PPL, Aon, Deutsche Bank mingle with sovereign names in primary

By Aleesia Forni and Andrea Heisinger

New York, May 21 - Sovereign names mixed with those from the corporate sector in Tuesday's high-grade primary market.

PPL Capital Funding, Inc. priced $1.15 billion of senior notes in three parts. The sale includes maturities of 2018, 2023 and 2043 and a guarantee from PPL Corp.

A $1.5 billion sale of $1,000-par fixed-to-fixed rate subordinated tier 2 notes due 2028 was priced by Deutsche Bank AG. The sale had been announced Monday.

National Rural Utilities Cooperative Finance Corp. sold $250 million of three-year floating-rate notes.

London-based Aon plc priced $250 million of 30-year senior notes guaranteed by Aon Delaware, a source said. Terms of the sale were not available at press time.

There was also a crossover trade from International Lease Finance Corp. The aircraft lessor priced $550 million of three-year floating-rate notes tight to initial price talk.

A private sale came from Pricoa Global Funding I. The unit of Prudential Financial, Inc. sold an upsized $500 million of five-year notes under Rule 144A and Regulation S.

There were also several offerings from sovereign names, taking advantage of the slower pace of corporate issuance before the long Memorial Day holiday weekend, a source said.

Swedish Export Credit Corp. priced $1.25 billion of three-year notes after going overnight from Monday, while Skandinaviska Enskilda Banken AB was said to have priced $1.5 billion of five-year notes.

Austria's Oesterreichische Kontrollbank AG was in the market with a $1.75 billion trade of five-year notes.

"It wasn't too exciting out there today, was it?" a market source who worked on one of the day's offerings said after the close.

"I would think we'll get more tomorrow, and then it will [slow to a] trickle. We're in slow-down mode, but still some activity out there."

The preferred stock market saw continued issuance from financial names as Bank of America Corp. priced $1 billion of $1,000-par fixed-to-floating-rate shares.

A trader said at midday that price talk was around 5.25%, though he had yet to see any markets.

After the close, a market source quoted the shares at par 1/8 bid, par 3/8 offered.

Ladenburg Thalmann Financial Services Inc. priced $115 million of series A cumulative redeemable preferreds. The size was increased from a minimum of $50 million when the sale was announced the previous week.

PPL's three tranches

PPL Capital Funding tapped the market for $1.15 billion of senior notes (Baa3/BBB-/BBB) in three tranches, a market source said.

A $250 million tranche of 1.9% five-year notes priced at a spread of Treasuries plus 110 basis points.

There was $600 million of 3.4% 10-year notes sold at a spread of 150 bps over Treasuries.

The final part was $300 million of 4.7% 30-year bonds priced at Treasuries plus 160 bps.

BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, RBS Securities Inc. and Wells Fargo Securities LLC are active bookrunners. Passives are Barclays, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and UBS Securities LLC.

The offering is guaranteed by PPL Corp.

Proceeds will not be received by the company but, instead, by selling security holders.

The energy and utility holding company is based in Allentown, Pa.

Deutsche sells hybrid

Deutsche Bank brought $1.5 billion of 4.296% $1,000-par fixed-to-fixed reset rate subordinated tier 2 notes due May 24, 2028 (expected ratings: Baa3/BBB+/A-), according to an FWP file with the Securities and Exchange Commission.

The deal was first announced on Monday.

Deutsche Bank Securities Inc. is the bookrunner.

The interest rate will stay fixed through May 24, 2023, at which time it will convert to the five-year mid-swap rate plus 224.75 bps.

The Zurich-based bank will apply to list the notes on the New York Stock Exchange.

Proceeds will be used for general corporate purposes and to strengthen the regulatory capital base.

Pricoa upsizes

Pricoa Global Funding I priced an upsized $500 million of 1.6% five-year notes (A2/AA-/A+) to yield Treasuries plus 80 bps, an informed source said.

The size was increased from $350 million.

The sale was done under Rule 144A and Regulation S.

Bookrunners were Barclays, Deutsche Bank Securities and TD Securities (USA) Inc.

The unit of financial services company Prudential Financial, Inc. is based in Newark.

National Rural's trade

National Rural Utilities Cooperative Finance sold $250 million of three-year medium-term floating-rate notes (A2/A/) at par to yield Libor plus 25 bps, a market source said.

Bookrunners were KeyBanc Capital Markets Inc. and PNC Capital Markets LLC.

The market lender for electric cooperatives is based in Herndon, Va.

ILFC does floater

International Lease Finance priced $550 million of three-year floating-rate notes (Ba3/BBB-/BB) at par to yield Libor plus 195 bps, according to an FWP filing with the SEC.

Price guidance was in the Libor plus 200 bps area as of midday, a market source said.

There was a do-not-grow provision on the size of the sale.

Active bookrunners were Goldman Sachs & Co., Deutsche Bank Securities and UBS Securities.

Proceeds are being used for general corporate purposes, including repayment of existing debt and the purchase of aircraft.

International Lease Finance last tapped the U.S. bond market in a $1.25 billion offering in two tranches on March 6.

The aircraft lessor is based in Los Angeles.

SEK's short bond

Swedish Export Credit tapped the market for $1.25 billion of 0.625% three-year notes (Aa1/AA+/) to yield mid-swaps plus 14 bps, or Treasuries plus 28 bps, a market source said.

The sale was announced on Monday.

Bookrunners were BofA Merrill Lynch, Barclays, Mizuho Securities USA Inc. and Nomura Securities International Inc.

The lender to Sweden's export industry is based in Stockholm.

OeKB sells fives

Oesterreichische Kontrollbank priced $1.75 billion of 1.125% five-year notes (Aaa/AA+/) at mid-swaps plus 17 bps, or Treasuries plus 33.5 bps, an informed source said.

The sale is guaranteed by the Republic of Austria.

Bookrunners were Citigroup Global Markets Inc., Goldman Sachs International, HSBC Securities (USA) Inc. and J.P. Morgan Securities.

The export and financial services company for Austrian businesses is based in Vienna.

BofA's $1,000-par

Bank of America priced $1 billion of 5.2% $1,000-par series U fixed-to-floating-rate noncumulative preferred stock, a market source said.

The preferreds will be issued as depositary shares representing a 1/25th interest.

BofA Merrill Lynch is the sole bookrunner.

When declared, dividends will be paid at a fixed rate on a semiannual basis. On June 1, 2023, the preferreds will reset to Libor plus 313 bps, and dividends will then be payable on a quarterly basis.

The stock will not be listed.

Proceeds will be used to redeem the series J, series 6 and series 7 preferreds.

The bank is based in Charlotte, N.C.

Ladenburg prices

Ladenburg Thalmann Financial Services priced $115 million of 8% series A cumulative redeemable preferred stock, according to an FWP filed with the SEC.

Mitsubishi UFJ Securities (USA) Inc. and Ladenburg Thalmann & Co. Inc. were the joint bookrunning managers.

Proceeds will be used to prepay the December 2014 and 2015 installments under notes payable to various lenders and to repay outstanding borrowings under a revolving credit agreement. Any remaining funds will be used for general corporate purposes, including further prepayment of indebtedness.

The independent brokerage and advisory firm is based in Miami.

Stephanie N. Rotondo contributed to this review.

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