Scotiabank, Prospect Capital cap busy week of issuance; Avon, Allergan notes trade better

By Aleesia Forni and Andrea Heisinger

New York, March 8 - New bonds from Bank of Nova Scotia and Prospect Capital Corp. were priced Friday as the U.S. Department of Labor released February unemployment numbers.

Scotiabank tapped the market for $1 billion of three-year senior notes split evenly between two tranches, one with a fixed rate and one with a floating rate.

Prospect Capital sold $250 million of 10-year senior notes.

The sale came after jobless numbers were given in the morning, showing that more jobs were added than lost. Unemployment fell to 7.7% which was a level unseen since the end of 2008.

More than $22 billion of high-grade bonds were sold in the past week, not included preferred stock sales or emerging markets. Unlike previous weeks, there were no multi-billion dollar blowout deals contributing to the total. Instead, it was a steady stream of smaller sales mostly topping out at $1.5 billion in size.

The coming week should see "a bit more" issuance than the past one.

"We're thinking $20 [billion] to $25 [billion]," said one market source. "Probably eight to nine trades at the top of the week, more in the financial space. Nothing jumbo - just a bunch of benchmark trades."

The Markit CDX Series 18 North American Investment Grade index tightened 2 basis points to a spread of 81 bps on Friday.

In the secondary market, Thursday's issuances from Allergan Inc. and Avon Products Inc. were trading better on Friday.

Avon's new notes were among the most active deals of the day, with the four-part issue trading 13 bps to 33 bps better.

Trading was also seen in the new issue from Prudential Financial Inc. The company's $650 million of 5.7% $25-par junior subordinated notes due 2053 were freed to trade at 1 p.m. ET, a trader said.

The issue priced late Thursday, coming upsized from $250 million.

The trader said the last trade was at $24.87, leaving the market at $24.85 bid, $24.90 offered, as of midday.

After the close, a market source quoted the paper at $24.85 bid, $24.90 offered.

Scotiabank's $1 billion deal

The Bank of Nova Scotia sold $1 billion of senior notes (Aa2/A+/) in two tranches, an informed source said.

A $500 million tranche of three-year floating-rate notes priced at par to yield Libor plus 40 bps. Guidance was in the Libor plus 43 bps area.

There was also $500 million of 0.95% three-year notes sold at a spread of Treasuries plus 55 bps. Talk was in the 58 bps area.

Bookrunners were Barclays, BofA Merrill Lynch, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Scotia Capital USA Inc.

Proceeds are being added to the bank's funds and used for general business purposes.

Scotiabank last tapped the U.S. bond market with a $1 billion sale of five-year notes on Dec. 11, 2012.

The financial services company is based in Toronto.

Prospect Capital's 10-year

Prospect Capital was in the market with a $250 million sale of 5.875% 10-year senior notes (/BBB/) priced at 99.07, according to a 497AD filing with the Securities and Exchange Commission.

Barclays was the bookrunner.

Proceeds are being initially used to maintain balance sheet liquidity, including investments in high-quality short-term debt, and then used to make long-term investments in accordance with its investment objective.

The financial services company is based in New York City.

Allergan tightens

Allergan's recent note issuance was quoted better spreads early during Friday's session compared to Thursday's new issue, one trader said.

The $250 million tranche of 1.35% five-year notes was quoted 3 basis points better at 52 bps bid, 47 bps offered following Thursday's pricing with a spread of Treasuries plus 55 bps.

The $350 million of 2.8% 10-year notes was trading at 82 bps bid, 77 bps offered on Friday.

Though tighter than the original new issue spread of Treasuries plus 82 bps, the notes had widened 4 bps compared to levels seen late Thursday.

The multi-specialty health-care company is based in Irvine, Calif.

Avon four-part deal firms

Avon's notes were also seen trading tighter in the secondary market on Friday, a trader said.

The $250 million tranche of 2.375% three-year bonds was quoted 28 bps better at 172 bps bid, 162 bps offered.

The notes priced at a spread of Treasuries plus 200 bps on Thursday.

Meanwhile, the $500 million of 4.6% seven-year notes traded 33 bps tighter at 292 bps bid, 282 bps offered following Thursday's pricing at a spread of 325 bps over Treasuries.

The $500 million of 5% 10-year notes, which priced at Treasuries plus 312.5 bps, was quoted on Friday at 290 bps bid, 280 bps offered.

The $250 million tranche of 6.95% 30-year bonds traded 13 bps tighter at 362 bps bid, 352 bpd offered.

Avon is a New York-based beauty products company.

Stephanie N. Rotondo contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.