securities LLC, TD Securities and U.S. Bancorp Investments Inc. were the bookrunners.

CenterPoint is a Houston-based energy delivery company.

Bank of England sells $2 billion

In the SSA space on Monday, the Bank of England priced $2 billion of 2.5% three-year notes (Aa2/AA/AA) on top of talk at a spread of mid-swaps flat, or Treasuries plus 23.85 bps, according to a market source.

The Rule 144A and Regulation S deal had an order book of more than $2.2 billion.

Barclays, BNP Paribas Securities, Citigroup Global Markets and J.P. Morgan Securities were the bookrunners.

London-based Bank of England is the central bank of the United Kingdom.

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