Praxair, Lexmark price new issues under positive market tone; Philip Morris bonds trade wider

By Cristal Cody

Tupelo, Miss., Feb. 27 - Lexmark International, Inc. and Praxair, Inc. brought new deals on Wednesday as the primary calendar slowed mid-week, according to market sources.

Lexmark launched $300 million of seven-year senior notes early in the day and upsized the deal to $400 million.

Praxair priced a $500 million offering of five-year notes in the afternoon.

"Pretty positive today," one bond source said. "We only had a couple new issues that priced; it was pretty quiet. There might be a couple of guys tomorrow based on how the market ended today."

Another bond source noted the day saw "better buying with stronger equity markets and a little better tone."

Though spreads in the secondary market were "basically unchanged" heading into midday, a trader saw spreads rallying overall as the day wore on.

The Markit CDX Series 18 North American Investment Grade index tightened 2 basis points to a spread of 90 bps.

The market saw light volumes on Wednesday, as players continue to "keep eyes on Europe" and U.S. Treasuries, a market source said.

In other secondary action, Tuesday's new issues from Cytec Industries Inc. and Philip Morris International Inc. were trading slightly wider from earlier levels.

Investment-grade bank and brokerage credit default swaps costs declined on the Wednesday.

Bank of America's CDS costs firmed 4 bps to 118 bps bid, 123 bid. Citi's CDS costs were 6 bps tighter at 108 bps bid, 113 bps offered. J.P. Morgan's CDS costs declined 5 bps to 77 bps bid, 81 bps offered. Wells Fargo's CDS costs tightened 4 bps to 67 bps bid, 72 bps offered.

Merrill Lynch's CDS costs firmed 4 bps to 103 bps bid, 110 bps offered. Morgan Stanley's CDS costs declined 5 bps to 138 bps bid, 143 bps offered. Goldman Sachs' CDS costs tightened 6 bps to 126 bps bid, 131 bps offered.

Praxair raises $500 million

Praxair sold $500 million of 1.2% notes due March 4, 2018 (/A/) on Wednesday at 99.874 to yield 1.226%, according to FWP with the Securities and Exchange Commission.

Citigroup Global Markets Inc. was the bookrunner.

Praxair may redeem the notes at its option at any time in whole or in part.

The Danbury, Conn.-based industrial gas producer plans to use the proceeds for general corporate purposes, including repaying debt.

Praxair last tapped the investment-grade market on Nov. 2 with a $700 million offering of five-year notes and 30-year bonds.

Lexmark upsizes

Lexmark International sold an upsized $400 million offering of seven-year senior notes (Baa3/BBB-/) at 99.998 to yield 5.125% on Wednesday, according to a source close to the deal.

The notes due March 15, 2020 priced at a spread of 389.4 basis points plus Treasuries.

The offering was upsized from $300 million.

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

Senior managers were Mitsubishi UFJ Securities (USA), Inc. and SunTrust Robinson Humphrey, Inc.

BB&T Capital Markets, Fifth Third Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith Inc., Scotia Capital (USA) Inc. and Williams Capital Group, LP were junior co-managers.

The issue has a 101% change-of-control put and a make-whole call at Treasuries plus 50 bps.

The notes are redeemable at any time in whole or in part, at Lexmark's option, on at least 30 days prior notice.

Proceeds will be used to redeem the company's 5.9% senior notes due June 1, 2013 and for general corporate funds to repay other debt, finance capital expenditures and operating expenses, fund share repurchases, fund dividends, finance acquisitions and invest in subsidiaries.

Lexmark is a Lexington, Ky.-based imaging, printing and software company.

Philip Morris weaker

Philip Morris International's $1.85 billion of senior notes traded slightly wider late Wednesday, a trader said.

The $600 million of 2.625% notes due 2023 was quoted at 95 basis points bid, 92 bps offered, 2 bps wider from levels seen earlier during the session.

The notes were sold at a spread of 95 bps over Treasuries on Tuesday.

The company's $850 million of 4.125% bonds due 2043 traded 1 bp wider on the day at 121 bps bid, 118 bps offered following Tuesday's pricing at a spread of Treasuries plus 120 bps.

The offering also included $400 million of two-year floating-rate notes priced at par to yield Libor plus 5 bps.

The producer of cigarette and tobacco products is based in New York.

Cytec widens slightly

The secondary market also saw Cytec Industries' $400 million of 3.5% senior notes trade 1 bp weaker on Wednesday.

A trader saw the notes at 162 bps bid, 158 bps offered.

The notes were trading at 161 bps bid, 160 bps offered late Tuesday after pricing with a spread of 170 bps over Treasuries earlier in the session.

The specialty chemicals and materials company is based in Woodland Park, N.J.

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