Issuers flood primary market; Wells Fargo, HSBC, ANZ, Grainger price; credit spreads firm

By Cristal Cody

Tupelo, Miss., May 15 – Investment-grade bond issuers kicked the week off in high gear on Monday.

Wells Fargo & Co., HSBC Holdings plc, Australia and New Zealand Banking Group Ltd. and Australia and New Zealand Banking Group Ltd., New York Branch, BPCE SA, Dominion Energy, Inc., Manufacturers & Traders Trust Co., Travelers Cos., Inc., International Flavors & Fragrances Inc., W.W. Grainger, Inc., Gulf Power Co. and Potomac Electric Power Co. all tapped the primary market.

Syndicate sources expect as much as $40 billion of deal volume over the week.

Coming up on Tuesday, Kommuninvest I Sverige AB (Aaa/AAA/) plans to price a $500 million dollar-denominated offering of four-year green bonds in a Rule 144A and Regulation S deal, according to a market source.

The notes due June 1, 2021 were initially talked to price in the mid-swaps plus low teens basis points area.

Credit Agricole CIB, HSBC and J.P. Morgan are the arrangers.

The Markit CDX North American Investment Grade index tightened about 1 bp over the day to a spread of 62 bps.

Wells Fargo sells $3 billion

Wells Fargo sold $3 billion of 3.584% fixed-to-floating-rate notes (A2/A/AA-) on Monday at a spread of Treasuries plus 125 bps, according to a market source.

The notes priced on the tight side of guidance of Treasuries plus 125 bps to Treasuries plus 127 bps.

The issue converts to a floating-rate of Libor plus 131 bps.

Wells Fargo Securities LLC was the bookrunner.

The financial services company is based in San Francisco.

HSBC prices $3 billion

HSBC Holdings priced $3 billion of 6% perpetual subordinated contingent convertible securities on Monday with a spread of 374.6 bps over Treasuries, according to a market source.

HSBC Securities (USA) Inc. was the bookrunner.

The issue is convertible if a capital adequacy trigger event occurs, according to a 424B2 filing with the Securities and Exchange Commission on Monday.

Proceeds will be used for general corporate purposes and to further strengthen the company’s capital base for requirements under CRD IV.

The banking and financial services group is based in London.

ANZ in primary

Australia and New Zealand Banking Group and Australia and New Zealand Banking Group, New York Branch sold $2 billion of fixed-and floating-rate notes (Aa2/AA-/) in four tranches on Monday, according to a market source.

ANZ Banking Group priced $600 million of 2.125% notes due Aug. 19, 2020 at a spread of Treasuries plus 73 bps.

The company sold $500 million of 2.625% notes due May 19, 2022 at a spread of 78 bps over Treasuries.

ANZ Banking Group, New York Branch priced $400 million of floating-rate notes due Aug. 19, 2020 at Libor plus 50 bps.

ANZ Banking Group, New York Branch also sold $500 million of floating-rate notes due May 19, 2022 at Libor plus 71 bps.

ANZ Securities Inc., Citigroup Global Markets Inc., Goldman, Sachs & Co. and Morgan Stanley & Co. LLC were the lead managers.

The New York-based corporate and investment banking company is a subsidiary of Australia & New Zealand Banking Group Ltd.

BPCE brings $1.5 billion

BPCE sold $1.5 billion of five-year notes (Baa3/A/) in fixed- and floating-rate tranches on Monday, according to a market source.

The company priced $500 million of five-year floaters at Libor plus 122 bps.

BPCE sold $1 billion of 3% five-year fixed-rate notes at a spread of Treasuries plus 128 bps.

Goldman, Sachs & Co., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Natixis Securities Americas LLC and Wells Fargo Securities LLC were the lead managers.

The financial services company is based in Paris.

Dominion Energy sells notes

Dominion Energy priced a $1 billion remarketing of junior subordinated notes due July 1, 2020 with a 2.579% coupon at 100.103 to yield 2.545%, according to a market source and an FWP filing on Monday with the Securities and Exchange Commission.

The notes (Baa3/BBB/BBB) were sold at a Treasuries plus 105 bps spread, on the tight side of talk in the Treasuries plus 110 bps area, plus or minus 5 bps.

BofA Merrill Lynch, Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. were the remarketing bookrunners.

The 2014 series A 1.5% remarketable subordinated notes due 2020 were originally issued by Dominion Energy as components of its 2014 series A equity units issued in July 2014.

The equity units were issued in the form of a corporate unit consisting of a purchase contract issued for shares of the company’s common stock and a 1/20, or a 5%, undivided beneficial ownership interest in $1,000 principal amount of its series A remarketable subordinated notes.

Proceeds from the deal will be used to purchase a portfolio of Treasury securities due July 3, 2017.

The producer and transporter of energy is based in Richmond, Va.

Manufacturers & Traders prints

Manufacturers & Traders Trust (A3/A/) sold $900 million of five-year fixed-and floating-rate notes on Monday, according to a market source.

The company priced $250 million of floating-rate notes due May 18, 2022 at Libor plus 67 bps.

Manufacturers & Traders Trust sold $650 million of 2.5% five-year fixed-rate notes at a spread of 67 bps over Treasuries.

Barclays, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and UBS Securities LLC were the lead managers.

The Buffalo, N.Y-based trust operates M&T Bank, Inc.

Travelers Cos. brings $700 million

Travelers sold $700 million of 4% 30-year senior notes on Monday at 99.566 to yield 4.025%, according to an FWP filing with the SEC.

The notes (A2/A/A) priced with a spread of 100 bps over Treasuries.

Goldman Sachs & Co., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and BofA Merrill Lynch were the bookrunners.

Proceeds will be used to retire the company’s $450 million of 5.75% senior notes due Dec. 15, 2017 and for a portion of the purchase price of its planned acquisition of Simply Business.

Travelers is a New York-based holding company for auto, home and business property casualty insurance companies.

International Flavors prices

International Flavors & Fragrances sold $500 million of 4.375% 30-year senior notes (Baa1/BBB+/) on Monday at 99.65 to yield 4.396% and a spread of Treasuries plus 137.5 bps, according to a market and an FWP filed with the SEC.

The notes priced on the tight side of guidance in the Treasuries plus 140 bps area, plus or minus 2.5 bps.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and BNP Paribas Securities Corp. were the bookrunners.

Proceeds will be used to repay at maturity the company’s $250 million 6.25% series A senior notes due Sept. 27, 2017, to repay borrowings under its revolving credit facility, to repay debt under its commercial paper program and for general corporate purposes.

The maker of flavor and fragrances for food and consumer products is based in New York.

Grainger sells $400 million

W.W. Grainger sold $400 million of 4.2% 30-year senior notes on Monday at 99.646 to yield 4.221%, according to an FWP filing with the SEC.

The notes (A2/A+/) priced with a spread of 120 bps over Treasuries,

Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, U.S. Bancorp Investments Inc., Barclays and RBC Capital Markets, LLC were the bookrunners.

Proceeds will be used to repay debt and the remainder for general corporate purposes.

The industrial supply company is based in Lake Forest, Ill.

Gulf Power taps market

Gulf Power sold $300 million of 3.3% 10-year series 2017A senior notes on Monday at 99.83 to yield 3.32%, according to a market source and an FWP filing with the SEC.

The notes (A2/A-/A) priced with a spread of Treasuries plus 98 bps, on the tight side of talk of Treasuries plus 100 bps area, plus or minus 2 bps.

Barclays, BNP Paribas Securities Corp. and MUFG were the bookrunners.

Proceeds will be used to repay at maturity the company’s $85 million of series 2007A 5.9% senior notes due June 15, 2017, to redeem some or all of its $55 million 6% series preference stock, its $45 million series 2007A 6.45% preference stock and its $50 million series 2013A 5.6% preference stock, to repay all or some of its $15 million of commercial paper borrowings and for general corporate purposes.

Gulf Power is an electric subsidiary of Southern Co., based in Pensacola, Fla.

Potomac Power reopens

Potomac Electric Power priced a $200 million add-on to its 4.15% first mortgage bonds (A2/A/A-) due March 15, 2043 on Monday at 102.032 to yield 4.021%, according to an FWP filing with the SEC.

The notes priced at a spread of Treasuries plus 100 bps.

RBC Capital Markets Corp. and TD Securities (USA) LLC were the bookrunners.

The original $250 million issue sold at Treasuries plus 90 bps on March 11, 2013. The company sold an additional $200 million of the notes at 110 bps over Treasuries on March 16. The total outstanding now is $650 million.

Proceeds will be used to repay outstanding commercial paper and for general corporate purposes.

Potomac Electric is a utility based in Washington, D.C.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.