Financials lead charge during $16 billion day for high-grade primary; Ford Credit soft

By Aleesia Forni and Cristal Cody

Virginia Beach, Sept. 21 – Issuers poured into the primary market on Monday, pricing $16.35 billion of high-grade paper following Thursday’s decision from the Federal Reserve to hold rates steady at the conclusion of its two-day policy meeting.

Financial issuers accounted for the bulk of the day’s new issuance.

In the largest trade of the day, UBS Group Funding (Jersey) Ltd. issued $4.3 billion of notes in three tranches due 2020 and 2025.

Wells Fargo & Co. issued $2.5 billion of holdco notes at the tight end of talk, and BNP Paribas SA priced $1 billion 10-year tier 2 subordinated notes.

Utilities also had a solid showing on Monday, with Dominion Resources Inc. pricing an upsized offering, while Louisville Gas and Electric Co. and Kentucky Utilities Co. each sold two-part deals, respectively, around 20 basis points tighter than initial price thoughts.

Praxair Inc., Applied Materials Inc., Gulfstream Natural Gas, Swedish Export Credit Corp., American Honda Finance Corp., A.P. Moller – Maersk A/S and Federal Realty Investment Trust were also in the day’s market with new deals.

Investment-grade bank and financial paper traded mostly flat to wider on Monday.

Citigroup Inc.’s 3.3% senior notes due 2025 were unchanged in secondary trading.

Morgan Stanley’s 4% senior notes due 2025 headed out 2 bps weaker.

Ford Motor Credit Co. LLC’s 4.134% senior notes due 2025 widened 7 bps from Friday.

The Markit CDX North American Investment Grade 25 index rolled to a new series on Monday and ended 3 bps wider at a spread of 81 bps.

UBS (Jersey)’s $4.3 billion

UBS Group Funding (Jersey) entered the primary on Monday to price a $4.3 billion three-part offering of senior notes (BBB+/A), a market source said.

The company sold $1.5 billion of 2.95% five-year notes with a spread of 150 bps over Treasuries. The issue priced at 99.829 to yield 2.987%.

Guidance was set in the area of 165 bps over Treasuries.

Also, $300 million of five-year floaters priced at par to yield Libor plus 144 bps.

Finally, $2.5 billion of 4.125% 10-year bonds priced at 99.813 to yield 4.148%, or 195 bps over Treasuries, tighter than talk set in the 210 bps area over Treasuries

UBS Securities LLC is the bookrunner for the Rule 144A and Regulation S deal.

The notes are guaranteed by Zurich-based financial services company UBS Group AG.

Wells Fargo holdco notes

Wells Fargo also tapped Monday’s market, pricing a $2.5 billion offering of 3.55% 10-year senior holding company notes (A2/A+) with a spread of 137.5 bps over Treasuries, an informed source said.

The notes sold at the tight end of guidance set in the Treasuries plus 140 bps area, following talk in the range of 145 bps to 150 bps over Treasuries.

Pricing was at 99.825 to yield 3.57%.

Wells Fargo Securities LLC is the bookrunner.

The bank is based in San Francisco.

Applied Materials taps market

Applied Materials was in Monday’s market with a $1.8 billion offering of senior notes (A3/A-) in tranches due 2020, 2025 and 2035, according to a market source.

A $600 million 2.625% tranche of notes due 2020 sold at 99.93 to yield 2.64%, or 115 bps over Treasuries.

Also priced was $700 million of 3.9% notes due 2025 at Treasuries plus 175 bps. Pricing was at 99.638 to yield 3.944%.

Finally, the company priced $500 million of 5.1% notes due 2035 at 99.663 to yield 5.127%, or Treasuries plus 210 bps.

All tranches sold at the tight end of guidance.

Bookrunners are J.P. Morgan Securities LLC, Citigroup Global Markets Inc., MUFG and Goldman Sachs & Co.

Proceeds will be used to repay $400 million 2.65% senior notes due June 15, 2016 and for general corporate purposes.

Applied Materials is a Santa Clara, Calif., manufacturer of semiconductor equipment.

American Honda prices tight

Torrance, Calif.-based American Honda Finance sold $1.65 billion of notes (A1/A+) in two parts on Monday, according to two FWP filings with the Securities and Exchange Commission.

The U.S. arm of Honda Financial Services sold $650 million of two-year floating-rate notes at par to yield Libor plus 45 bps and $1 billion 2.45% five-year notes at 99.935 to yield 2.464%, or Treasuries plus 98 bps.

Both tranches sold at the tight end of guidance.

BofA Merrill Lynch, Barclays, Deutsche Bank Securities and SMBC Nikko were the bookrunners.

The U.S. arm of Honda Financial Services is based in Torrance, Calif.

BNP subordinated notes

The session also hosted BNP Paribas’ new $1 billion of 4.375% 10-year tier 2 subordinated notes (Baa2/BBB/A), which sold at 230 bps over Treasuries, a market source said.

The issue sold at 99.05 to yield 4.494%.

Pricing was at the tight end of guidance, which was in the 230 bps to 235 bps range over Treasuries and followed initial talk in the Treasuries plus 235 bps area.

BNP Paribas Securities Corp. was the bookrunner.

The financial services company is based in Paris.

A.P. Moller offering

A.P. Moller – Maersk A/S priced $1 billion of senior notes on Monday in two parts, according to a market source and a company release.

The sale (Baa1/BBB+) included a $500 million tranche of 2.875% notes due Sept. 28, 2020 priced at 99.917 to yield 2.893% with a spread of Treasuries plus 140 bps.

The notes sold at the tight end of guidance set in the Treasuries plus 145 bps area.

A $500 million 3.875% 10-year tranche sold at 98.994 to yield 3.998%, or Treasuries plus 180 bps.

Initially, the notes were talked in the Treasuries plus 180 bps area.

Bookrunners were BofA Merrill Lynch, BNP Paribas, Credit Agricole and JPMorgan.

Proceeds will be used for general corporate purposes.

The business conglomerate operating in global trade, transport and energy is based in Copenhagen.

Praxair two-parter

Also on Monday, Praxair issued a $750 million two-part offering of notes (A2/A) in tranches due 2020 and 2026, according to a market source.

A $300 million 2.25% note due 2020 sold at 99.906 to yield 2.27%, or Treasuries plus 78 bps.

The notes due 2020 were initially talked in the 85 bps area over Treasuries.

The company priced $450 million of 3.2% notes due 2026 at Treasuries plus 105 bps, or 99.584 to yield 3.248%.

The tranche was talked in the 115 bps area over Treasuries.

Bookrunners are Citigroup, Deutsche Bank, HSBC Securities and MUFG.

Proceeds are for general corporate purposes, including debt repayment.

The industrial gas company is based in Danbury, Conn.

Dominion upsizes

Dominion Resources sold an upsized $650 million offering of 3.9% 10-year senior notes (Baa2/BBB+) on Monday at Treasuries plus 170 bps, according to a market source and a FWP filed with the SEC.

The issue priced at 99.876 to yield 3.915%.

Pricing was at the tight end of guidance set in the 175 bps area over Treasuries, firmed from talk set in the 185 bps area over Treasuries.

The deal was upsized from $500 million.

Citigroup, Deutsche Bank, UBS Securities and Wells Fargo are the joint bookrunners.

Proceeds will be used for general corporate purposes and to repay short-term debt.

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

Louisville Gas mortgage bonds

In other new issue happenings, Louisville Gas and Electric priced $550 million of first mortgage bonds (A1/A) in two parts tight of guidance, according to a market source.

There was $300 million of 3.3% 10-year notes sold at 99.957 to yield 3.305%, or Treasuries plus 110 bps, and $250 million 4.375% 30-year bond sold at 99.917 to yield 4.38% with a spread of Treasuries plus 135 bps.

BNP Paribas, Goldman Sachs, JPMorgan and Mizuho Securities are the joint bookrunners.

Proceeds will be used to repay short-term debt, to repay $250 million of 1.625% mortgage bonds due Nov. 1, 2015 and for other general corporate purposes.

The regulated electric and natural gas utility is based in Louisville, Ky.

Kentucky Utilities new issue

Kentucky Utilities also sold a two-part offering of first mortgage bonds (A1/A) on Monday, according to a market source.

The $500 million offering included $250 million of 3.3% 10-year notes sold at a price of 99.957 with a 3.305% yield.

The notes priced at Treasuries plus 110 bps, tighter than talk set in the Treasuries plus 130 bps area.

Also, $250 million of 4.375% 30-year notes sold at 99.917 with a yield of 4.38% and a spread of Treasuries plus 135 bps.

Pricing came tighter than the Treasuries plus 155 bps area talk.

JPMorgan, Morgan Stanley, MUFG and UBS Securities are the joint bookrunners.

Proceeds will be used to repay short-term debt, to repay $250 million of 1.625% mortgage bonds due Nov. 1, 2015 and for other general corporate purposes.

The electric utility is based in Lexington, Ky.

Swedish Export floaters

Swedish Export Credit priced a $600 million issue of floating-rate bonds (Aa1/AA+) at par to yield Libor plus 9 bps on Monday, according to a market source and an FWP filed with the SEC.

The notes sold in line with price guidance.

Barclays, Citigroup and TD Securities are the bookrunners.

Based in Stockholm, Swedish Export Credit is the lender to Sweden’s export industry.

Federal Realty sells $250 million

Federal Realty Investment Trust priced $250 million of 2.55% senior notes (A3/A-) Jan. 15, 2021 on Monday at Treasuries plus 110 bps, according to a market source and a company news release.

Pricing was at 99.771 to yield 2.597%.

Wells Fargo, BofA Merrill Lynch and JPMorgan are the bookrunners.

The company intends to use the net proceeds from this offering to pay down its revolving credit facility and for general corporate purposes.

The real estate investment trust for retail and mixed-use buildings is based in Rockville, Md.

Forward calendar builds

Nordic Investment Bank, International Finance Corp. and Tennessee Valley Authority each announced new deal plans on Monday for bonds slated to price later this week.

Helsinki, Finland-based Nordic Investment announced price talk for a planned $1 billion offering of five-year notes in the mid-swaps plus 7 bps area via bookrunners JPMorgan, RBC Capital Markets LLC and TD Securities.

Meantime, International Finance plans to price a $200 million add-on to its existing floating-rate bonds (Aaa/AAA) due Dec. 14, 2020 that carry a coupon of Libor plus 1 bp.

Price talk is set in the area of Libor plus 3 bps.

BofA Merrill Lynch, Barclays and BMO are the banks on the deal.

The Washington, D.C.-based World Bank member sold the original $500 million issue at par to yield Libor plus 1 bp on Aug. 17.

And Tennessee Valley Authority plans to sell $1 billion of senior notes (Aaa/AA+/AAA) due 2065 via BofA Merrill Lynch, BNP Paribas, Morgan Stanley and TD Securities.

The corporate agency provides electricity for business customers and local power companies in parts of seven southeastern states and is based in Knoxville, Tenn.

Citigroup unchanged

Citigroup’s 3.3% senior notes due 2025 were unchanged on Monday at 146 bps bid, a market source said.

Citigroup sold $1.5 billion of the notes (Baa2/A-/A) on April 22 at Treasuries plus 135 bps.

The investment bank is based in New York.

Morgan Stanley soft

Morgan Stanley’s 4% notes due 2025 eased 2 bps on the bid side to 156 bps bid in secondary trading, according to a market source.

Morgan Stanley sold $3 billion of the notes (A3/A-/A) on July 20 at Treasuries plus 165 bps.

The financial services company is based in New York City.

Ford Motor Credit weaker

Ford Motor Credit’s 4.134% notes due 2025 widened to 194 bps bid on Monday, weaker than where the notes traded at 187 bps bid on Friday, a source said.

The company sold $700 million of the notes (Baa3/BBB-/BBB-) on July 30 at Treasuries plus 187.5 bps.

Ford Motor Credit is the financing arm of Dearborn, Mich.-based automaker Ford Motor Co.

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