Express Scripts, Pricoa, PNC, Harris, Bunge, Yara offer bonds; Harris trades well, BofA eases

By Andrea Heisinger and Paul Deckelman

New York, June 4 - A Thursday that was "initially mixed" evened out as the day progressed, with successful deals from Express Scripts, Inc., Pricoa Global Funding, PNC Funding Corp., Harris Corp., Bunge Limited Finance Corp. and Yara International ASA.

The sale from Express Scripts took all day to price, while others such as Pricoa and Yara were announced and priced quickly. The Pricoa sale was announced after noon ET, a source close to the deal said.

Other deals were upsized, such as Harris and Bunge.

Among the established issues in the secondary arena on Thursday, a market source said the CDX Series 12 North American high-grade index inched downward by 1 basis point to a mid bid-asked spread level of 123 bps.

Advancing issues - which on Wednesday had led decliners by a better-than three-to-two edge - fell behind them by a narrow margin on Thursday.

Overall market activity, reflected in dollar volumes, rose by 17% from Wednesday's levels.

Spreads in general were seen tighter, in line with higher Treasury yields; for instance, the yield on the benchmark 10-year government jumped by 16 bps to 3.70%.

The new Harris Corp. 10-year bonds were seen having tightened solidly from the level at which it priced.

On the downside, Bank of America Corp.'s recently priced mega-deal widened out from its Wednesday levels. However, that paper continued to trade well inside of the spread at which it priced last week.

Express Scripts offers three tranches

St. Louis-based Express Scripts sold $2.5 billion of senior notes in three tranches late Thursday. The sale was expanded from the two tranches listed in a 424B5 filing with the Securities and Exchange Commission earlier in the day.

The deal was announced earlier in the week, along with a concurrent 23 million common stock share sale.

The $1 billion of three-year notes priced at Treasuries plus 375 basis points.

The $1 billion of five-year notes sold at a spread of Treasuries plus 375 bps.

A $500 million of 10-year notes priced at a spread of Treasuries plus 362.5 bps.

A source close to the sale said both the three-and five-year tranches were talked at the 387.5 bps area, and came at the tight end of the margin of plus or minus 12.5 bps. The 10-year notes were talked at the 375 bps area, also plus or minus 12.5 bps and again came at the tight end.

Proceeds, along with those from the common stock sale, are being used to help finance the acquisition of pharmacy benefit company WellPoint, Inc.

Citigroup Inc., Credit Suisse Securities and J.P. Morgan Securities ran the books.

Full terms were not available at press time because of the lateness of pricing.

Pricoa prices deal quickly

Pricoa Global Funding, a unit of financial services company Prudential Financial Inc., sold $500 million of 5.45% five-year notes at Treasuries plus 295 basis points, a source close to the deal said.

Full terms were not available at press time for the deal done via Rule 144A by the Newark, N.J.-based company.

Deutsche Bank Securities, UBS Investment Bank and Wachovia Capital Markets were bookrunners.

The sale "went very smoothly," the source said. "It was announced late - after noon - but priced quickly," he said.

A second source who worked on the sale said it was "well oversubscribed."

Prudential and its subsidiaries have come to the market more than once recently, to which the source said, "they're just tapping the market anyway they can."

PNC Funding sells non-FDIC notes

Pittsburgh-based PNC Funding priced $1 billion of senior notes in two tranches without the backing of the Federal Deposit Insurance Corp.

The $400 million 5.4% five-year notes priced at 290 bps over Treasuries, while the $600 million of 6.7% 10-year notes came at Treasuries plus 305 bps.

Goldman Sachs & Co. and J.P. Morgan Securities were bookrunners.

Harris offers upsized 10-year

Communications and information technology company Harris priced an upsized $350 million 6.375% 10-year notes at Treasuries plus 275 basis points. The sale was done by early afternoon, a source said. Its size was increased from $300 million, he added.

Bookrunners were Citigroup Global Markets and Morgan Stanley.

Proceeds from the offering by the Melbourne, Fla.-based company will be used to repay debt under a commercial paper program incurred in connection with the acquisition of Tyco Electronics Wireless Systems. Pending that use, they will be invested in interest-bearing instruments or investment-grade securities.

Tone mellows by day's end

It was a bumpy start to Thursday, a syndicate source said, but things eventually evened out as several deals successfully made their way to the primary.

"Initially it was mixed," he said, "but there was plenty of demand."

At least two of the day's deals, from Yara and Pricoa, were announced and priced fairly late in the day. The Express Scripts sale, although formally announced earlier in the week and started early in the day, was not priced until very late afternoon.

The steady flow of new deals after Wednesday's rush was likely a "hangover," one source said. "We're not sure when things will slow. It's probably not going to be a slow summer."

There may be sales on a normally slow Friday, although not many.

Bunge unit upsizes sale

Bunge Limited Finance priced an upsized $600 million of 8.5% 10-year senior notes to yield 8.5%. They came at a spread of 479.4 bps over Treasuries.

The size was increased from $400 million, a source said.

Bookrunners were BNP Paribas Securities, HSBC Securities, J.P. Morgan Securities and RBS Securities.

Proceeds will be used for repayment of debt from parent company Bunge Ltd., which is guaranteeing the notes.

The subsidiary of agribusiness and food company Bunge is based in White Plains, N.Y.

Norway's Yara does Rule 144A offering

Yara International, based in Oslo, Norway, sold $500 million 7.875% 10-year senior notes to yield 7.95%, an informed source said. They had a spread of Treasuries plus 424.6 bps.

The deal from the plant fertilizer company was priced via Rule 144A.

Bookrunners were BNP Paribas Securities, Barclays Capital and Citigroup Global Markets.

GMAC sale woos investors

The two-tranche deal from GMAC LLC Wednesday totaling $4.5 billion guaranteed by the FDIC was a hit with investors, a source close to the sale said.

"It was good," he said, declining to elaborate on how oversubscribed it was.

A second source also close to the deal gave an equally short answer, saying "from that name, there was a lot of interest."

It was the first FDIC-backed issue from the funding arm of struggling automaker General Motors, which is junk-rated and filed for bankruptcy just a few days prior to the GMAC offering.

New Harris bonds tighten

When the new Harris Corp. 6.375% due 2019 were freed for secondary activity, a trader saw those bonds firm smartly to a spread over comparable Treasury issues of 245 bps bid, 230 bps over.

That was well in from the 275 bps over level at which the Melbourne, Fla.-based information technology company had priced its $350 million of bonds - upsized from an initially planned $300 million - earlier in the session.

Bunge bonds trade near pricing spread

On the other hand, the trader saw Bunge's new 8.50% notes due 2019 offered at 470 bps over, but did not see a bid side.

That level was not too far from the 479.4 bps over spread at which the White Plains, N.Y.-based agribusiness and food concern had priced its $600 million of bonds, upsized from the originally planned $400 million, earlier in the session.

Allegheny bonds better

At another desk, Allegheny Technologies Inc.'s 9.375% notes due 2019 were being quoted at 488 bps over - a nearly 50 bps tightening on the session.

The Pittsburgh-based diversified metals company's $350 million issue also remained well inside of the 578.5 bps over spread at which the company had priced those bonds on May 27.

B of A bonds widen out

In the financial sphere, a market source saw Bank of America Corp.'s 7.625% notes due 2019 trading at 369 bps over, on very active volume of more than $80 million.

That level was considerably wider than the 347 bps over level at which the $2.5 billion of bonds had been trading on Wednesday.

But the bonds continued to trade tighter than the 410 bps over level at which the Charlotte, N.C.-based banking giant had priced that deal on May 28.

Goldman slightly wider

Goldman Sachs Group Inc.'s 7.50% notes due 2019 were trading at 310 bps over on Thursday. That was about 5 bps wider on the session. Volume was an active $83 million.

However, the New York-based investment bank's $1 billion of bonds were still trading well inside the 337.5 bps level at which the mega-deal had priced on May 27.

Bank and broker CDS costs rise

A trader watching the credit-default swaps market saw the cost of protecting the holders of big-bank and major brokerage paper widen, a sign of reduced investor confidence in the sector.

Given the rise in financial company shares, that increase in the CDS costs was "a little surprising," he said.

He said that credit-protection costs for bank paper were anywhere from 2 bps tighter to 8 bps wider, while brokerage company CDS costs were 3 bps to 10 bps wider.

"You would have thought that all of them would have tightened," he added.

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