Ford does crossover deal; Citi, Ventas, PPG tap market; new recent bonds mixed in trading

By Aleesia Forni and Andrea Heisinger

New York, July 31 - Issues continued to roll into the investment-grade primary market on Tuesday with Citigroup Inc. and split-rated Ford Motor Credit Co. LLC among those bringing deals.

Citigroup sold $1.25 billion of three-year bonds.

Ford Motor Credit was in the market for the second time since June, this time with a $750 million deal of three-year paper that was about two times oversubscribed.

Ventas Realty LP and Ventas Capital Corp. sold an upsized $275 million of 10-year notes, and diversified manufacturer PPG Industries, Inc. priced $400 million of 10-year senior notes.

Private Export Funding Corp. tapped the market for $400 million of seven-year bonds after the deal was upsized from $300 million.

There was also a sovereign deal from Inter-American Development Bank for $500 million of 30-year global bonds.

The Ford offering was its second since being upped to investment grade by both Moody's Investors Service and Fitch Ratings.

A trader said that the deal came away tighter than most people imagined, but added that there is a whole new investor base that wants to own Ford. He said that the 230 bps said it all about demand. The deal size of $750 million was smaller than some were expecting, the trader added.

Wednesday is expected to be quieter than the first two days of the week as a Federal Reserve Open Market Committee meeting takes place.

"I haven't heard of much," said one market source. A syndicate source said, "[We have] one potential trade" in the works.

There is also a jobs report for July coming out on Friday, which limits when companies will consider entering the market.

"Maybe somebody will come on Thursday, but otherwise everyone's going to wait until Monday," the market source said.

The Markit CDX Series 18 North American Investment Grade index tightened 8 bps to a spread of 108 bps on Tuesday.

The secondary market saw the new issue from Ford widen 4 bps near the day's close, while Private Export Funding's and PPG's offerings tightened 2bps to 4 bps.

Meanwhile, the recent issuance from TransCanada Pipelines Ltd. tightened in Tuesday's trading, while Teck Resources Ltd.'s three-tranche issuance was mixed.

Citi sells $1.25 billion

Citigroup sold $1.25 billion of 2.25% three-year notes (Baa2/A-/) late in the afternoon at a spread of Treasuries plus 205 bps, an informed source said.

The deal was priced tighter than talk in the 210 bps area.

Citigroup Global Markets Inc. ran the books.

Citi was last in the market with a $750 million reopening of 4.5% notes due 2022 on June 29. Its last sale of three-year notes was in a $1.25 billion deal priced with a 2.65% coupon and a spread of 230 bps over Treasuries on February 22.

The financial services company is based in New York City.

Ford prices at talk

Ford Motor Credit priced $750 million of 2.5% notes due 2016 (Baa3/BB+/BBB-) at a spread of Treasuries plus 230 bps, a source close to the trade said.

The deal was done in line with price guidance in the 230 bps area and had about $1.5 billion of demand on the books, a source said. Most of the investor interest was from high-grade accounts despite the bonds' crossover status, the source said, adding that there wasn't much consideration given to upsizing the deal.

In secondary trading, the deal was quoted at 234 bps bid, 233 bps offered near the end of the session.

Barclays Capital Inc., Citigroup Global Markets Inc., Goldman Sachs & Co., Morgan Stanley & Co. LLC and RBC Capital Markets LLC were bookrunners.

Proceeds are being used for general corporate purposes.

Ford Motor Credit was in the market with a $1.5 billion sale of 3% five-year notes priced at 230 bps over Treasuries on June 7.

The financing arm of Ford Motor Co. is based in Dearborn, Mich.

Ventas' 10-year notes

Ventas Realty and Ventas Capital priced a slightly upsized $275 million of 3.25% 10-year notes (Baa3/BBB-/BBB) to yield 188 bps over Treasuries, a source who worked on the trade said.

The size was initially $250 million, the source said, and the deal sold tighter than talk in the 195 bps area.

The trade was upsized because of "demand and [because] the company was able to," the source said. There was just under $650 million on the books.

Bookrunners were Bank of America Merrill Lynch, J.P. Morgan Securities LLC, UBS Securities LLC and Wells Fargo Securities LLC.

Proceeds are being used to prepay in full $200 million of unsecured term loan due 2013, to repay debt under an unsecured revolver, for working capital and for general corporate purposes including funding future acquisitions or investments, if any.

The deal is guaranteed by Ventas, Inc.

The real estate investment trust for senior housing and healthcare properties is based in Chicago.

PPG's $400 million

PPG Industries priced $400 million of 2.7% 10-year senior notes (Baa1/BBB+/A-) to yield Treasuries plus 120 bps, a market source said.

A trader saw the notes at 118 bps bid, 115 bps offered late in the day.

BNP Paribas Securities Corp., Goldman Sachs & Co. and J.P. Morgan Securities LLC were bookrunners.

Proceeds are being used to repay a portion of 5.75% notes due 2013 and for general corporate purposes.

PPG was last in the market with a $1 billion deal in three tranches on Nov. 8, 2010. A 3.6% 10-year note from that deal priced at 120 bps over Treasuries.

The diversified manufacturing company is based in Pittsburgh.

PEFCO prices seven-years

Private Export Funding sold $400 million of 1.45% seven-year notes (Aaa/AA+/) to yield Treasuries plus 48 bps, a market source who worked on the trade said.

The notes tightened to 44 bps bid, 42 bps offered, a trader said.

The deal's size was increased from $300 million.

Bookrunners were Bank of America Merrill Lynch and Citigroup Global Markets Inc.

The company assists with financing U.S. exports through private capital and is based in New York City.

IADB's long bond

The Inter-American Development Bank priced $500 million of 3.2% 30-year global bonds (Aaa/AAA/) to yield Treasuries plus 67 bps, a market source said.

Bookrunners were Bank of America Merrill Lynch and Citigroup Global Markets Inc.

The development lender to Latin America and the Caribbean is based in Washington, D.C.

TransCanada Pipelines firms

TransCanada Pipelinesı 2.5% senior notes due 2022 tightened to 96 bps bid, 93 bps offered on Tuesday, a trader said.

TransCanada Pipelines sold $1 billion of the 10-year senior notes (A3/A-/) on Monday to yield Treasuries plus 100 bps.

The natural gas and oil pipeline is based in Calgary, AB.

Teck mixed

Teck Resources' new notes were mixed in trading on Tuesday following the $1.75 billion offering of notes (Baa2/BBB/) in three tranches on Monday, a trader said.

The companyıs 2.5% notes due 2018 firmed to 187 bps bid, 183 bps offered from the issue spread of Treasuries plus 195 bps.

The 3.75% notes due 2023 edged 1 bp wider to 236 bps bid, 232 bps offered. Teck sold $750 million of the notes at a spread of 235 bps over Treasuries.

The long tranche of 5.4% bonds due 2043 traded going out wider at 289 bps bid, 284 bps offered in secondary trading. Teck sold $500 million of the bonds at a spread of Treasuries plus 285 bps.

The mining company is based in Vancouver, B.C.

Citi widens

In other trading, Citigroup's 6.375% notes due 2014 widened 3 bps to 207 bps bid from Monday's levels.

The bank priced $2.5 billion five-year notes at Treasuries plus 380 bps on Aug. 5, 2009.

J.P. Morgan firms

The secondary market saw the $3 billion 6.3% issue from J.P. Morgan due 2019 tighten 16 bps to 148 bps bid.

J.P. Morgan priced the 10-year bonds on April 16, 2009 at 305 bps over Treasuries.

Bank Nova wider

Also in the secondary, Bank of Nova Scotia's 1.85% notes due 2015 widen 5 bps on Tuesday to 58 bps bid, according to a market source.

The bank priced the $1 billion issue at 147 bps over Treasuries in January.

Paul A. Harris and Cristal Cody contributed to this review

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