BofA shelves planned bond offer; McDonald’s sees demand; Hewlett Packard, Charter tighten

By Aleesia Forni

New York, Dec. 2 – Bank of America did not launch its previously announced benchmark offering of senior bank notes on Wednesday, while McDonald’s Corp. saw blowout demand for its new bond offering.

Bank of America’s two-part three-year deal (A1/A/A+) was slated for Wednesday pricing following its announcement early during the trading day, according to informed sources, though the deal did not launch as planned during the session.

One market source said the bank will revisit the issue on Thursday, though other details were unavailable at press time.

The Charlotte, N.C.-based financial services company talked the fixed-rate tranche in the 85 basis points area over Treasuries, while the floaters were talked at the Libor equivalent.

BofA Merrill Lynch is the bookrunner.

Meantime, McDonald’s Corp. attracted an order book that was more than six times oversubscribed for its new $6 billion offering.

Tranches of the offering sold between 25 bps and 35 bps inside of initial price thoughts.

Elsewhere on Wednesday, Commonwealth Bank of Australia priced $1.25 billion of subordinated notes, while Jackson National Life Global Funding and Principal Life Global Funding II were each in the market with upsized funding agreement-back deals.

Investment-grade bonds were mixed over the session.

McDonald’s existing senior notes (A3/BBB+/BBB+) traded flat to softer over the day.

Hewlett Packard Enterprise Co.’s bonds (Baa2/BBB/A-) firmed 3 bps in secondary trading.

Charter Communications Inc.’s 4.908% notes due 2025 tightened 5 bps.

The Markit CDX North American Investment Grade 25 index eased 1 bp to close at a spread of 82 bps.

McDonalds five-parter

Orders piled into McDonald’s new $6 billion issue of senior notes (Baa1/BBB+/BBB+), which sold in five tranches on Wednesday, a market source said.

The final book was more than $38 billion.

There was $750 million of 2.1% three-year notes sold at 99.951 to yield 2.117%, or Treasuries plus 90 bps.

A $1 billion 2.75% five-year tranche sold at 99.815 to yield 2.79%, or 115 bps over Treasuries.

Also, a $1.75 billion 3.7% tranche of bonds due 2026 priced with a spread of Treasuries plus 155 bps. Pricing was at 99.676 to yield 3.738%.

There was $750 million of 4.7% 20-year bonds priced at 99.679 to yield 4.725%, or Treasuries plus 180 bps.

Finally, $1.75 billion of 4.875% 30-year bonds sold at 195 bps over Treasuries. The notes priced at par.

The bookrunners are BofA Merrill Lynch, Goldman Sachs & Co., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC.

The Oak Brook, Ill.-based fast food chain plans to use the proceeds for general corporate purposes.

CBA subordinated notes

Also on Wednesday, Commonwealth Bank of Australia sold $1.25 billion of 4.5% 10-year subordinated notes (A3/BBB+/A+) at Treasuries plus 235 bps, according to a market source.

Pricing was at the tight end of the Treasuries plus 235 bps to 240 bps guidance. The notes were initially talked in the range of 250 bps to 260 bps over Treasuries.

Commonwealth Bank of Australia, Citigroup Global Markets Inc., Goldman Sachs and JPMorgan are the bookrunners.

The notes will be sold via Rule 144A and Regulation S.

The banking and financial services company is based in Sydney, Australia.

Jackson, Principal upsize

A pair of insurance subsidiaries sold upsized funding-agreement-backed deals on Wednesday.

Jackson National Life Global Funding priced an upsized $350 million of 2.6% funding agreement-backed notes on Wednesday at Treasuries plus 98 bps, a market source said, at the tight end of the Treasuries plus 100 bps area guidance.

Pricing was at 99.907 to yield 2.62%.

The deal (A1/AA/AA) was upsized from $300 million.

Bookrunners were BofA Merrill Lynch, Goldman Sachs and HSBC Securities were the bookrunners.

The subsidiary of U.K. insurance company Prudential plc is based in Lansing, Mich.

And Principal Life Global Funding II sold its upsized $350 million of funding agreement-backed floaters (A1/A+) on Wednesday at par to yield Libor plus 50 bps, a market source said.

The deal was upsized from $250 million and sold at the tight side of guidance.

Bookrunners were Deutsche Bank Securities Inc. and UBS Securities LLC.

The Des Moines-based financing unit of Principal Insurance Group sold the notes via Rule 144A and Regulation S.

McDonald’s mixed

McDonald’s existing 2.2% notes due 2020 eased 2 bps to 77 bps bid in the secondary market, a source said.

The company sold $700 million of the notes on May 18, 2015 at Treasuries plus 70 bps.

McDonald’s tranche of 4.6% notes due 2045 were flat at 189 bps bid.

The bonds priced in a $600 million tranche in the May 18 deal at Treasuries plus 155 bps.

The fast food chain is based in Oak Brook, Ill.

Hewlett Packard firms

Hewlett Packard Enterprise’s 4.9% notes due 2025 firmed 3 bps over the session to 286 bps bid, a market source said.

The company sold $2.5 billion of the notes on Sept. 30 at Treasuries plus 290 bps.

Hewlett Packard Enterprise’s 6.35% bonds due 2045 were quoted 3 bps better late afternoon at 365 bps bid in the secondary market.

The company sold $1.5 billion of the bonds at Treasuries plus 350 bps in the Sept. 30 offering.

Hewlett Packard Enterprise is a Palo Alto, Calif.-based provider of technology services.

Charter stronger

Charter Communications’ 4.908% notes due 2025 firmed 5 bps to 249 bps bid in secondary trading on Wednesday, a market source said.

The company sold $4.5 billion of the bonds (Ba1/BBB-) on July 9 at a spread of Treasuries plus 260 bps.

The provider of cable, internet and phone services is based in Stamford, Conn.

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