Target prices following wider talk; Cameron, PNC also price; Assured Guaranty, Target tighten

By Cristal Cody and Aleesia Forni

Virginia Beach, June 17 – Target Corp. joined a number of smaller-sized deals in Tuesday’s primary, keeping up the pace of issuance in the high-grade bond market.

The session saw more than $4 billion of paper price, bringing the week’s total to more than $11 billion.

Target’s $2 billion two-part deal, the largest new issue that priced during the session, was sold in fixed-rate tranches due 2019 and 2024.

The deal was also expected to include five-year floaters, though that tranche was dropped following the deal’s announcement.

In addition, a market source noted that price talk widened around 10 basis points from earlier guidance.

The sale follows the company’s data breach late last year, in which the credit and debit card information of millions of customers was compromised.

The deal’s orderbook was around two times oversubscribed.

In other primary action, Assured Guaranty US Holdings Inc., Cameron International Corp., American Campus Communities Operating Partnership LP, UDR Inc., Entergy Louisiana LLC and PNC Bank all brought deals.

Details of PNC’s sale were unavailable at press time.

The World Bank (the International Bank for Reconstruction and Development) joined the forward calendar on Tuesday, announcing plans to price a two-part offering of notes.

New paper was mostly better in secondary trading, while high-grade bond spreads headed out unchanged to modestly tighter, according to market sources.

The Markit CDX North American Investment Grade series 22 index was unchanged at a spread of 60 bps.

Assured Guaranty’s 5% notes due 2024 tightened more than 15 bps in aftermarket trading, according to a trader.

Target’s two tranches of notes firmed 4 bps to 7 bps, a trader said.

The two-part deal from Cameron International traded 1 bp to 3 bps tighter in the secondary market, according to a trader.

Entergy Louisiana’s 5% bonds due 2044 headed out more than 7 bps better on the offered side, according to a trader.

UDR’s 3.75% notes due 2024 firmed 3 bps on the offered side in secondary trading.

American Campus’ new notes were not seen in aftermarket trading, a trader said.

Target prices wide of guidance

Target came to Tuesday’s primary with a $2 billion offering of senior notes (A2/A/A-) in tranches due 2019 and 2024 on Tuesday, according to a market source.

A $1 billion tranche of 2.3% five-year notes sold at 99.775 to yield 2.348%, or Treasuries plus 60 bps, while $1 billion of 3.5% 10-year bonds priced at 99.556 to yield 3.553%, or Treasuries plus 90 bps.

The notes sold in line with talk, which had widened around 10 bps from earlier guidance.

In aftermarket trading, Target’s 2.3% notes due 2019 tightened to 56 bps bid, 54 bps offered, a trader said.

The tranche of 3.5% notes due 2024 firmed to 83 bps bid, 81 bps offered in the secondary market.

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

Proceeds will be used for a tender offer and for general corporate purposes.

Target last sold bonds in a $1.5 billion sale of 4% 30-year notes, which sold on June 21, 2012 at a spread of Treasuries plus 145 bps.

The discount merchandise chain is based in Minneapolis.

Cameron two-parter

Cameron International sold $500 million of senior notes (Baa1/BBB+/) on Tuesday in tranches due 2017 and 2024, according to a market source and an FWP filed with the Securities and Exchange Commission.

A $250 million tranche of 1.4% three-year notes sold at 99.951 to yield 1.417%, or Treasuries plus 43 bps.

There was also $250 million of 3.7% 10-year notes priced with a spread of 108 bps over Treasuries. The notes sold at 99.769 to yield 3.728%.

Cameron International’s 1.4% notes due 2017 firmed to 40 bps bid, 38 bps offered in the secondary market, a trader said.

The company’s 3.7% notes due 2024 traded slightly better at 107 bps bid, 105 bps offered.

Citigroup Global Markets, Mitsubishi UFJ Securities (USA), Inc., RBS Securities Inc., JPMorgan and Credit Suisse Securities (USA) LLC were the joint bookrunners.

Proceeds will be used to repay the company’s $250 million of 1.6% senior notes due 2015. Remaining proceeds will be used for general corporate purposes.

The oil and gas pressure control and compression company is based in Houston.

Cameron International was last in the market with $750 million of senior notes in three tranches.

The sale, which priced on Dec. 11, included $250 million of 1.15% notes due 2016 priced at Treasuries plus 55 bps, $250 million of 4% notes due 2023 priced at Treasuries plus 120 bps and $250 million of 5.125% notes due 2043 sold at Treasuries plus 130 bps.

Assured Guaranty prices tight

Assured Guaranty also priced a $500 million offering of senior notes on Tuesday.

The 5% 10-year notes sold at the tight end of talk with a spread of Treasuries plus 237.5 bps, according to an informed source and an FWP filed with the SEC.

The notes (Baa2/A/) priced at 99.795 to yield 5.026%.

In the secondary market, Assured Guaranty’s 5% notes due 2024 tightened to 220 bps bid, 218 bps offered, a trader said.

The joint bookrunners were BofA Merrill Lynch and Wells Fargo Securities LLC.

Proceeds will be used for general corporate purposes, including the repurchase of common shares.

The notes will be guaranteed by Assured Guaranty Ltd.

Assured is a Hamilton, Bermuda, provider of credit enhancement for municipal finance, structured finance and mortgage markets.

American Campus upsizes

American Campus Communities was also in the market Tuesday with an upsized $400 million offering of 4.125% 10-year senior notes priced at Treasuries plus 150 bps, according to an FWP filing with the SEC.

The notes (Baa3/BBB-/) sold at 99.861 to yield 4.142%.

Bookrunners were BofA Merrill Lynch, Deutsche Bank Securities, JPMorgan, U.S. Bancorp Investments Inc. and Wells Fargo Securities.

Proceeds will be used to repay the outstanding balance of a revolving credit facility.

The notes are guaranteed by American Campus Communities Inc.

The real estate investment trust for student housing is based in Austin, Texas.

American Campus was in last in the U.S. bond market with an upsized $400 million sale of 3.75% 10-year senior notes priced at 187.5 bps over Treasuries on March 25, 2013.

UDR offering

UDR priced $300 million of 3.75% 10-year notes on Tuesday at the tight end of talk with a spread of Treasuries plus 115 bps, according to an informed source and a 424B5 filing with the SEC.

The notes priced at 99.652 to yield 3.792%.

UDR’s 3.75% notes due 2024 firmed to 112 bps offered in the secondary market, a trader said.

Citigroup Global Markets, JPMorgan and Wells Fargo Securities were the joint bookrunners.

Proceeds will be used to repay the company’s outstanding debt under its $900 million unsecured credit facility and for general corporate purposes.

The real estate investment trust for apartment communities is based in Highlands Ranch, Colo.

Entergy mortgage bonds

Entergy Louisiana sold on Tuesday $170 million of 5% first mortgage bonds (A2/A-/) due 2044 at par with a spread of Treasuries plus 157.6 bps, according to an FWP filing with the SEC.

Entergy Louisiana’s 5% bonds due 2044 headed out tighter at 150 bps offered in secondary trading, according to a trader.

JPMorgan, RBS Securities, KeyBanc Capital Markets Inc. and SMBC Nikko Securities America were the joint bookrunners.

Proceeds will be used to repay borrowings under the company’s $200 million credit facility expiring March 9, 2018 and for general corporate purposes.

Entergy Louisiana is a Jefferson, La.-based energy provider.

IBRD eyes sale

The International Bank for Reconstruction and Development is planning a two-part sale of two-year and seven-year global notes (Aaa/AAA/), an informed source said on Tuesday.

The bookrunners are Barclays, JPMorgan, Morgan Stanley & Co. LLC and Nomura.

The IBRD offers loans to developing countries and is based in Washington, D.C.

Bank/brokerage CDSs flat to lower

Investment-grade bank and brokerage CDS prices were unchanged to lower, according to a market source.

Bank of America Corp.’s CDS costs were flat at 61 bps bid, 65 bps offered. Citigroup Inc.’s CDS costs ended unchanged at 60 bps bid, 63 bps offered. JPMorgan Chase & Co.’s CDS costs firmed 1 bp to 48 bps bid, 52 bps offered. Wells Fargo & Co.’s CDS costs declined 1 bp to 35 bps bid, 38 bps offered.

Merrill Lynch’s CDS costs closed unchanged at 65 bps bid, 67 bps offered. Morgan Stanley’s CDS costs ended flat at 59 bps bid, 63 bps offered. Goldman Sachs Group, Inc.’s CDS costs firmed 1 bp to 65 bps bid, 68 bps offered.

Paul Deckelman contributed to this review.

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