ERAC, Mizuho, PPL, MassMutual price, see plenty of investor demand; secondary spreads widen

By Aleesia Forni and Andrea Heisinger

New York, Oct. 10 - A full slate of deals, mostly priced privately, hit the high-grade bond market on Wednesday. They were led by Mizuho Corporate Bank Ltd. and ERAC USA Finance LLC.

Mizuho sold $2.5 billion of notes due 2017 and 2022. Both maturities priced 20 basis points tighter than talk.

ERAC USA sold $1 billion in three tranches after the size was increased from $600 million.

A sovereign sale of $1 billion in three-year notes came from Norddeutsche Landesbank-Girozentrale.

PPL Capital Funding, Inc. sold $400 million of 10-year senior notes.

An upsized $500 million of notes due 2022 was priced by MassMutual Global Funding II. The deal size was increased from $300 million, a source said.

Private Export Funding Corp. was in the market with a $400 million offering of 10-year notes. The trade was upsized from $300 million.

A sale of $300 million of seven-year bonds was announced by ProLogis International Funding SA. Pricing is expected sometime this week, a source said.

The tone of the primary market was described by one source as "blah."

"We have earnings, so it's just some opportunistic [deals]," the source said.

Thursday and Friday are seen with fewer deals, although the market won't be empty.

"There should be a few things," a syndicate source said.

The secondary market did not fare much better, with spreads widening across the board, one trader said.

The Markit CDX Series 18 North American Investment Grade index widened 1 bp to a spread of 99 bps on Wednesday.

CenturyLink Inc.'s bonds were especially underperforming on the day, with cash trading 10 bps to 15 bps wider.

ERAC USA sells $1 billion

ERAC USA Finance sold an upsized $1 billion of notes (Baa1/BBB+/) in three tranches via Rule 144A and Regulation S, an informed source said.

The deal size was increased from $600 million on about $10 billion on the books from investors.

The sale included $250 million of 1.4% notes due 2016 priced at a spread of Treasuries plus 110 bps. The tranche sold tighter than talk in the 145 bps area.

A $500 million tranche of 3.3% 10-year notes priced at a spread of 165 bps over Treasuries. The spread came in 20 bps from guidance in the 185 bps area.

There was also a reopening of 5.625% bonds due 2042 to add $250 million. The notes sold at a spread of Treasuries plus 225 bps. The bonds were sold tighter than talk in the 242.5 bps area, plus or minus 2.5 bps.

The bookrunners were Bank of America Merrill Lynch, Goldman Sachs & Co. and Wells Fargo Securities LLC.

The financing subsidiary of Enterprise Rent-A-Car Co. is based in St. Louis.

MassMutual upsizes 10-year

MassMutual Global Funding priced an upsized $500 million of 2.5% 10-year notes at a spread of 90 bps over Treasuries, an informed source told Prospect News.

The deal size was increased from $300 million.

The notes (Aa2/AA+/AA+) were sold tighter than guidance in the range of 95 bps to 100 bps over Treasuries.

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

Barclays, Deutsche Bank Securities Inc. and U.S. Bancorp Investments Inc. were the bookrunners.

MassMutual Global Funding last sold bonds in a $600 million sale in two tranches on April 14, 2010.

The issuing unit of Massachusetts Mutual Life Insurance Co. is based in Springfield, Mass.

Mizuho prices two tranches

Mizuho Corporate Bank priced $2.5 billion of notes (A1/A+/) in two tranches, a market source said.

A $1.5 billion tranche of five-year bonds priced at a spread of 90 bps over Treasuries. This was a tighter level than talk in the Treasuries plus 110 bps area.

A $1 billion tranche of 10-year notes was sold at a spread of Treasuries plus 130 bps. This was also tight to talk in the 150 bps area.

The bonds were sold under Rule 144A and Regulation S.

The full terms were not available at press time.

The bookrunners were Bank of America Merrill Lynch, Goldman Sachs, J.P. Morgan Securities LLC and Mizuho Securities USA Inc.

The corporate and investment banking subsidiary of Mizuho Financial Group is based in Tokyo.

PPL's 10-year

PPL Capital Funding priced a $400 million deal of 3.5% 10-year senior notes (Baa3/BBB-/BBB) to yield Treasuries plus 180 bps, a market source said.

There was about $3 billion of investor demand for the bonds, the source said.

The deal is guaranteed by PPL Corp.

The bookrunners were Mitsubishi UFJ Securities (USA) Inc., Morgan Stanley & Co. LLC, RBC Capital Markets LLC and Wells Fargo.

Proceeds are being invested in or loaned to PPL Corp. subsidiaries and will be used by them to repay short-term obligations including commercial paper borrowings and for general corporate purposes.

PPL was last in the market with a $400 million deal of 4.2% 10-year notes on June 11 priced at 265 bps over Treasuries.

The energy and utility holding company is based in Allentown, Pa.

Nord/LB sells short bond

Norddeutsche Landesbank-Girozentrale priced $1 billion of 0.875% three-year notes to yield mid-swaps plus 50 bps, or Treasuries plus 61.4 bps, an informed source told Prospect News.

The notes (Aaa/AAA/) were sold tighter than initial talk in the mid-swaps plus 55 bps area and in line with revised guidance in the mid-swaps plus 51 bps area, plus or minus 1 bp.

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

Bank of America Merrill Lynch, Barclays, BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC and HSBC Securities (USA) Inc. were the bookrunners.

The commercial bank is based in Hanover, Germany.

Pefco prices tight

Private Export Funding was in the market with an upsized $400 million sale of 10-year notes priced to yield Treasuries plus 38 bps, a market source said.

The notes (Aaa/AA+/) were sold tighter than guidance in the 45 bps over Treasuries area.

The full terms of the deal weren't available at press time.

The bookrunners were HSBC and JPMorgan.

The offering is guaranteed by the Export-Import Bank of the United States.

The company assists with financing U.S. exports through private capital and is based in New York.

ProLogis plans sale

ProLogis International Funding is expected to price $300 million of seven-year notes (Baa2/BBB-/BBB-), a source close to the trade said.

The notes will be priced under Rule 144A and Regulation S without registration rights.

The unit of industrial real estate owner and operator ProLogis is based in Denver.

CenturyLink bonds widen

In the secondary market, CenturyLink's 5.8% 10-year notes were quoted at 335 bps bid, 325 bps offered during Wednesday's session.

The Monroe, La.-based broadband and telecommunications company priced $1.4 billion of the notes at a spread of Treasuries plus 380 bps on March 5.

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