High-grade market hit with wave of deals; IBM, CVS among sellers; Nevada Power firms 6 bps

By Andrea Heisinger and Cristal Cody

New York, May 9 - New paper from International Business Machines Corp., Prudential Financial Inc., Energy Transfer Partners LP and CVS Caremark Corp. were among the companies contributing to Monday's $8.35 billion of high-grade volume.

Nevada Power Co. d/b/a NV Energy, Pacificorp, ERAC USA Finance Co., Nordea Bank AB and Wesfarmers Ltd. also sold bonds.

IBM sold $1 billion of three-year notes by early afternoon at the low end of guidance. The notes carry a coupon that matches the record for the lowest set at that maturity.

Energy Transfer priced $1.5 billion of notes in two parts. There were $800 million of 10-year notes priced at the low end of guidance and $700 million of 30-year bonds, also sold at the tight end of talk.

A large, upsized sale came from pharmacy retailer CVS Caremark. The company sold $1.5 billion of notes with maturities of 2021 and 2041 after the size was increased from $1 billion.

Australian conglomerate Wesfarmers sold an upsized $650 million of five-year notes in line with guidance. The sale was increased from $500 million and done under Rule 144A.

Financial services and insurance company Prudential Financial sold $800 million of notes due 2016 and 2041. Each priced at the tight end of guidance.

Enterprise Rent-A-Car Co. unit ERAC USA Finance priced $500 million of notes under Rule 144A.

Utility Nevada Power had one of the day's first deals to price. It sold $250 million of 30-year mortgage bonds.

Another utility, Pacificorp, also sold mortgage bonds in a $400 million deal with a 10-year maturity. The bonds were priced at the low end of guidance.

Nordea Bank priced $1.25 billion of 10-year notes late in the day under Rule 144A.

Split-rated Western Gas Partners, LP priced $500 million of 10-year notes off of the high-grade syndicate. The notes sold in line with talk.

Names expected to price bonds later in the week include Japan Finance Corp. and Standard Chartered plc.

There was little carryover from Friday when there was talk that Greece might leave the euro, sources said.

Instead, new issues poured into the market under "favorable conditions," as one syndicate source said.

"I mean, government rates have tightened about 40 points from last month," he said. "Spreads continue to grind tighter."

The busy day was expected as several calls about deals were made late in the previous week. There is $20 billion or more set to price if the market tone stays optimistic, a source said.

"We're supposed to be very busy," the source said of Tuesday.

In the secondary market, the new bonds from Nevada Power firmed more than 6 bps, a trader said.

Pacificorp's mortgage bonds traded marginally firmer, while ERAC USA Finance's notes firmed about 2 bps and Prudential Financial's longer-dated bonds tightened, traders said.

Meanwhile, CVS Caremark's bonds widened in trading, Energy Transfer Partners' bonds were weaker on the bid side and IBM's notes were flat, sources said.

The Markit CDX Series 14 North American investment-grade index firmed 1 bp to a spread of 89 bps, according to Markit Group Ltd.

Trading activity was light and overall investment-grade Trace volume dipped 4% to about $9.6 billion, a market source reported.

Treasuries ended the day slightly better on the short end on buying after Standard & Poor's downgraded Greece. The 10-year note yield ended flat at 3.15%, while the 30-year bond yield rose 3 bps to 4.31%.

IBM sells $1 billion

International Business Machines sold $1 billion of 1.25% three-year notes (Aa3/A+/A+) to yield Treasuries plus 37 bps, an informed source said.

The notes were talked in the 40 bps area and sold at the tight end of that. There was about $1.5 billion on the books, the source said.

Bookrunners were Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

Proceeds are being used for general corporate purposes.

The notes due 2014 were flat at 37 bps bid, 34 bps offered in secondary trading, sources said.

The technology and computer company is based in Armonk, N.Y.

Prudential does two tranches

Prudential Financial priced $800 million of notes (Baa2/A) in two parts on Monday, a market source said.

The $500 million of 3% five-year notes priced at a spread of Treasuries plus 118 bps. The notes were talked in the 120 bps area and sold at the tight end of that.

A $300 million tranche of 5.625% 30-year bonds sold at Treasuries plus 138 bps. Guidance was in the 140 bps area.

Bookrunners were Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and Morgan Stanley & Co., Inc.

Proceeds are being used for general corporate purposes.

The notes due 2016 traded flat at 118 bps bid, 117 bps offered, a trader said. The tranche of bonds due 2041 were seen tighter at 136 bps bid, 132 bps offered, a trader said. Another trader saw the bonds at 133 bps offered.

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

CVS upsizes by $500 million

CVS Caremark sold and upsized $1.5 billion of senior notes (Baa2/BBB+) in two parts late in the day, said a source who worked on the deal.

The $550 million of 4.125% 10-year notes priced at a spread of Treasuries plus 115 bps. Price guidance was in the 120 bps area.

A $950 million tranche of 5.75% 30-year bonds sold at a spread of 155 bps over Treasuries. These notes were talked in the 160 bps area.

Barclays Capital Inc. and J.P. Morgan Securities LLC were bookrunners.

Proceeds are being used to repay notes due Aug. 15 at maturity along with commercial paper and for general corporate purposes.

One trader saw the notes due 2021 wider at 120 bps bid, 117 bps offered. Another trader quoted the notes at 116 bps offered.

The bonds due 2041 widened on the bid side soon after pricing to 157 bps bid, 153 bps offered, a trader said. A second trader saw the bonds at 153 bps offered.

The pharmacy retailer is based in Scarsdale, N.Y.

Energy Transfer's $1.5 billion

Energy Transfer Partners sold $1.5 billion of senior notes (Baa3/BBB-/BBB-) in two tranches, according to a market source and a press release.

An $800 million tranche of 4.65% 10-year notes priced at a spread of Treasuries plus 155 bps. This was at the low end of guidance in the 160 bps area.

The second part was $700 million of 6.05% 30-year bonds sold at 175 bps over Treasuries. The bonds priced at the tight end of talk in the 180 bps area.

Credit Suisse Securities (USA) LLC, RBS Securities Inc. and SunTrust Robinson Humphrey Inc. were active bookrunners.

Proceeds will be used to repay borrowings under a revolving credit facility, fund capital expenditures related to pipeline construction projects and for general corporate purposes.

Both tranches widened on the bid side in the secondary market, traders said.

The notes due 2021 traded at 156 bps bid, 154 bps offered, while the bonds due 2041 were quoted at 177 bps bid, 173 bps offered.

The energy gathering and transportation company is based in Dallas.

ERAC USA's 10-years

ERAC USA Finance sold $500 million of 4.5% 10-year notes (Baa1/BBB+) to yield Treasuries plus 142 bps, a market source said.

The notes sold under Rule 144A.

Bookrunners were Bank of America Merrill Lynch, Barclays Capital Inc. and RBS Securities Inc.

In trading, the notes were quoted at 140 bps bid, 138 bps offered, traders said.

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

Wesfarmers upsizes

Wesfarmers sold an upsized $650 million of 2.983% five-year notes to yield Treasuries plus 115 bps, a market source away from the sale said.

The size was increased from $500 million. Talk was in the 115 bps area with the notes pricing in line with that.

The notes (Baa1/A-/BBB+) sold under Rule 144A.

Bookrunners were Barclays Capital Inc., Goldman Sachs & Co. and J.P. Morgan Securities Inc.

Proceeds will be used for general corporate purposes including debt repayment.

The conglomerate is based in Perth, Australia.

Nevada Power's 30-years

Nevada Power sold $250 million of 5.45% 30-year general and refunding mortgage notes, series Y, (Baa3/BBB/BBB) to yield 115 bps over Treasuries, according to an FWP with the Securities and Exchange Commission.

Bookrunners were Barclays Capital Inc., BNY Mellon Capital Markets LLC and UBS Securities LLC.

Proceeds, along with cash at hand, are being used to pay $350 million of 8.25% mortgage notes at maturity on June 1.

The bonds due 2041 firmed in secondary trading to 109 bps bid, 107 bps offered, a trader said.

The utility is based in Las Vegas.

Pacificorp's mortgage bonds

Pacificorp sold $400 million of 3.95% 10-year first mortgage bonds (A2/A/A-) at Treasuries plus 73 bps, said a source close to the trade.

This was at the tight end of guidance in the 75 bps area.

J.P. Morgan Securities LLC, RBS Securities Inc. and Wells Fargo Securities LLC were bookrunners.

Proceeds are going to fund capital expenditures, repay short-term debt and for general corporate purposes.

In secondary trading, the bonds firmed slightly to 72 bps bid, 70 bps offered, a trader said.

The electric utility is based in Portland, Ore.

Nordea sells $1.25 billion

Nordea Bank sold $1.25 billion of 4.875% 10-year notes late in the day to yield Treasuries plus 180 bps, an informed source said.

The securities sold at the tight end of guidance in the range of 180 to 183 bps.

The notes (Aa2/A+/A+) were priced under Rule 144A.

Bookrunners were Bank of America Merrill Lynch, Credit Suisse Securities LLC and Goldman Sachs & Co.

The financial services company is based in Stockholm, Sweden.

Western Gas prices at talk

Western Gas Partners, LP priced $500 million of 5.375% 10-year split-rated senior notes (B2/BB+/BBB-) at Treasuries plus 237.5 bps, a source close to the sale said.

These notes were sold in line with guidance in the 237.5 bps area.

Morgan Stanley & Co. Inc. and Wells Fargo Securities LLC were bookrunners.

Proceeds are going to repay amounts under a revolving credit facility and for general corporate purposes.

The notes are guaranteed by subsidiaries.

The midstream energy asset company is based in The Woodlands, Texas.

Japan Finance plans sale

Tokyo-based Japan Finance announced a benchmark sale of five-year notes, according to a market source and 424B5 filing with the SEC.

The notes (Aa2/AA-) are expected to be sold later in the week, the source said.

Bank of America Merrill Lynch, Barclays Capital Inc., Citigroup Global Markets Inc. and HSBC Securities (USA) Inc. are bookrunners.

Proceeds will be used for the operations of the Japan Bank for International Cooperation.

The sale by the lender to the general public and Japanese businesses is guaranteed by Japan.

Standard Chartered 5-years

Standard Chartered announced a sale of five-year notes, a market source said.

The notes (A2/A) are expected to be sold under Rule 144A at some point this week, the source said.

Bookrunners are Bank of America Merrill Lynch, Goldman Sachs & Co., J.P. Morgan Securities LLC and Standard Chartered.

The financial services company is based in London.

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