Walt Disney, St. Jude price ahead of Fed decision; Lowe’s bonds strong in secondary

By Aleesia Forni and Cristal Cody

Virginia Beach, Sept. 14 – Walt Disney Co. and St. Jude Medical, Inc. entered the investment-grade bond primary market on Monday, getting in ahead of this week’s Federal Open Market Committee meeting and a possible interest rate hike.

Walt Disney sold a $2 billion three-tranche offering, with each piece selling around 10 basis points to 15 bps tight of initial price thoughts.

St. Jude Medical’s $1.5 billion offering was also sold tighter than price talk and grabbed around $6.5 billion of orders.

In other new issues, Aviation Capital Group Corp. sold $900 million of senior notes in two parts, United Parcel Service, Inc. sold $57 million of floaters and Pricoa Global Funding I offered a $350 issue of three-year notes.

New bonds from home improvement retailers Lowe’s Cos., Inc. and Home Depot Inc. that priced in the previous week remained stronger in the secondary market.

Lowe’s long bonds were up nearly 3 points from issuance on Monday. The company’s bonds traded 15 bps tighter than where the issue priced.

Home Depot’s 3.35% senior notes due 2025 were mostly unchanged over the session but continue to trade better than issuance.

The Markit CDX North American Investment Grade index was flat over the day at a spread of 80 bps.

Disney new issue

The primary market hosted Walt Disney on Monday, with the company pricing $2 billion of senior notes (A2/A/A) in three parts, according to a market source and an FWP filed with the Securities and Exchange Commission.

There was $500 million 1.5% three-year notes sold at 99.915 to yield 1.529%, or Treasuries plus 50 bps.

The notes sold at the tight end of price guidance set in the Treasuries plus 55 bps area, tightened from initial talk in the range of Treasuries plus 60 bps to 65 bps.

A $750 million 2.15% five-year tranche sold with a 70 bps spread over Treasuries. Pricing was at 99.75 to yield 2.203%.

The issue came at the tight end of the Treasuries plus 75 bps area guidance following initial talk in the range of Treasuries plus 80 bps to 85 bps.

Finally, $750 million of 3.15% 10-year notes priced at 99.762 to yield 3.178%, or Treasuries plus 100 bps.

The notes sold at the tight end of guidance set in the Treasuries plus 105 bps area. Initially, talk was in the Treasuries plus 115 bps area.

Bookrunners were Goldman Sachs & Co., J.P. Morgan Securities LLC, BNP Paribas Securities Corp. and BofA Merrill Lynch.

Proceeds will be used for general corporate purposes.

The entertainment and media company is based in Burbank, Calif.

St. Jude prices tight

Also on Monday, St. Jude Medical sold $1.5 billion of senior notes in three parts, according to a market source and an FWP filing with the SEC.

The offering (Baa2/A/A-) included $500 million of 2% three-year notes sold at 99.759 to yield 2.084%, or Treasuries plus 105 bps.

Also, $500 million of 2.8% five-year notes priced with a spread of 130 bps over Treasuries. Pricing was at 99.954 to yield 2.81%.

A third tranche was $500 million of 3.875% 10-year notes priced at 99.616 to yield 3.922%, or 175 bps over Treasuries.

All tranches sold at the tight end of price guidance.

BofA Merrill Lynch, MUFG and Wells Fargo Securities LLC are the bookrunners.

Proceeds will be used to fund the acquisition of Thoratec Corp.

The maker of cardiovascular medical devices is based in St. Paul, Minn.

Aviation Capital two-parter

Aviation Capital Group priced $900 million of senior notes (/BBB-/BBB-) in two parts, a market source said.

A $600 million 2.875% note due 2018 sold at 99.553 to yield 3.032%, or 212.5 bps over Treasuries.

Price talk was in the Treasuries plus 212.5 bps area.

Also, $300 million of 4.875% notes due 2025 sold at Treasuries plus 275 bps. Pricing was at 99.597 to yield 4.926%.

The issue sold in line with talk set in the Treasuries plus 275 bps area.

Credit Agricole, Credit Suisse Securities, Deutsche Bank Securities Inc., JPMorgan, Mizuho Securities, BNP Paribas, Citigroup Global Markets Inc., Goldman Sachs, MUFG, RBC Capital Markets LLC and Wells Fargo were the bookrunners.

The Newport Beach, Calif.-based provider of aircraft operating leases plans to use the proceeds for general corporate purposes.

Pricoa three-year notes

Pricoa Global Funding I priced $350 million of 1.9% three-year notes (A1/AA-/A+) on Monday to yield Treasuries plus 87.5 bps, an informed source said.

The sale was done under Rule 144A and Regulation S.

Bookrunners were Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Wells Fargo Securities LLC.

The unit of financial services company Prudential Financial, Inc. is based in Newark, N.J.

UPS floaters

The primary also hosted United Parcel Service’s new $57.73 million of floating-rate senior notes (Aa3/A+) due Sept. 15, 2065, which priced at par to yield Libor minus 30 bps, according to a FWP filing with the SEC.

Bookrunners are UBS Securities LLC, JPMorgan, Morgan Stanley & Co. LLC and Wells Fargo Securities.

The notes may be called in 2045 at 105 and then at amounts declining annually by 50 bps until 2055, when the notes are callable at par.

The notes are putable on each Sept. 15 until to Sept. 15, 2020 at 98, on each Sept. 15 to Sept. 15, 2025 at 99 and on Sept. 15, 2026 and every third year thereafter at par.

Proceeds will be used for general corporate purposes.

The package delivery and supply chain management company is based in Atlanta.

Lowe’s stronger

Lowe’s 4.375% senior notes due 2045 traded higher on Monday at 100.50, up from 100.31 on Friday, a market source said.

The bonds were quoted 2 bps tighter at 140 bps bid earlier in the day.

The company sold $750 million of the bonds on Wednesday at 97.632 to yield 4.52%, and a spread of Treasuries plus 155 bps.

The home improvement company is based in Mooresville, N.C.

Home Depot mostly unchanged

Home Depot’s 3.35% notes due 2025 rose to 100.74 over the day, up modestly from 100.60 on Friday, according to a market source.

The bonds were flat earlier in the day at 109 bps bid.

Home Depot sold $1 billion of the notes (A2/A/A) on Tuesday at 99.857 to yield 3.367%. The notes priced at 117 bps over Treasuries.

The home improvement retailer is based in Atlanta.

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