Oneok, Prudential, Martin Marietta, Entergy Texas price; funds post outflows; spreads widen

By Cristal Cody

Tupelo, Miss., March 5 – Investment-grade supply continued on Thursday as stocks faltered, Treasuries rallied and credit spreads widened.

Oneok Inc. priced a $1.65 billion three-tranche offering of guaranteed senior notes.

Prudential Financial, Inc. sold $1.5 billion of medium-term notes in three tranches.

Martin Marietta Materials Inc. brought $500 million of 10-year senior notes to the primary market.

Entergy Texas Inc. priced a $175 million add-on to its 3.55% first mortgage bonds due Sept. 30, 2049 during the session.

In addition, in the sovereign, supranational and agency market, Kommunalbanken AS offered dollar-denominated five-year global notes.

The notes due March 12, 2025 were initially talked to price at the mid-swaps plus 17 basis points area.

Investment-grade issuance totals more than $27 billion week to date.

Deal volume includes more than $18 billion of bonds priced over Wednesday’s session and over $6 billion on Tuesday following a quiet session on Monday.

Up to about $15 billion of bond supply was forecast this week after only two issuers priced subordinated note offerings last week as coronavirus pandemic fears sent the financial markets into a tailspin.

The Federal Reserve cut the Federal Funds Rate on Tuesday by 50 bps to 1% to 1.25% on concerns that the coronavirus poses to economic activity.

The Bank of Canada also cut interest rates on Wednesday.

On Thursday, California declared a state of emergency after recording its first coronavirus-related death.

Amidst the market volatility, corporate high-grade funds saw outflows over the past week ended Wednesday, according to Lipper US Fund Flows.

Funds posted outflows of $4.79 billion, compared with inflows of $3.65 billion in the previous week and $5.14 billion in the prior week.

Credit spreads widened about 10 bps over Thursday’s session after improving more than 4 bps the previous day.

The Markit CDX North American Investment Grade 33 index softened to a spread of 74.93 bps on Thursday from 65.2 bps on Wednesday.

The Dow Jones Industrial Average closed down 3.58%.

Treasuries rallied in the flight-to-safety bid. The benchmark 10-year note yield declined 6 bps to finish at 0.926%.

High-grade bonds mostly softened over the session with energy issues trading about 1 bp to nearly 20 bps wider, a source said.

Oneok prices $1.65 billion

Oneok priced $1.65 billion of guaranteed senior notes (Baa3/BBB/) in three tranches on Thursday, according to a news release.

The deal included $400 million of 2.2% five-year notes, $850 million of 3.1% 10-year notes and $400 million of 4.5% 30-year notes.

Barclays, Deutsche Bank Securities Inc., Mizuho Securities USA Inc., TD Securities (USA) LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, MUFG, PNC Capital Markets LLC, RBC Capital Markets, LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc. and Wells Fargo Securities, LLC were the bookrunners.

The bonds are guaranteed by Oneok Partners LP and Oneok Partners Intermediate LP.

Oneok is a midstream service provider and natural gas company based in Tulsa, Okla.

Prudential brings $1.5 billion

Prudential Financial sold $1.5 billion of medium-term notes (A3/A/) in three tranches on Thursday, according to FWP filings with the Securities and Exchange Commission.

A $500 million tranche of 1.5% notes due March 10, 2026 priced at 99.572 to yield 1.575% and a spread of 90 bps over Treasuries.

The company sold $500 million of 2.1% 10-year notes at 99.749 to yield 2.128%. The notes were sold with a Treasuries plus 120 bps spread.

Finally, $500 million of 3% notes due March 10, 2040 priced with a spread of Treasuries plus 145 bps. The notes came at 99.746 to yield 3.017%.

BNP Paribas Securities Corp., BofA Securities, Inc., Deutsche Bank Securities, HSBC Securities (USA) Inc. and Morgan Stanley were the bookrunners.

The financial services company is based in Newark, N.J.

Martin Marietta prices

Martin Marietta Materials sold $500 million of 2.5% 10-year senior notes (Baa3/BBB+/BBB) on Thursday at a spread of 170 bps over Treasuries, according to an FWP filing.

The notes were sold at 98.864 to yield 2.63%.

Deutsche Bank Securities, J.P. Morgan Securities LLC, Wells Fargo Securities and SunTrust Robinson Humphrey, Inc. were the bookrunners.

The producer of construction aggregates is based in Raleigh, N.C.

Entergy Texas taps 2049 bonds

Entergy Texas priced a $175 million add-on to its 3.55% first mortgage bonds due Sept. 30, 2049 (Baa1/A/) on Thursday at 112.176 to yield 2.925%, according to an FWP filing.

The notes priced at a spread of 137.5 bps over Treasuries.

J.P. Morgan Securities, Mizuho Securities and U.S. Bancorp Investments Inc. were the bookrunners.

Entergy Texas originally sold the notes in a $300 million offering on Sept. 16, 2019 at 99.177 to yield 3.595% and a spread of Treasuries plus 128 bps. The total outstanding is now $525 million.

Entergy Texas is a Beaumont, Texas-based energy provider.

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