Burlington Northern, RBC, Markel, McKesson tap market; Mattel bonds tighten; BNY unchanged

By Andrea Heisinger

New York, March 5 - The steady stream of new bond sales in the high-grade market continued on Tuesday with Burlington Northern Santa Fe, LLC and the Royal Bank of Canada among those announcing sales.

Burlington Northern priced $1.5 billion of 10-year notes and 30-year bonds. There was about $5.2 billion of demand for the trade, a market source said.

RBC sold $2 billion of notes in two tranches, each due 2016. The sale was split evenly between a fixed-rate coupon and floating-rate coupon.

There was roughly $3 billion on the books for the RBC sale, a source said.

Other corporate names in the primary include Markel Corp., McKesson Corp. and American Tower Corp., whose trade went overnight from Monday.

Burlington Northern sold $1.5 billion of bonds in tranches due 2023 and 2043. RBC sold $2 billion split evenly between three-year floating-rate notes and three-year fixed-rate bonds.

Financial holding company Markel priced $500 million of paper due 2023 and 2043.

McKesson tapped the market for $900 million of five-year notes and a 10-year maturity.

Stockholm-based Swedbank AB sold $1 billion of five-year notes.

Avon Products, Inc. announced a sale that is not expected to price until the coming week. American Airlines, Inc. is planning a sale of class A and class B equipment trust certificates totaling $663.3 million.

A new $100 million offering of preferred stock was sold by PS Business Parks Inc.

A trader said at midday that he had not seen any real details on the PS Business Parks issue, aside from the fact that at least $75 million preferreds are expected to be sold.

He saw the preferreds at less 20 bid in the gray market at midday. Post-pricing, he placed the issue at $24.80 bid, par offered.

Another source said the deal went "pretty well," but opined that the market was closer to $24.80 bid, $24.90 offered.

Wednesday should see more issues of "reasonable size," one syndicate source said.

The secondary market saw about $11 billion of volume on the day, with the Markit CDX Investment Grade Index moving about 1.5 basis points tighter, a source said.

"Not bad, really," the source added. "With everything lurking, it's funny [the market's] doing so well."

Some of the crop of offerings from Monday was seen making gains in the secondary on Tuesday at midday, a trader said.

Trading itself was "reasonably strong from a spread perspective," the trader said in the morning.

The source quoted the two new bonds from Mattel, Inc. as tightening 6 basis points to 10 bps at midday from pricing levels.

McKesson's new paper was seen improving by more than 5 bps in trading, while Markel's two tranches were seen 6 bps to 11 bps tighter.

The new bonds from Burlington Northern were quoted a couple of basis points better.

A $1.05 billion split-rated sale in two parts from QVC, Inc. was trading "about 10 better overall" at midday, the trader said.

The West Chester, Pa.-based retailer sold 10-year notes and 30-year bonds.

The two fixed-rate notes from Bank of New York Mellon Corp.'s $1.5 billion four-tranche sale on Monday were seen unchanged to slightly better by the close Tuesday, a source said.

RBC prices $2 billion

The Royal Bank of Canada sold $2 billion of notes (Aa3/AA-/) in two parts, each with a three-year maturity, a market source said.

There was $1 billion of three-year floating-rate notes sold at par to yield Libor plus 37 bps.

A $1 billion tranche of 0.85% three-year bonds priced at a spread of Treasuries plus 52 bps.

Following RBC's U.S. dollar deal on Tuesday, a few Canadian corporate issuers with a history of other deals are likely to find opportunities in the U.S. investment-grade market, an informed source said.

"The U.S. market price differential is not all that great now, so itıs been a bit of a coin toss on which currency they want," the source said.

"We did see that last week with the Rogers Communication deal down there. Some of the corporate issuers, but not banks, can issue long-dated paper cheaper than up here. So it's not universal."

RBC Capital Markets LLC and Wells Fargo Securities LLC were bookrunners.

The financial services company is based in Montreal.

BNSF's debentures

Burlington Northern Santa Fe was in the market with a $1.5 billion sale of debentures (A3/BBB+/) in two parts, a market source said.

The sale included $700 million of 3% 10-year notes priced at a spread of Treasuries plus 110 bps. The notes sold tighter than talk in the 115 bps area.

The 10-year notes were seen offered at 107 bps in trading after pricing.

A $800 million tranche of 4.45% 30-year bonds sold at Treasuries plus 133 bps. Pricing was in line with talk in the 135 bps area.

A source quoted the bonds 1 bp better at a bid of 132 bps.

Bookrunners were J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC.

Proceeds are being used for general corporate purposes, including working capital, capital expenditures, debt repayment and distribution.

BNSF was last in the U.S. bond market with a $1.25 billion sale in two parts on Aug. 16, 2012. That offering included a 3.05% 10-year note sold at 125 basis points over Treasuries and a 4.375% 30-year bond priced at 150 bps over Treasuries.

The holding company for railroad transportation subsidiaries is based in Fort Worth, Texas.

McKesson's two bonds

McKesson tapped the market for $900 million of notes (Baa2/A-/A-) in two parts during the day's session, according to an FWP with the Securities and Exchange Commission.

A $500 million tranche of 1.4% five-year notes sold at a spread of Treasuries plus 67 bps. A trader quoted the bonds tighter at an offer of 60 bps.

The second part was $400 million of 2.85%10-year notes priced at 97 bps over Treasuries. The tranche was quoted 6 bps better at a bid of 91 bps.

BofA Merrill Lynch and J.P. Morgan Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes, including repayment of borrowings under a senior bridge term loan agreement.

The San Francisco-based health care services and information technology company was last in the U.S. bond market with a $900 million sale of notes in two tranches on Nov. 29, 2012. That offering included a 2.7% 10-year note sold at 110 basis points over Treasuries.

Markel sells $500 million

Markel priced $500 million of senior notes (Baa2/BBB/BBB) in two tranches, an informed source said.

The sale included $250 million of 3.625% 10-year notes priced at a spread of Treasuries plus 175 bps. The notes were quoted 6 bps tighter in trading at a bid of 169 bps and offer of 166 bps.

There was also $250 million of 5% 30-year bonds sold at a spread of 200 bps over Treasuries. The bonds were seen trading 11 bps better at a bid of 189 bps and offer of 186 bps, a trader said.

Citigroup Global Markets Inc. and Wells Fargo Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes.

There is a mandatory call at 101 if the acquisition of Alterra Capital Holdings Ltd. is not done before Nov. 1.

Markel was last in the market with a $350 million sale of 4.9% 10-year notes priced at 330 basis points over Treasuries on June 27, 2012.

The financial holding company, primarily for specialty insurance products, is based in Glen Allen, Va.

Swedbank's five-years

Swedbank sold $1 billion of 1.75% five-year senior notes (A2/A+/A+) to yield Treasuries plus 107 bps, a source close to the trade said.

Pricing was done under Rule 144A and Regulation S.

Bookrunners were BofA Merrill Lynch, Barclays, BNP Paribas Securities Corp. and Citigroup Global Markets Inc.

The financial services company is based in Stockholm.

Avon plans sale

Avon Products announced a sale of notes (Baa1/BBB-/BBB-) in two tranches, according to a market source and 424B3 filing with the Securities and Exchange Commission.

Pricing of the bonds is not expected until "probably next week," a source close to the trade said.

"We just posted it," he added. "It's not a live deal."

Bookrunners are BofA Merrill Lynch, Citigroup Global Markets Inc. and Goldman Sachs & Co.

Proceeds, along with cash on hand, are being used to repay debt and for general corporate purposes.

The New York-based beauty products company was last in the U.S. bond market with an $850 million sale in two tranches on Feb. 26, 2009.

American preps certificates

American Airlines is planning to price $663.3 million of enhanced equipment trust certificates class A and class B tranches, according to a press release.

The sale includes $506.7 million of class A certificates (/BBB-/BBB+) with an expected maturity of July 15, 2025.

There is also $156.6 million of class B certificates (/B+/B) with an expected maturity of Jan. 15, 2021.

Each will have a legal maturity 18 months after the expected maturity.

The notes will be secured by eight Boeing aircraft.

Pricing will be done under Rule 144A and Regulation S.

The commercial airline is based in Fort Worth, Texas.

PS Business' preferreds

PS Business Parks priced $100 million of 5.7% series V cumulative preferred stock, according to an FWP filing with the SEC.

The preferreds will be issued as depositary shares representing a 1/1,000th interest.

BofA Merrill Lynch, Morgan Stanley & Co. Inc. and Wells Fargo Securities LLC are the joint bookrunning managers.

The company intends to list the new securities on the New York Stock Exchange under the ticker symbol "PSBPV."

The Glendale, Calif.-based real estate investment trust will use proceeds to repay outstanding indebtedness and for general corporate purposes.

Mattel bonds tighten

Toy maker Mattel sold $500 million of paper on Monday split between 1.7% notes due 2018 priced at 95 bps over Treasuries and 3.15% bonds due 2023 at Treasuries plus 130 bps. Both notes were seen between 2 bps and 5 bps tighter at the close on Monday.

By Tuesday, traders saw them move even tighter.

At the close of the day's session, a source quoted the five-year notes at an offer of 86 bps, while the 10-year notes were seen offered at 124 bps.

Mattel is based in El Segundo, Calif.

BNY bonds unchanged

The two fixed-rate tranches of notes from the Bank of NY were seen little changed in next-day trading Tuesday.

A trader quoted the 0.7% notes due 2016 at an offer of 35 bps, which was similar to the 38 bps price over Treasuries.

The 1.35% five-year notes were seen unchanged at a bid of 60 bps, and offer of 57 bps. The notes sold at 60 bps.

Cristal Cody and Stephanie N. Rotondo contributed to this review

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