Ford, Xcel, Federal Realty, Piedmont price to start week; Xcel trades tighter; IBM bonds mixed

By Aleesia Forni and Andrea Heisinger

New York, May 6 - Led by a crossover trade from Ford Motor Credit Co. LLC, issuance was measured in the high-grade bond market on Monday.

The financing arm of automaker Ford priced $1.5 billion of three-year notes in two tranches. The sale included $500 million of three-year floating-rate notes and $1 billion of three-year notes.

Elsewhere in the market, Xcel Energy Inc. priced $450 million of three-year notes. The size of the trade was increased from $400 million, a source said, with roughly $1.2 billion of investor demand on the books.

Two sales came from real estate investment trusts.

Federal Realty Investment Trust priced $275 million of 10-year paper, and Piedmont Operating Partnership LP sold $350 million of senior notes due 2023.

The Piedmont sale was done via Rule 144A and Regulation S and is guaranteed by parent company Piedmont Office Realty Trust Inc. The size was increased from $250 million.

The previous week saw about $35 billion of straight high-grade bonds sold, while this week is expected to have between $20 billion and $25 billion pricing, sources said.

Supply is expected to ramp up on Tuesday and Wednesday, a market source said late in the session.

"I think almost everything was upsized [today], so investors are still hungry," the source said. "More industrials are expected."

The Markit CDX North American Investment Grade index was 1 bps tighter at a spread of 71 basis points.

Monday's high-grade secondary market kicked off on a positive note, according to one market source, who said the market could see "quite a busy week."

The secondary saw the day's new issue from Xcel Energy trade 3 bps tighter near the end of the session.

Meanwhile, Thursday's deal from International Business Machines Corp. traded mixed in the secondary market, while a trader quoted both tranches of Loews Corp.'s recent offering tighter.

Investment-grade bank and broker credit default swap costs were tighter on the day, according to a market source.

Bank of America Corp.'s CDS costs were 8 bps tighter at 97 bps bid, 102 bps offered. Citigroup Inc.'s CDS costs firmed 3 bps to 90 bps bid, 95 bps offered. JPMorgan Chase & Co.'s CDS costs were also 3 bps tighter at 79 bps bid, 82 bps offered. Wells Fargo & Co.'s CDS costs declined 3 bps to 63 bps bid, 66 bps offered.

Merrill Lynch's CDS costs were 7 bps tighter at 88 bps bid, 98 bps offered. Morgan Stanley's CDS costs declined 9 bps to 122 bps bid, 127 bps offered. Goldman Sachs Group, Inc.'s CDS costs were 2 bps tighter at 108 bps bid, 113 bps offered.

Ford's $1.5 billion

Ford Motor Credit was in the market with a $1.5 billion crossover sale of senior notes (Baa3/BB+/BBB-) in tranches with fixed rate and floating rates, according to FWP filings with the Securities and Exchange Commission.

There was $500 million of three-year floating-rate notes priced at par to yield Libor plus 125 bps.

A $1 billion tranche of 1.7% three-year notes sold at a spread of Treasuries plus 140 bps.

A market source said the fixed-rate tranche was initially talked in the high 140 bps to 150 bps area over Treasuries.

Bookrunners were BNP Paribas Securities Corp., Credit Agricole Securities (USA) Inc. and Goldman Sachs & Co.

Proceeds are being added to the general funds of Ford Credit and available for purchase of receivables, loans and use in connection with the retirement of debt.

The financing arm of automaker Ford Motor Co. last tapped the U.S. bond market with a $500 million sale of 18-month floating-rate notes on Feb. 28.

The company is based in Dearborn, Mich.

Xcel prices tight

Xcel Energy tapped the market for $450 million of 0.75% three-year notes (Baa1/BBB+/BBB+) at Treasuries plus 42 bps, an informed source said.

Initial price talk was in the low Treasuries plus 50 bps area, a source said at midday. The size was increased from $400 million.

A trader quoted the notes 3 bps better near the end of the session at 39 bps bid.

BofA Merrill Lynch, Barclays and Citigroup Global Markets Inc. were bookrunners.

Proceeds are being used to repay short-term debt and for other general corporate purposes, including funding a portion of the redemption price of 7.6% junior subordinated notes, series 2068, on May 31.

Xcel was last in the market with a $250 million offering of 30-year bonds on Sept. 7, 2011.

The public utility holding company is based in Minneapolis.

Federal Realty's 10-years

Federal Realty Investment Trust priced a slightly upsized $275 million of 2.75% 10-year senior notes (Baa1/BBB+/A-) during the day's session to yield Treasuries plus 112 bps, an informed source said.

Whispered talk at midday was in the Treasuries plus 120 bps to 125 bps range, the source said.

BofA Merrill Lynch and Wells Fargo Securities LLC were bookrunners.

Proceeds are being used to redeem outstanding 5.4% notes due 2013, to pay off an outstanding balance under a revolving credit facility and for general corporate purposes including funding a potential acquisition or a redevelopment pipeline.

Federal Realty last tapped the U.S. bond market in a $250 million sale of 3% 10-year notes priced at 170 bps over Treasuries on July 16, 2012.

The real estate investment trust for retail and mixed-use buildings is based in Rockville, Md.

Piedmont's private deal

Piedmont Operating Partnership sold an upsized $350 million of guaranteed 3.4% 10-year senior notes (Baa2/BBB/) in the market at 99.601, according to a press release.

The size of the trade was increased from $250 million, the source said.

The sale was done under Rule 144A and Regulation S.

Bookrunners were J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and U.S. Bancorp Investments Inc.

The notes are guaranteed by Piedmont Office Realty Trust Inc.

Proceeds are being used to repay short-term debt recently incurred to fund two property acquisitions and for general corporate purposes.

The real estate investment trust for properties in the 10 largest U.S. markets is based in Atlanta.

IBM mixed in secondary

In other trading activity, a source at another desk saw the recent deal from International Business Machines trading mixed compared to levels seen late Friday.

The company sold the $2.25 billion of bonds in two maturities on Thursday.

The $1 billion of 0.45% three-year notes, which priced at a spread of Treasuries plus 25 bps, traded 2 bps wider at 25 bps bid, 20 bps offered.

The $1.25 billion tranche of 1.625% seven-year notes was quoted 1 bp better at 63 bps bid, 56 bps offered early during Monday's trading.

IBM sold the notes at a spread of 67 bps over Treasuries.

The information technology and computer company is based in Armonk, N.Y.

Loews trades tighter

In another recent deal, the $500 million tranche of 2.625% 10-year notes from Loews, which sold at a spread of Treasuries plus 105 bps on Thursday, traded 2 bps better on Monday.

A trader quoted the notes at 100 bps bid, 95 bps offered during the day's trading.

Meanwhile, the $500 million of 4.125% 30-year bonds traded 1 bp better at 131 bps bid, 128 bps offered.

The company sold the notes at a spread of 135 bps over Treasuries.

Loews is a New York City-based holding company for diversified subsidiaries, including insurance, hotels, oil drilling and pipeline transportation.

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