Investment-grade primary sees 'surprise rush' of new deals; secondary focuses on new issues

By Aleesia Forni

Virginia Beach, Va., Aug. 8 - In what one source called a "surprise rush" of deals, the high-grade bond market saw issuers bring roughly $6.5 billion of new paper to the primary on Thursday.

Prologis LP, Procter & Gamble Co. and Boston Scientific Corp. all sold billion dollar-deals at the tight end of their respecting price talk during the session.

The day's activity was led by a two-part $1.25 billion offering of notes from Prologis, selling 5.5- and 10-year tranches of notes.

A $400 million tranche of 2.75% notes due 2019 sold at Treasuries plus 140 basis points, while the $850 million of 4.25% notes due 2023 priced with a spread of 170 bps over Treasuries.

The session also saw Boston Scientific sell a $1.05 billion issue of senior notes in two tranches, according to a market source and an FWP filing with the Securities and Exchange Commission.

Both tranches priced tight of original talk, the source noted.

The company priced $600 million of 2.65% notes due Oct. 1, 2018 at a spread of Treasuries plus 130 bps.

The notes were talked in the 140 bps over Treasuries area.

The company also sold $450 million of notes due 2023 with a spread of Treasuries plus 155 bps.

Procter & Gamble came to market with a $1 billion offering on Thursday.

The company priced 3.1% 10-year notes at a spread of Treasuries plus 60 bps, a syndicate source said.

There was also a $1.5 billion 10-year offering from Wells Fargo & Co. that priced at a spread of Treasuries plus 160 bps during the session. Details were not available at press time.

In other primary action, Plains All American Pipeline, LP and PAA Finance Corp. sold an upsized $700 million of 3.85% 10-year senior notes with a spread of Treasuries plus 130 bps, a market source said.

London-based Willis Group also hit the primary on Thursday, guaranteeing an upsized $525 million two-tranche offering of 10- and 30-year notes issued by Trinity Acquisition plc.

A $500 million offering of 4.8% senior notes from Norfolk Southern Corp. was also sold at the tight end of price talk during Thursday's session.

The notes were sold with a spread of Treasuries plus 120 bps, according to a filing with the SEC.

New issues mostly tighter

In secondary activity, Procter & Gamble's notes due 2023 traded at 60 bps bid, 55 bps offered going out on Thursday, a trader said.

"If you want to buy it, it's a little more expensive," the trader said.

Boston Scientific's new notes due 2018 were quoted in the late afternoon at 123 bps offered.

The company's new tranche of notes due 2023 were offered at 149 bps going out.

Plains All American's 3.85% notes due 2023 were quiet in the secondary market after the notes priced, according to a trader.

In other new issue secondary activity, Norfolk Southern's 4.8% senior notes due 2043 traded at 117 bps offered, a source said.

High-grade bonds performed mostly better over the day, with trading focused on new issues, according to market sources.

"Spreads are a basis point or 2 tighter on the day," a trader said.

"It's slow," another source said. "Bonds are a little bit tighter."

Bonds priced in Wednesday's session from Shell International Finance BV, Macquarie Bank Ltd. and Moody's Corp. were mostly better, with Macquarie Bank's notes more than 10 bps tighter, traders said.

The Markit CDX Series 20 North American Investment Grade index was 1 bp tighter at a spread of 75 bps.

Prologis prices tight

Thursday's primary saw Prologis price $1.25 billion of notes in 5.5- and 10-year tranches, an informed source said.

Both tranches were sold at the tight end of talk.

A $400 million tranche of 2.75% notes due Feb. 15, 2019 sold at Treasuries plus 140 bps. The notes priced at 99.965 to yield 2.757%.

The company also priced $850 million of 4.25% 10-year notes with a spread of 170 bps over Treasuries. The notes priced at 99.742 to yield 4.282%.

The company intends to use the proceeds from the sale to repay borrowings under its global line and to fund the cash purchase of senior notes that are tendered under offers to purchase such notes, which began on Thursday.

The notes are guaranteed by Prologis Inc.

Citigroup Global Markets Inc., Goldman Sachs & Co., BofA Merrill Lynch and J.P. Morgan Securities LLC are the joint bookrunners.

Denver-based Prologis is an owner, operator and developer of industrial real estate.

Boston Scientific two-parter

Another of Thursday's billion dollar-deals came from Boston Scientific.

The company priced a $1.05 billion issue of senior notes in two tranches on Thursday, according to a market source and a FWP filing with the SEC.

Both tranches priced tight of original talk, the source noted.

The company priced $600 million of 2.65% notes due Oct. 1, 2018 at a spread of Treasuries plus 130 bps.

The notes were talked in the 140 bps over Treasuries area.

Boston Scientific sold the five-year tranche at 99.954 to yield 2.659%.

The company also sold $450 million of notes due 2023 with a spread of Treasuries plus 155 bps or 99.936 to yield 4.123%.

The notes were talked in the area of Treasuries plus 165 bps.

The company plans to use proceeds from the offering to redeem its 5.45% notes due June 15, 2014 and 4.5% notes due Jan. 15, 2015.

Remaining proceeds will be used for general corporate purposes.

Barclays, BofA Merrill Lynch, JPMorgan, BNP Paribas Securities Corp., Citigroup, Deutsche Bank Securities Inc., RBC Capital Markets, LLC, RBS Securities Inc. and UBS Securities LLC were the joint bookrunners.

The medical device maker is based in Natick, Mass.

P&G prices tight

Meanwhile, Procter & Gamble priced $1 billion of 3.1% 10-year notes at a spread of Treasuries plus 60 bps, according to a syndicate source and an FWP filing with the SEC.

The notes priced at the tight end of the Treasuries plus 65 bps area talk.

Procter & Gamble sold the notes at 99.353 to yield 3.176%.

Citigroup, Goldman Sachs and JPMorgan were the joint bookrunners.

Proceeds will be used for general corporate purposes.

Procter & Gamble is a Cincinnati-based consumer products company.

Plains upsizes

In another new deal, Plains All American Pipeline sold an upsized $700 million of 3.85% 10-year senior notes on Thursday with a spread of Treasuries plus 130 bps, according to a market source and an FWP filing with the SEC.

Plains sold the notes at the tight end of talk, which was set in the area of Treasuries plus 135 bps.

The notes priced at 99.792 to yield 3.874%.

Proceeds will be used to repay outstanding borrowings under the company's credit facilities and for general partnership purposes.

JPMorgan, BofA Merrill Lynch, DNB Markets, Inc. and Mizuho Securities USA Inc. acted as the joint bookrunners.

The oil and natural gas transportation, production and storage company is based Houston.

Willis sells in two parts

Willis Group priced on Thursday an upsized $525 million two-tranche offering of 10- and 30-year notes, according to a market source.

The company sold $250 million of 4.625% 10-year notes at a spread of 212.bps over Treasuries. The notes priced at 99.439 to yield 4.696%.

The notes were talked in the Treasuries plus 225 bps area.

There was also a $275 million tranche of 30-year bonds priced with a spread of Treasuries plus 250 bps. The bonds sold at 99.605 to yield 6.154%.

The bonds were talked in the Treasuries plus 262.5 bps area.

The notes were issued by Trinity Acquisition plc and guaranteed by Willis Group Holdings plc, Willis Netherlands Holdings BV, Willis Investment UK Holdings Ltd., TA I Ltd., Willis Group Ltd. and Willis North America Inc.

Barclays, Morgan Stanley & Co. LLC, JPMorgan, Lloyds Securities, SunTrust Robinson Humphrey Inc. and Wells Fargo Securities LLC were the joint bookrunners for the deal.

Proceeds, together with cash on hand, will be used to purchase Willis North America notes through a tender offer. Remaining proceeds will be used for general corporate purposes.

Willis Group is a risk adviser and insurance and reinsurance broker based in London.

Norfolk sells $500 million

The session also saw Norfolk Southern price a $500 million offering of 4.8% senior notes (Baa1/BBB+) due Aug. 15, 2043 at Treasuries plus 120 bps, according to a FWP filing with the SEC.

The notes priced at the tight end of what a syndicate source said earlier during the session was talk in the area of 125 bps over Treasuries.

BofA Merrill Lynch, JPMorgan and Morgan Stanley were the joint bookrunners.

The company plans to use proceeds for general corporate purposes.

Norfolk Southern is a railroad operator based in Norfolk, Va.

Shell mixed

Shell International Finance's five-year notes and long bonds sold on Wednesday traded better in the secondary market on Thursday, while the tranche of notes due 2023 stayed 2 bps wider, according to market sources.

Shell's 1.9% notes due 2018 came in 1 bp to 54 bps bid, 51 bps offered, a trader said. The tranche priced in a $1.5 billion offering at Treasuries plus 55 bps.

The 3.4% notes due 2023 stayed wider in Thursday's session at 85 bps bid, a trader said. The notes were seen at 85 bps bid, 83 bps offered in secondary trading after Shell sold $1 billion of the 10-year notes at Treasuries plus 83 bps.

Shell's 4.55% bonds due 2043, priced in a $1.25 billion tranche at Treasuries plus 92 bps, tightened to 86 bps bid, 84 bps offered early Thursday and later traded at 86 bps bid, 85 bps offered, according to traders.

Shell, an oil and gas company based in the Hague, the Netherlands, sold a total of $3.75 billion of bonds (Aa1/AA/) in the three-tranche offering on Wednesday.

Macquarie tightens

In other trading, Macquarie Bank's new 2% notes due 2016 (A2/A/A) tightened 11 bps to 132 bpd bid, 131 bps offered by early Thursday and later were seen at 134 bps bid, sources said.

The Sydney, Australia-based banking unit of Macquarie Group Ltd. sold $1 billion of the three-year notes at Treasuries plus 145 bps in Wednesday's session.

Moody's 1 bp better

Moody's 4.875% notes due 2024 traded 1 bp tighter early Thursday at 234 bps bid, 231 bps offered, a source said.

The New York -based credit ratings and research agency sold $500 million of the notes (/BBB+/) at Treasuries plus 235 bps.

Bank/brokerage CDS costs lower

Investment-grade bank and brokerage credit default swap costs mostly declined on Thursday, a market source said.

Bank of America Corp.'s CDS costs fell 2 bps to 105 bps bid, 108 bps offered. Citigroup Inc.'s CDS costs dropped 3 bps to 98 bps bid, 101 bps offered. JPMorgan Chase & Co.'s CDS costs rose 3 bps to 79 bps bid, 30 bps offered. Wells Fargo & Co.'s CDS costs declined 2 bps to 61 bps bid, 65 bps offered.

Merrill Lynch's CDS costs fell 1 bp to 103 bps bid, 110 bps offered. Morgan Stanley's CDS costs were 3 bps lower at 133 bps bid, 137 bps offered. Goldman Sachs Group, Inc.'s CDS costs ended flat at 126 bps bid, 130 bps offered.

Paul Deckelman contributed to this review

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