Unilever, Texas Instruments set low coupons on $10 billion day; new issues trade mostly tighter

By Aleesia Forni and Andrea Heisinger

New York, July 30 - Unlike previous back-loaded weeks, the high-grade bond market got off to a busy start right away on Monday with names like Unilever Capital Corp., Teck Resources Ltd., Estee Lauder Cos. Inc. and Campbell Soup Co. taking advantage of low coupons.

Other names in the market included Texas Instruments Inc., Northern Trust Corp., TransCanada Pipelines Ltd. and Praxair, Inc.

Swedish Export Credit Corp. sold $250 million of three-year floating-rate notes.

Texas Instruments priced $1.5 billion of notes due 2015 and 2019 after the size of the deal was increased from $1 billion.

Unilever was in the market with a $1 billion deal of three-year notes and five-year paper that's guaranteed by three other units of the consumer goods company. Both notes were priced at record-low coupons, and the three-year tranche tied Texas Instruments, which also priced its three-year note with a 0.45% rate.

Unilever and Texas Instruments joins other companies that have been coupon hunting - or coming into the market opportunistically to try to achieve record-low coupons - and managed to do just that with both of its notes. The 0.45% three-year note bested the 0.55% record set by IBM Corp. in a $2.5 billion deal on February 1. The 0.85% five-year notes managed to best a record for that maturity set less than a week ago, when Bristol-Myers Squibb Co. priced at a 0.875% coupon.

Two Canadian companies were in the U.S. bond market.

Teck Resources priced $1.75 billion of notes due 2018, 2023 and 2043, while TransCanada Pipelines sold $1 billion of 10-year senior notes.

Beauty products and cosmetics maker Estee Lauder priced $500 million of 10-year notes and 30-year bonds to redeem notes and for other purposes.

There was an M&A-related trade for the day as well, with Campbell Soup selling $1.25 billion of notes in three parts to help pay for the previously announced acquisition of Bolthouse Farms.

Financial holding company Northern Trust sold $500 million of 10-year senior notes, and Praxair was in the market pricing the same amount and maturity.

Issuers were eager to get into the market Monday following earnings blackouts and due to the clamor by investors for high-grade bonds and the record-low coupons that top-rated companies have been achieving.

There was also Wednesday's Fed meeting and other economic data later in the week, like a jobs report for July that comes out Friday, that were spurring sales before any headlines could signal a drop in market tone.

Between $10 billion and $15 billion was expected for the week, most of which could price on Monday and Tuesday, a source said.

"We got off to a good start - more tomorrow," he said.

There was $8.25 billion of straight corporates priced - $9.1 billion if the deal from emerging markets name America Movil is included.

Tuesday should see more deals, but not as much volume.

"I know we'll have a couple that will look," a market source who worked on several of Monday's deals said. "It's not going to be anything like today, I hope."

A syndicate source said: "I'm sure several will go considering deals went fairly well today - not hearing anything crazy, but no one expected a $10 [billion] day today either."

The Markit CDX Series 18 North American Investment Grade index widened 1 bps to a spread of 116 bps on Monday.

Both tranches of Estee Lauder's new issue were seen 1 bps tighter in the secondary, while both new deals from TransCanda Pipleline and Praxair traded flat near the day's close.

In other trading, the new issuances from Campbell Soup, Teck Resources and Texas Instruments traded 1 bps to 5 bps tighter.

Unilever sets records

Unilever Capital priced $1 billion of senior notes (A1/A+/) in two parts and, in the process, set two new record-low coupons, a market source said

The $450 million of 0.45% three-year notes sold at a spread of Treasuries plus 27 bps. The notes sold at the tight end of guidance in the 30 bps area, the source said.

A $550 million tranche of 0.85% five-year notes priced at a spread of 47 bps over Treasuries. The tranche was priced at the low end of talk in the 50 bps area.

Deutsche Bank Securities Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were bookrunners.

Proceeds are being used for general corporate purposes.

The deal is guaranteed by Unilever NV, Unilever plc and Unilever United States Inc.

Unilever Capital was last in the market with a $1.5 billion, two tranche sale on Feb. 7, 2011. A 2.75% five-year note from that deal sold at 50 bps over Treasuries.

The U.S. office of the consumer good company is based in Englewood Cliffs, N.J.

Texas Instruments ties low

Texas Instruments priced $1.5 billion of notes (A1/A+/) in two parts, an informed source said, and the coupon for the three-year notes tied with Unilever for a record low.

The size was increased from a minimum initial amount of $1 billion. There was about $1.8 billion on the books for the three-year notes and about $2 billion on the books for the seven-year tranche, the source said.

The $750 million of 0.45% three-year notes priced at a spread of Treasuries plus 30 bps. The notes sold tighter than talk in the 40 bps area.

A second tranche of $750 million in 1.65% seven-year notes sold at a spread of 75 bps over Treasuries. The tranche priced tighter than guidance in the 85 bps area.

In secondary trading, the three-year notes traded 3 bps better at 27 bps bid, while the seven-year tranche was seen at 74 bps bid.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were active bookrunners.

Proceeds will be used for general corporate purposes including common stock repurchase.

Texas Instruments was last in the market with a $3.5 billion deal in four tranches on May 16, 2011. That sale included 1.375% three-year notes priced at 50 bps over Treasuries.

The semiconductor maker is based in Dallas.

Teck's three tranches

Teck Resources sold $1.75 billion of notes (Baa2/BBB/) in three tranches, a source close to the trade said.

The deal was highly oversubscribed with about $3.25 billion on the books for the five-year notes, $3.4 billion for the 10-year tranche and $2.3 billion for the 30-year bonds.

The $500 million of 2.5% notes due 2018 priced at 99.69 to yield 2.561% with a spread of Treasuries plus 195 basis points. The tranche sold tighter than talk in the 220 bps area.

A $750 million tranche of 3.75% notes due 2023 were sold at a spread of 235 bps over Treasuries. The tranche was priced tighter than guidance in the 250 bps area.

There was also a $500 million tranche of 5.4% bonds due 2043 priced at a spread of Treasuries plus 285 bps. The bonds sold at the tight end of guidance in the 290 bps area.

One trader saw the five-year tranche at 191 bps bid, 188 bps offered. The 10-year tranche traded 3 bps better at 232 bps bid, 231 bps offered, while the 30-year notes were quoted at 284 bps bid, 281 bps offered.

Bank of America Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were active bookrunners.

Proceeds, along with cash on hand, are being used to fund the redemption of outstanding 10.25% senior notes due 2016 in the third quarter and for general corporate purposes, including retirement or redemption of other debt.

The deal is guaranteed by Teck Metals Ltd.

Teck Resources was last in the market with a $1 billion deal of notes in two tranches on February 16. The 5.2% 30-year bonds from that offering were sold at 210 bps over Treasuries.

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

Campbell's $1.25 billion

Campbell Soup priced $1.25 billion of notes (Baa2/BBB/) in three tranches, a source away from the trade said.

The $400 million of two-year floating-rate notes priced at par to yield Libor plus 30 bps.

A $450 million tranche of 2.5% 10-year notes sold at a spread of Treasuries plus 108 bps.

There was also $400 million of 3.8% 30-year bonds priced at 128 bps over Treasuries.

Both tranches tightened 5 bps in the secondary market, a trader said.

The 10-year notes traded at 103 bps bid, 100 bps offered, and the 30-year tranche was seen trading at 123 bps bid, 119 bps offered.

Bookrunners were Morgan Stanley & Co. LLC, Barclays Capital Inc., J.P. Morgan Securities LLC and BNP Paribas Securities Corp.

Proceeds are going toward financing the BF Bolthouse Holdco, LLC, or Bolthouse Farms, acquisition for $1.55 billion in cash.

The company was last in the market with a $500 million deal of 4.25% 10-year notes priced at 85 bps over Treasuries on March 31, 2011.

Campbell's is a convenience foods company based in Camden, N.J.

TransCanada's $1 billion

TransCanada Pipelines sold $1 billion of 2.5% 10-year senior notes (A3/A-/) to yield Treasuries plus 100 bps, a source who worked on the trade said.

The bonds sold tighter than talk in the 110 bps area, the source said. There was roughly $3 billion on the books for the trade.

The notes traded at 100 bps bid, 98 bps offered near the end of the session, one trader said.

Bookrunners were Citigroup Global Markets Inc. and J.P. Morgan Securities LLC.

Proceeds are being used for general corporate purposes and to reduce short-term debt of the corporation and its affiliates.

TransCanada was last in the U.S. bond market with a $500 million offering of three-year notes on February 28.

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

Estee Lauder's two tranches

Estee Lauder Cos. priced $500 million of senior notes (A2/A/) in two tranches, an informed source said.

The $250 million of 2.35% 10-year notes priced at a spread of Treasuries plus 85 bps.

A second tranche of $250 million in 3.7% 30-year bonds sold at Treasuries plus 115 bps.

Both tranches traded 1 bps tighter near the end of New York's session.

The 10-year tranche traded at 84 bps bid, 83 bps offered, while the 30-year tranche was quoted at 114 bps bid, 113 bps offered.

Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were active bookrunners.

Proceeds are being used to redeem $250 million of outstanding 7.75% senior notes due 2013 and for general corporate purposes, including repayment of commercial paper as it matures, and other debt, working capital, acquisitions, capital expenditures, repurchase of class A common stock and transaction fees and expenses for the bond offering.

Estee Lauder was last in the market with a $300 million deal of 7.75% five-year notes priced at 500 bps over Treasuries on Oct. 30, 2008.

The beauty products company is based in New York City.

Praxair sells 10-years

Praxair priced $500 million of 2.2% 10-year senior notes (A2/A/) at Treasuries plus 72 bps, a source close to the deal said.

The bonds sold tighter than whispered guidance in the mid-80 bps area, the source said, adding that they priced inside of the company's outstanding note spreads.

The deal traded flat at 72 bps bid, 69 bps offered near the end of the session.

There was roughly $1.2 billion on the books for the deal which was "not too shabby for a day when there was $10 billion in new issues."

Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and Wells Fargo Securities LLC ran the books.

Proceeds are being used to repay short-term debt, fund share repurchase under a share repurchase program and for general corporate purposes.

The industrial gases maker is based in Danbury, Conn.

Northern Trust's $500 million

Northern Trust sold $500 million of 2.375% 10-year senior notes (A1/A+/) to yield Treasuries plus 90 bps, an informed source said.

Bank of America Merrill Lynch and Morgan Stanley & Co. LLC were active bookrunners.

Proceeds are being used for general corporate purposes.

Northern Trust was last in the U.S. bond market with a $500 million deal of 3.375% 10-year notes priced at 125 bps over Treasuries on Aug. 17, 2011.

The financial holding company is based in Chicago.

SEK's floaters

Swedish Export Credit priced $250 million of three-year floating-rate notes (Aa1/AA+/) at par to yield Libor plus 48 bps, according to an FWP filing with the Securities and Exchange Commission.

Bookrunners were Daiwa Securities America Inc., Deutsche Bank Securities Inc. and Goldman Sachs & Co.

The financier of Sweden's export industry is based in Stockholm.

Cristal Cody contributed to this review

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