Aflac, AMB, PNC among deal flow; Newell Rubbermaid wider in secondary; industrials mixed

By Andrea Heisinger and Cristal Cody

New York, Aug. 4 - Aflac Inc., AMB Property LP, PNC Funding Corp., Magellan Midstream Partners LP, Intesa Sanpaolo SpA and Northern States Power Co. sold bonds on Wednesday as the pace of issuance slowed in the high-grade market but remained steady.

The day's deals were significantly smaller than what was priced on Monday and Tuesday. Those days had several sales topping $1 billion, while Wednesday had none of that size.

Holding company for insurance subsidiaries Aflac priced $750 million in two tranches late in the day.

PNC Funding also sold $750 million after it upsized its deal from $500 million of 10-year notes.

AMB priced its upsized $300 million of seven-year notes around the same time that Magellan Midstream sold $300 million of notes due 2021.

Electricity and natural gas provider Northern States Power priced $500 million of notes in two tranches.

The deal from Italy's Intesa was announced late in the day and priced well after the market close. The financial services company sold $1 billion of five-year notes.

Volume has not decreased much from the rush of deals Monday, but while that day saw $11.5 billion of bonds priced, Wednesday had a much smaller $3.6 billion, or about half the amount priced on Tuesday.

"I think we still have stuff in the pipeline, but we'll see," a source said at the end of the day, after commenting that desks have been "slammed" all week.

"Basically, I think everyone might see a break [in issues] coming."

In the secondary market, one new tranche from Northern States Power was slightly tighter on the bid side, while a tranche that Newell Rubbermaid Inc. priced on Monday widened on aggressive pricing, a source said.

Trading was mixed in the industrial sector, with bonds from Transocean Ltd. up 2 basis points as the company reported that second-quarter income fell 11% to $715 million, according to a source.

The CDX Series 14 North American investment-grade index was unchanged at a spread of 100 bps, according to a source.

Overall investment-grade Trace volume rose 1% to just under $13 billion, a source said.

Treasuries fell and sent yields up on better economic data and a surge in stocks.

The yield on the 10-year note rose 4% to 2.95%.

The yield on the 30-year bond rose 3 bps to 4.08%.

Aflac sells tranches late

Aflac priced $750 million of senior unsecured notes (A2/A-) in two tranches late in the afternoon, a syndicate source away from the sale said.

A $300 million tranche of 3.45% five-year notes sold at a spread of 185 bps over Treasuries. The notes were priced lower than guidance in the 200 bps area, the source said.

The second tranche was $450 million of 6.45% 30-year bonds priced at Treasuries plus 240 bps. This tranche also priced tighter than talk in the 250 bps area.

Bookrunners were Goldman Sachs & Co. Inc. and J.P. Morgan Securities.

Proceeds are being used to repay the parent company's 1.52% Uridashi notes and variable interest rate Uridashi notes, both due in September 2011. They will also be used to repurchase common stock and for general corporate purposes.

The holding company for health and life insurance subsidiaries last sold bonds in a $400 million deal of 30-years on Dec. 14, 2009. Those bonds were priced at a comparable 250 bps over Treasuries. Aflac is based in Columbus, Ga.

New bonds keep flowing

There seems to be no end to the flood of new investment-grade paper hitting the market this week. The middle of the week was no exception.

"Wow, is it Wednesday already?" a syndicate source said at the end of the busy day. "I think if rates stay [low], we'll see more."

Record-low interest rates have drawn companies to the market, with mostly corporate issuers, but also several from the financial and insurance sectors.

"A lot of them have debt coming due or acquisitions, so they're doing debt," a syndicate source said.

There haven't been any upcoming deals announced, but the market is unlikely to be completely empty on Thursday. Most of the large deals have already been priced for the week, sources said, but there could be some smaller sales from utilities or other names yet to come.

AMB upsizes seven-year

San Francisco-based AMB Property LP priced an upsized $300 million of 4.5% seven-year senior unsecured notes (Baa1/BBB/BBB) by mid-afternoon at a spread of 237.5 bps over Treasuries, an informed source said.

The size was announced at $250 million. The deal is guaranteed by AMB Property Corp.

Bookrunners were Bank of America Merrill Lynch, J.P. Morgan Securities, Morgan Stanley & Co. Inc. and Wells Fargo Securities LLC.

Proceeds are being used to reduce borrowings under a $425 million multi-currency senior unsecured term loan facility, with the remainder to repay a $65.8 million secured mortgage instrument.

The issuer manages commercial property.

Magellan prices at talk

Magellan Midstream Partners sold $300 million of 4.25% senior unsecured notes (Baa2/BBB) due 2021 to yield Treasuries plus 135 bps, a source close to the sale said. The notes were priced in line with guidance of 135 bps.

The bookrunners were J.P. Morgan Securities, Bank of America Merrill Lynch, Morgan Stanley & Co. Inc. and Wells Fargo Securities LLC.

Proceeds will be used to fund a portion of the $289 million cash purchase price for crude oil storage assets and crude oil and refined petroleum products pipelines acquired from BP Pipelines (North America) Inc. and the purchase of crude oil working inventories associated with those assets. Pending that, proceeds may be used for general partnership purposes.

The new deal got a better spread than the company did last time it issued 10-year bonds. That was in a $300 million deal of 6.55% notes due 2019 priced on June 19, 2009 at 280 bps over Treasuries. Those notes were later reopened to add $250 million, priced at 185 bps on Aug. 5, 2009.

The refined petroleum product transportation and storage company is based in Tulsa, Okla.

PNC unit sells $750 million

PNC Funding sold an upsized $750 million of 4.375% 10-year senior unsecured notes at 150 bps over Treasuries, a source away from the sale said.

The size was increased from $500 million, a source said.

The notes (A3/A/A+) are guaranteed by PNC Financial Services Group, Inc.

Bank of America Merrill Lynch and J.P. Morgan Securities ran the books.

Proceeds are going for general corporate purposes.

The diversified financial services company is based in Pittsburgh.

Northern States mortgage bonds

Northern States Power priced $500 million first-mortgage bonds (A1/A/A+) split evenly between two tranches, an informed source said.

The $250 million tranche of 1.95% five-year bonds priced at a spread of Treasuries plus 38 bps. The bonds were priced in line with talk in the area of 38 bps.

A $250 million tranche of 4.85% 30-year notes sold at 80 bps over Treasuries. The notes priced in line with guidance in the 80 bps area.

The notes due 2015 firmed 1 bp on the bid side to 37 bps in the secondary market, a trader said.

The tranche of bonds due 2040 was not immediately seen in trading.

Bank of New York Mellon Capital Markets LLC, Citigroup Global Markets and RBS Securities Inc. were bookrunners on the pricing.

Proceeds are being added to a general fund for repayment of short-term debt and general corporate purposes, including capital expenditures.

The electric and natural gas utility, and subsidiary of Xcel Energy Inc., is based in Minneapolis.

Intesa sells five-years

Intesa Sanpaolo sold $1 billion of 3.625% five-year notes at Treasuries plus 205 bps, a syndicate source close to the sale said.

The deal was announced late in the day and priced around 5:30 p.m. ET.

The notes (Aa2/A+/AA-) were sold under Rule 144A.

Bookrunners were Bank of America Merrill Lynch, Citigroup Global Markets and J.P. Morgan Securities.

The financial services company is based in Turin, Italy.

Industrials mixed

The industrial sector was mixed in secondary trading, according to a source.

"It was decidedly mixed - some wider, some tighter," the source said.

Bonds from The Woodlands, Texas-based Anadarko Petroleum Corp., which owns 25% of the oil well where the drilling rig that BP plc operated exploded in April, were "1 point better," the source said.

High-grade debt from Transocean, the Switzerland-based offshore drilling contractor that owned the Deepwater Horizon oilrig that exploded, were 2 points better, the source said.

"[It was mixed] across the board."

Newell Rubbermaid wider

The new 4.7% senior unsecured notes due 2020 that Newell Rubbermaid priced on Monday moved out in the secondary market on Wednesday on "some aggressive pricing," a trader said.

The company sold $550 million of the 10-year notes (Baa3/BBB-/BBB) to yield Treasuries plus 175 bps.

"The 20s, when they came, tightened to 170 and went out to 180 basis points," the trader said. "Today, it's 175."

The consumer and commercial products company is based in Atlanta.

Pride notes on rise

A trader said that Pride International Inc.'s two-part mega-deal that priced on Tuesday and then traded up in the aftermarket was again posting gains on Wednesday.

"They were real busy [Tuesday] night, and this morning, those things were up an additional couple of points."

He saw the $300 million of 7 7/8% notes due 2040 at around the 103¼ level, which he called up around 1½ to 2 points from where the bonds went out on Tuesday night, around 101¼ to 101 3/8, right after the notes had priced at par.

He also saw the $900 million of 6 7/8% notes due 2020 at 103 bid, 103 3/8 offered versus Monday's closing level around 102 bid, estimating the issue to be up 1 to 1¼ points, "depending on what time of the day it was. But there was a lot of activity in PDE this morning and last night, too."

He said that some $81 million of the 10-year bonds had traded on Wednesday and $30 million of the 30-year notes. He pointed out that as a split-rated offering (Ba1/BBB-/BB+), "the investment-grade accounts, they like to trade it."

He also mentioned that "it was priced on the tight end," a sign of good demand for the Houston-based offshore energy drilling company's deal.

At another desk, a trader saw the 6 7/8s at 103 bid, 103½ offered.

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