Zimmer sells $7.35 billion; ING, FMS also price; Bank of America, JPMorgan weaker

By Aleesia Forni and Cristal Cody

Virginia Beach, March 10 – The onslaught of new issuance in the investment-grade primary market continued on Tuesday.

Even with a decidedly weaker tone to the market, the primary digested $16.6 billion of new issuance during the session, pushing the week’s total supply to more than $32 billion in just two trading days.

Zimmer Holdings Inc. entered the primary market with a $7.35 billion seven-part offering in order to refinance the bridge loan for its acquisition of Biomet, Inc.

The deal attracted an order book that was around three times oversubscribed, with all tranches pricing around 10 basis points to 15 bps tighter compared to initial talk.

The primary also saw ING Bank NV sell $2.35 billion of senior notes in three parts.

FMS Wertmanagement sold a $1.5 billion five-year issue of global notes at the tight end of price guidance.

Also on Tuesday, Valero Energy Corp. sold a $1.25 billion two-tranche offering of senior notes, and American Honda Finance Corp. priced $1.25 billion of notes in three- and five-year tranches.

Essex Portfolio, LP, Kommunalbanken AS and Boardwalk Pipelines LP each sold upsized offerings on Tuesday.

The session also saw TC PipeLines LP, Priceline Group Inc. and Sempra Energy price new issues.

Bank and financial paper softened along with high-grade credit spreads over the day, sources said.

Bank of America Corp.’s paper (Baa2/A-/A) traded 2 bps to 8 bps wider in the secondary market.

JPMorgan Chase & Co.’s 3.125% notes due 2025 eased 2 bps.

The Markit CDX North American Investment Grade series 23 index closed 1.5 bps weaker at a spread of 65 bps.

Zimmer prices $7.65 billion

Zimmer Holdings priced a $7.65 billion seven-part offering of senior notes (Baa3/BBB/) on Tuesday, according to a market source.

The offering included $500 million of 1.45% two-year notes priced at Treasuries plus 80 bps.

There was also $1.15 billion of 2% three-year notes sold at 95 bps over Treasuries.

A $1.5 billion tranche of 2.7% five-year notes priced at 110 bps over Treasuries.

There was also $750 million of 5.15% seven-year notes priced with a spread of Treasuries plus 125 bps.

A $2 billion 3.55% tranche of 10-year notes sold at 145 bps over Treasuries.

The company also priced $500 million of 4.25% 20-year notes at Treasuries plus 160 bps.

Finally, $1.25 billion of 4.45% 30-year bonds sold at 180 bps over Treasuries.

BofA Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC were the bookrunners.

Proceeds will be used to finance Zimmer’s acquisition of Biomet.

Zimmer, based in Warsaw, Ind., develops and markets reconstructive and spinal implants, trauma and related orthopedic surgical products.

ING three-parter

The primary also hosted ING Bank, which priced $2.35 billion of notes (A2/A/A+) in three parts, according to a market source.

There was a $350 million tranche of three-year floaters priced at par to yield Libor plus 55 bps.

The notes were guided at the Libor equivalent to the three-year fixed-rate notes.

ING also sold a $1 billion tranche of 1.8% notes due 2018 at 78 bps over Treasuries. Pricing was at 99.846 to yield 1.853%.

The notes sold at the tight end of the 80 bps area over Treasuries guidance.

A $1 billion tranche of 2.45% notes due 2020 sold at 99.813 to yield 2.49% with a spread of 88 bps over Treasuries.

Pricing was at the tight end of guidance set in the 90 bps area.

The notes were sold via Rule 144A and Regulation S without registration rights.

Barclays, Credit Suisse Securities, Deutsche Bank Securities Inc. and ING were the bookrunners.

Proceeds will be used for general corporate purposes.

FMS sells $1.5 billion

FMS Wertmanagement priced a $1.5 billion 1.75% five-year issue of global notes on Tuesday at mid-swaps flat, or Treasuries plus 16.2 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes (Aaa/AAA/AAA) sold at the tight end of talk set in the mid-swaps plus 1 bp area.

Pricing was at 99.933 to yield 1.764%.

Barclays, Credit Suisse Securities, Goldman Sachs & Co. and HSBC were the bookrunners.

The financial services company is based in Munich.

American Honda offering

The session also saw American Honda Finance price $1.25 billion of senior notes (A1/A+) in three- and five-year tranches, according to a market source.

There was $850 million of 1.5% notes due 2018 sold at 99.866 to yield 1.546%, or 47 bps over Treasuries.

The notes sold at the tight end of the 47 bps to 49 bps guidance. Initial talk was set in the low-50 bps area over Treasuries.

A second tranche was a $400 million issue of 2.15% notes due 2020 priced with a spread of 58 bps. Pricing was at 99.821 to yield 2.188%.

Guidance was set in the 60 bps area over Treasuries after having tightened from initial price thoughts set in the mid-60 bps area over Treasuries.

Proceeds will be used for general corporate purposes.

The bookrunners were BNP Paribas Securities Corp., JPMorgan, Morgan Stanley & Co. LLC and Societe Generale.

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

Valero Energy two-parter

Valero Energy came to market on Tuesday with a $1.25 billion two-tranche offering of senior notes (Baa2/BBB/BBB), according to an informed source.

A $600 million tranche of 3.65% 10-year notes sold at 155 bps over Treasuries. Pricing was at 99.709 to yield 3.685%.

There was also $650 million of 4.9% 30-year notes priced at 99.594 to yield 4.926%, or Treasuries plus 220 bps.

Both tranches sold at the tight end of price talk.

Citigroup Global Markets, Barclays, MUFG and Wells Fargo Securities LLC are the bookrunners.

Proceeds will be used for general corporate purposes.

San Antonio-based Valero is an oil refinery owner and operator.

Priceline new issue

In other primary action, Priceline Group sold $500 million of 3.65% 10-year senior notes (Baa1/BBB+) with a spread of Treasuries plus 155 bps on Tuesday, according to a market source and an FWP filed with the SEC.

Pricing was at 99.742 to yield 3.681%.

The notes sold at the tight end of price talk.

BofA Merrill Lynch, JPMorgan, Wells Fargo Securities, Citigroup Global Markets, Deutsche Bank Securities and Goldman Sachs were the joint bookrunning managers.

The Norwalk, Conn.-based online travel agency plans to use proceeds for general corporate purposes, which may include share repurchases, repayment of debt and acquisitions.

Essex 10-years

Essex Portfolio sold an upsized $500 million offering of 3.5% 10-year senior notes (Baa2/BBB/BBB+) on Tuesday with a spread of Treasuries plus 140 bps, according to a market source and an FWP filed with the SEC.

The notes sold tighter than initial talk set at 145 bps to 150 bps over Treasuries.

Pricing was at 99.747 to yield 3.53%.

The bookrunners were Wells Fargo Securities, Citigroup Global Markets, JPMorgan, MUFG and U.S. Bancorp Investments Inc.

The notes will be guaranteed by Essex Property Trust, Inc.

Proceeds will be used to repay debt under the company’s $1 billion unsecured line of credit facility and $25 million unsecured working capital line of credit facility and for other general corporate and working capital purposes.

Based in Palo Alto, Calif., Essex Portfolio is a real estate investment trust.

Sempra prices tight

Sempra Energy priced a $500 million issue of 2.4% five-year senior notes (Baa1/BBB+/BBB+) on Tuesday at Treasuries plus 80 bps, according to an FWP filed with the SEC.

The notes sold at the tight end of guidance set at 80 bps to 85 bps over Treasuries. Initial talk was set in the 95 bps area over Treasuries.

Pricing was at 99.916 to yield 2.418%.

Deutsche Bank Securities, Goldman Sachs, JPMorgan and Wells Fargo Securities were the joint bookrunners.

Proceeds from the offering will be used to repay commercial paper.

The holding company for utility subsidiaries is based in San Diego.

KBN upsizes

Meanwhile, Kommunalbanken priced an upsized $500 million offering of five-year floating-rate notes (Aaa/AAA/) in line with talk on Tuesday at par to yield Libor plus 7 bps, a market source said.

The deal was upsized from $300 million.

Nomura, RBC Capital Markets LLC and RBS Securities Inc. are the bookrunners for the Rule 144A and Regulation S offering.

The government-funded lender to municipalities is based in Oslo.

TC PipeLines new issue

TC PipeLines priced $350 million of 4.375% senior notes (Baa2/BBB/) due 2025 on Tuesday at 230 bps over Treasuries, according to an informed source.

Pricing was at 98.844 to yield 4.428%.

SunTrust Robinson Humphrey Inc. and RBS Securities were the bookrunners.

The company expects to use the proceeds of the offering to pay the cash purchase price of the remaining 30% interest in Gas Transmission Northwest LLC from TransCanada Corp.

TC PipeLines, based in Houston, was created by TransCanada PipeLines Ltd. to acquire, own and participate in the management of United States-based natural gas pipelines and related assets.

Boardwalk upsizes

Boardwalk Pipelines sold an upsized $250 million add-on to its existing 4.95% senior notes due Dec. 15, 2024 on Tuesday at Treasuries plus 285 bps, according to an informed source and an FWP filed with the SEC.

Pricing was at the tight end of talk set in the 290 bps area over Treasuries.

The notes (Baa3/BB+/BBB-) sold at 99.752 to yield 4.981%.

Barclays, JPMorgan, Citigroup Global Markets, Deutsche Bank Securities, MUFG and Wells Fargo Securities were the bookrunners.

The notes are guaranteed by Boardwalk Pipeline Partners LP.

Proceeds will be used to retire a portion of the outstanding $250 million of subsidiary Texas Gas Transmission LLC’s 4.6% notes due 2015.

The original $350 million issue priced with a spread of Treasuries plus 275 bps on Nov. 19.

The natural gas and liquids pipeline and storage company is based in Houston.

Bank of America paper soft

Bank of America’s 4% notes due 2025 eased 2 bps to 187 bps bid on Tuesday, according to a market source.

The issue priced on Jan. 16 in a $2.5 billion offering at a spread of Treasuries plus 225 bps.

Bank of America’s 4% notes due 2024 widened 8 bps to 132 bps offered, the source said.

Bank of America sold $2.75 billion of the notes on March 27, 2014 at Treasuries plus 137 bps.

The financial services company is based in Charlotte, N.C.

JPMorgan notes ease

JPMorgan Chase’s 3.125% notes due 2025 widened 2 bps in secondary trading to 127 bps bid, according to a market source.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Jan. 16 at a spread of Treasuries plus 145 bps.

The financial services company is based in New York City.

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