TIAA debut offering meets demand; P&G, PNC also price notes; Tri-State long bonds firm

By Aleesia Forni and Cristal Cody

Virginia Beach, Oct. 27 – The investment-grade bond market kicked off what is expected to be an active week with more than $6 billion of new issuance on Monday.

In its debut offering, TIAA Asset Management Finance Co. LLC priced $2 billion of notes in two parts on Monday, attracting a solid order book that was more than four times oversubscribed.

Also on Monday, both Procter & Gamble Co. and PNC Bank NA came to market with upsized issues during the session.

Procter & Gamble sold its new deal at the tight end of price talk, which firmed around 10 basis points compared to initial guidance.

PNC Bank’s two-part offering also priced around 10 bps tighter than original price thoughts.

In other primary happenings on Monday, Tri-State Generation & Transmission Association Inc. sold a $500 million new issue, while AT&T Inc. offered $1.3 billion of global notes.

Looking forward, another busy primary session is expected for Tuesday ahead of the two-day Federal Open Market Committee meeting mid-week.

Sources are calling for around $20 billion to $25 billion of new issuance for the last full week of October.

Investment-grade credit spreads were unchanged on Monday, and the Markit CDX North American Investment Grade series 23 index closed at a spread of 65 bps.

AT&T’s new global notes were not seen in secondary trading, a trader said.

“Pretty quiet,” one source said.

Procter & Gamble’s 1.9% notes due 2019 tightened 1 bp on the bid side in late afternoon aftermarket trading.

PNC’s paper traded about 1 bp tighter in the secondary market.

In other aftermarket activity, no trading was seen in Tri-State Generation’s 3.7% notes due 2024, but the company’s tranche of 4.7% notes due 2044 tightened 6 bps, a trader said.

TIAA brings $2 billion

TIAA Asset Management Finance priced $2 billion of notes (Baa3/BBB/AA-) in two parts on Monday, a market source said.

There was $1 billion of 2.95% bonds due 2019 priced at Treasuries plus 150 bps. The notes sold at 99.82 to yield 2.989%.

A $1 billion tranche of 4.125% 10-year bonds sold at 99.886 to yield 4.139% with a spread of 187.5 bps over Treasuries.

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

The notes were sold via Rule 144A and Regulation S.

TIAA is a wholly owned subsidiary of New York-based Teachers Insurance & Annuity Association of America.

AT&T sells new issue

AT&T sold $1,295,000,000 of global notes (A3/A-/A) due 2044 at par on Monday, according to a FWP filed with the Securities and Exchange Commission.

The notes will be listed on the GreTai Securities Market.

MasterLink Securities Corp. and Mega International Commercial Bank Co. Ltd. were the bookrunners.

The notes may be redeemed on each Nov. 10 on or after Nov. 10, 2016 at par.

Proceeds will be used for general corporate purposes.

The telecommunications company is based in Dallas.

PNC upsizes deal

PNC Bank priced an upsized $1.25 billion of senior bank notes (A2/A/A+) on Monday in two parts, according to a market source.

The deal was upsized from original thoughts of $750 million.

The sale included a $750 million tap of the bank’s existing 2.4% notes due Oct. 18, 2019 priced at Treasuries plus 105 bps.

Pricing was at 100.772 to yield 2.232%.

The original $500 million of notes sold at Treasuries plus 62.5 bps on Sept. 15.

There was also a $500 million offering of 3.3% 10-year notes priced at 99.958 to yield 3.305%, or Treasuries plus 105 bps.

Barclays, Citigroup, JPMorgan and PNC Capital Markets LLC were the joint bookrunners.

In the secondary market, PNC’s 2.4% notes due 2019 traded at 73 bps bid, according to a trader.

The company’s tranche of notes due 2024 firmed to 104 bps bid as the session closed.

PNC is a Pittsburgh-based bank and holding company.

P&G prices tight

Procter & Gamble sold an upsized $1 billion offering of five-year senior notes (Aa3/AA-/) in fixed- and floating-rate tranches on Monday, according to a market source and an FWP filed with the SEC.

The sale included $450 million of floating-rate notes due 2019 priced at par to yield Libor plus 27 bps.

There was also a $550 million tranche of 1.9% five-year notes priced at 99.848 to yield 1.932%, or Treasuries plus 45 bps.

Pricing was at the tight end of talk.

Citigroup, Goldman Sachs & Co. and JPMorgan were the bookrunners.

Proceeds will be used for general corporate purposes.

Procter & Gamble’s 1.9% notes due 2019 traded modestly better at 44 bps bid, 40 bps offered in the secondary market, a trader said.

Procter & Gamble is a Cincinnati-based consumer products company.

Tri-State two-parter prices

Tri-State Generation & Transmission Association priced $500 million of notes (A3/A/A) on Monday in tranches due 2024 and 2044, according to a market source.

The company sold $250 million of 3.7% 10-year bonds at 99.958 to yield 3.705%, or Treasuries plus 145 bps

There was also $250 million of 4.7% 30-year bonds priced at 170 bps over Treasuries.

The notes sold at 99.474 to yield 4.733%.

BofA Merrill Lynch and Goldman Sachs were the bookrunners for the Rule 144A and Regulation S deal.

Tri-State Generation’s 3.7% notes due 2024 were not seen in aftermarket trading, while the tranche of 4.7% notes due 2044 tightened to 164 bps bid, 157 bps offered, a trader said.

The electric cooperative is based in Westminster, Colo.

Bank/brokerage CDS costs

Investment-grade bank and brokerage CDS prices were mostly unchanged on Monday, according to a market source.

Bank of America Corp.’s CDS costs were flat at 69 bps bid, 72 bps offered. Citigroup Inc.’s CDS costs were also unchanged at 69 bps bid, 72 bps offered. JPMorgan Chase & Co.’s CDS costs were 1 bp higher at 89 bps bid, 61 bps offered. Wells Fargo & Co.’s CDS costs were flat at 46 bps bid, 49 bps offered.

Merrill Lynch’s CDS costs were unchanged at 72 bps bid, 75 bps offered. Morgan Stanley’s CDS costs ended flat at 82 bps bid, 85 bps offered. Goldman Sachs Group, Inc.’s CDS costs were unchanged at 82 bps bid, 85 bps offered.

Paul Deckelman contributed to this review

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