Wells Fargo, Essex, RBC, EIB, Quebec, Santander tap primary market; credit spreads tighten

By Cristal Cody

Tupelo, Miss., Feb. 4 – Wells Fargo & Co. led supply in the high-grade primary market on Tuesday with a $6 billion two-part offering of registered medium-term notes.

Also on Tuesday, Essex Portfolio, LP priced an upsized $500 million of 12-year guaranteed senior notes.

Royal Bank of Canada sold $300 million of senior floating-rate notes due Aug. 5, 2022.

The high-grade sovereign, supranational and agency market saw its first bond deals print Tuesday after more than a week of no issuance.

The European Investment Bank priced $3 billion of three-year global notes.

The Province of Quebec sold $2.5 billion of five-year notes.

Santander UK plc brought $1.25 billion of three-year covered bonds.

Meanwhile, a handful of companies were looking at the euro-denominated primary market on Tuesday, including International Business Machines Corp., Dow Chemical Co. and Comcast Corp., markets sources report.

IBM sold €3.75 billion of registered fixed-rate notes (A2/A/) in three tranches.

Week to date, more than $12 billion of dollar-denominated high-grade corporate bonds have priced.

Monday’s session saw just over $6 billion of supply.

About $15 billion to $20 billion of deal volume is expected this week, according to syndicate sources.

The Markit CDX North American Investment Grade 33 index tightened more than 2 basis points on the day to close at a spread of 47 bps.

New issues were mixed in the secondary market, a source said.

Prologis, LP’s $2.2 billion three-part offering of notes (A3/A-) priced Monday improved about 3 bps.

A $500 million tranche of 2.125% seven-year notes priced at a spread of 70 bps over Treasuries, while $1 billion of 2.25% 10-year notes came at a Treasuries plus 80 bps spread and $700 million of 3% 30-year notes priced at a 105 bps over Treasuries spread.

Wells Fargo prices $6 billion

Wells Fargo sold $6 billion of medium-term notes (A2/A-/A+) in two tranches in the offering on Tuesday, according to a market source.

A $3 billion tranche of 2.164% senior redeemable fixed-to-floating-rate notes due Feb. 11, 2026 priced at a spread of 75 bps over Treasuries. The notes were initially talked to price in the Treasuries plus 90 bps to 95 bps spread area.

The rate on the notes will convert in February 2025 to a floating rate of Libor plus 73 bps.

Wells Fargo sold $3 billion of 2.572% senior redeemable fixed-to-floating-rate notes due Feb. 11, 2031 at a spread of Treasuries plus 98 bps. Initial price talk was in the Treasuries plus 115 bps to 120 bps area.

The rate on the 2031 notes will be reset in February 2030 to a floating rate of Libor plus 100 bps.

Wells Fargo Securities LLC was the bookrunner on the deal.

The financial services company is based in San Francisco.

Essex Portfolio upsizes

Essex Portfolio priced an upsized $500 million of 2.65% guaranteed senior notes due March 15, 2032 (Baa1/BBB+/BBB+) on Tuesday at a spread of Treasuries plus 108 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

The notes were sold at 99.628 to yield 2.686%.

Initial price talk was in the Treasuries plus 135 bps area.

The deal was upsized from $400 million.

Wells Fargo, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, U.S. Bancorp Investments Inc., Jefferies LLC and MUFG were the bookrunners.

Essex held fixed income investor meetings for the offering on Monday.

The notes are guaranteed by Essex Property Trust, Inc.

Palo Alto, Calif.-based Essex Portfolio is a real estate investment trust.

RBC sells floaters

Royal Bank of Canada priced $300 million of senior floating-rate notes due Aug. 5, 2022 (A2/A/AA) on Tuesday at par to yield SOFR plus 40 bps, according to an FWP filing.

RBC Capital Markets, LLC was the bookrunner.

Royal Bank of Canada is a Toronto-based financial services company.

EIB brings $3 billion

The European Investment Bank (Aaa/AAA/AAA) priced $3 billion of 1.375% global notes due May 15, 2023 on Tuesday at mid-swaps plus 6 bps, or a spread of 7.65 bps over Treasuries, according to a market source.

Initial price talk was in the mid-swaps plus 8 bps area with guidance tightened to the mid-swaps plus 7 bps area.

HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC and RBC Capital Markets were the bookrunners.

The lender for the European Union is based in Kirchberg, Luxembourg.

Quebec prices $2.5 billion

Quebec (Aa2/AA-/AA-) priced $2.5 billion of 1.5% notes due Feb. 11, 2025 on Tuesday at mid-swaps plus 19 bps, or a spread of Treasuries plus 19.4 bps, according to a market source and an FWP filing.

The notes were initially talked to print in the mid-swaps plus 21 bps area with guidance firmed to the mid-swaps plus 20 bps area.

The issue priced at 99.459 to yield 1.613%.

BMO Capital Markets Corp., BofA Securities, Inc., J.P. Morgan and Scotia Capital (USA) Inc. were the bookrunners.

Santander sells covered bonds

Santander UK priced $1.25 billion of 1.625% covered bonds due Feb. 12, 2023 (Aaa/AAA/AAA) on Tuesday at mid-swaps plus 28 bps, or a Treasuries plus 30.7 bps spread, according to a market source.

Initial price talk was in the mid-swaps plus 30 bps area.

Bookrunners included Credit Suisse Securities (USA) LLC, HSBC Securities, RBC Capital Markets, Santander Investment Securities Inc. and TD Securities (USA) LLC.

The financial services company is based in London.

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