Anheuser-Busch sells monster deal, sees 'strong' demand; Primerica, Macquarie, NT&T price

By Aleesia Forni and Andrea Heisinger

New York, July 11 - The big name in the high-grade bond market Wednesday was Anheuser-Busch InBev Worldwide Inc., which priced a four-tranche blowout deal to help finance the purchase of Grupo Modelo.

The sale totaled $7.5 billion. The books were already several times oversubscribed at about $26 billion by late morning when the size of the trade wasn't set but was said to be between $3 billion and $5 billion. By mid-afternoon, the book size was about $30 billion, a syndicate source said.

"Orders were pouring in," the source said. All of the tranches were sold tighter than both initial and revised guidance, and there weren't many drops from investors due to that.

So far in 2012, the Anheuser-Busch deal is second in size only to the $9.8 billion, six-tranche behemoth priced by United Technologies Corp. on May 24.

In response to the new deal, Anheuser-Busch's existing bonds traded 1 basis point to 4 bps higher in the secondary market, a trader said, with the new bonds seeing "strong" demand.

There were other smaller trades on Wednesday from a variety of corporates both domestic and foreign.

Nippon Telegraph & Telephone Corp. priced $750 million of five-year notes, continuing the trend of Japanese issuers tapping the dollar-denominated bond market.

There was a $350 million deal of 10-year notes from Primerica, Inc.

Australia's Macquarie Group Ltd. sold $700 million of its 5% five-year notes in a reopening of the original deal priced in February. The total outstanding will be $1.4 billion.

Japan Bank for International Cooperation priced $2 billion of five-year notes in the morning after the sale went overnight from Tuesday.

There was a $300 million issue of perpetual preferred stock from Vornado Realty Trust. The sale was upsized from $100 million.

The flow of deals into the high-grade primary is expected to ease on Thursday after three solid days of issuance.

"We need to absorb some of this, and I think people want to see how [Anheuser-Busch] performs," one market source said late in the day.

A market source said that Thursday is "looking pretty slow."

Some issuers that had looked at the market on Wednesday instead opted to see how some of the corporate deals performed in trading.

Anheuser's $7.5 billion deal

Anheuser-Busch InBev Worldwide priced $7.5 billion of notes (A3/A/A) in four maturities, a source close to the deal said.

The full terms were not available at press time.

A $1.5 billion tranche of 0.8% three-year notes priced at a spread of Treasuries plus 50 bps. The notes were sold tighter than initial talk in the 65 bps area and at the low end of guidance in the 55 bps area.

There was $2 billion of 1.375% five-year notes sold at 80 bps over Treasuries. The tranche sold tighter than whispered talk in the 95 bps area and at the low end of revised guidance in the 85 bps area.

The third part was $3 billion of 2.5% 10-year notes priced at a spread of 105 bps over Treasuries. The notes sold lower than initial talk in the 125 bps area and at the tight end of revised guidance in the 110 bps area.

Finally, there was a $1 billion tranche of 3.75% 30-year bonds sold at a spread of Treasuries plus 120 bps. The bonds were also priced significantly tighter than whispered guidance in the 150 bps area and at the low end of revised talk in the 125 bps area.

The three-year notes were seen at 42 bps offered near the end of New York's session.

In the grey market, the five-years saw 71 bps bid, 66 bps offered. Meanwhile, the 10-year bonds saw 97 bps bid, 92 bps offered. The 30-year tranche traded at 109 bps bid, 104 bps offered in the gray market, the source continued.

Bank of America Merrill Lynch, Barclays Capital Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC were active bookrunners.

Proceeds are being used for general corporate purposes and for prefunding financing related to the merger with Grupo Modelo.

The deal is guaranteed by Anheuser-Busch InBev SA/NV, Brandbrew SA, Cobrew NV/SA and Anheuser-Busch Cos. LLC.

The beer brewer is based in Leuven, Belgium.

Macquarie reopens notes

Macquarie Bank reopened its issue of 5% notes due Feb. 22, 2017 to add $700 million, a market source said.

The notes (A1/A/A+) were sold at a spread of 375 bps over Treasuries. The bonds priced at the tight end of guidance in the 380 bps area.

Total issuance is $1.4 billion including $700 million priced on Feb. 14 at 420 bps over Treasuries.

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

Bank of America Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Macquarie ran the books.

The financial services segment of Macquarie Group Ltd. is based in Sydney, Australia.

Primerica upsizes

Primerica priced an upsized $375 million of 4.75% 10-year senior notes (Baa2/A-/) at a spread of Treasuries plus 325 bps, an informed source said.

The deal size was increased from $350 million. There was about $2.2 billion on the books for the trade, the source said, and demand led to the slight $25 million upsize.

The bonds sold tighter than initial guidance in the mid-to-high 300 bps area and at the tight end of talk in the 330 bps area.

In the grey market, the bonds were seen at 315 bps bid.

The bookrunners were Citigroup, JPMorgan and Morgan Stanley & Co. LLC.

Proceeds are being used to repay amounts under a $300 million note owed to Citigroup and for working capital and general corporate purposes.

The provider of life insurance and financial products is based in Duluth, Ga.

NT&T prices $750 million

Nippon Telegraph & Telephone priced $750 million of 1.4% five-year bonds (Aa2/AA/) at a spread of Treasuries plus 80 bps, a market source said.

Bank of America Merrill Lynch, Barclays and Morgan Stanley were the bookrunners.

Proceeds are being used for general corporate purposes.

The telecom and IT company is based in Tokyo.

JBIC's guaranteed sale

Japan Bank for International Cooperation sold $2 billion of 1.125% five-year senior notes (Aa3/AA-/) at a spread of mid-swaps plus 75 bps, or Treasuries plus 57.9 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

The sale was announced on Tuesday and went overnight.

Bank of America Merrill Lynch and HSBC Securities (USA) Inc. were the bookrunners.

Proceeds are being used for bank operations.

The deal is guaranteed by the government of Japan.

JBIC was last in the U.S. bond market with a $1.5 billion sale of 4.25% five-year notes at 86.5 bps over Treasuries on June 11, 2008.

The financial aid institution backed by the Japanese government is based in Tokyo.

Vornado prices preferreds

Vornado Realty Trust priced a $300 million offering of new 5.7% series K cumulative redeemable perpetual preferred stock (expected Baa3/BBB-/BB+), according to an FWP filing with the SEC.

The deal was initially expected to be about $100 million and was later revised to be as much as $350 million.

Price talk was originally around 5.875%, a trader said.

The public offering price was $25 per share.

The company plans to list the preferreds on the New York Stock Exchange.

Bank of America Merrill Lynch, Citigroup, UBS Securities LLC, Wells Fargo Securities LLC and Morgan Stanley were the bookrunners.

Proceeds from the sale will be contributed to the trust's operating partnership in exchange for preferred units. The operating partnership will then use the funds for general business purposes, which may include the redemption or repurchase of other preferred stock and units.

Stephanie N. Rotondo contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.