AbbieVie brings $16.7 billion deal; AT&T, Microsoft improve; Exxon, Canadian Pacific Rail soft

By Aleesia Forni and Cristal Cody

Virginia Beach, May 5 – AbbVie Inc. was met with overwhelming demand for a new $16.7 billion megadeal that priced on Tuesday to help fund its acquisition of Pharmacyclics, Inc.

Tranches of the new six-part offering sold between 15 basis points to 20 bps tight of initial price thoughts.

“It went very, very well,” a market source said, noting that the deal’s order book reached nearly $60 billion.

The behemoth trade is the third-largest investment-grade new issue of the year, falling behind Actavis Inc.’s $21 billion offering priced in March and AT&T Inc.’s $17.5 billion trade in April.

In other primary happenings on Tuesday, the market hosted Corning Inc., which sold $750 million of notes in three- and seven-year tranches, and Public Service Co. of Colorado, which offered $250 million of 10-year mortgage bonds.

In forward calendar news, Sweden announced price guidance for a planned three-year offering of notes expected to price on Wednesday.

Investment-grade bonds were mixed over the session.

AT&T’s bonds (Baa1/BBB+/A-) traded better.

Verizon Communications Inc.’s notes were mostly unchanged in the secondary market.

In other trading, Microsoft Corp.’s 2.7% notes due 2025 firmed 2 bps.

Exxon Mobil Corp.’s 2.709% notes due 2025 eased 3 bps over the day.

Canadian Pacific Railway Co.’s 2.9% notes due 2025 traded 4 bps weaker.

The Markit CDX North American Investment Grade series 23 index eased 1 bp to a spread of 64 bps on Tuesday.

AbbVie sells $16.7 billion

AbbVie priced a combined $16.7 billion of senior notes (Baa1/A) in six tranches on Tuesday, according to a market source.

A $3 billion 1.8% note due 2018 sold at 99.898 to yield 1.835%, or Treasuries plus 85 bps.

There was also a $3.75 billion 2.5% note due 2020 priced with a spread of 105 bps over Treasuries. The issue priced at 99.59 to yield 2.588%.

The company also sold $1 billion of 3.2% notes due 2022 at 99.803 to yield 3.23%, or Treasuries plus 130 bps.

A $3.75 billion 3.6% note due 2025 sold at 99.825 to yield 3.621%. Pricing was at a spread of Treasuries plus 145 bps.

There was a $2.5 billion 4.5% note due 2035 priced at 99.309 to yield 4.553%, or Treasuries plus 165 bps.

Finally, $2.7 billion of 4.7% notes due 2045 sold with a spread of Treasuries plus 180 bps. Pricing was at 99.952 to yield 4.703%.

All tranches sold at the tight end of price guidance.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, Barclays and Deutsche Bank Securities Inc. are the bookrunners.

Proceeds will be used to fund the cash component of the acquisition of Pharmacyclics, to finance the repurchase of shares of its common stock for cash in connection with the acquisition and for general corporate purposes.

The biopharmaceutical company is based in Abbott Park, Ill.

Corning two-parter

Corning sold $750 million of notes (A3/A-/A-) in tranches due 2018 and 2022 on Tuesday, according to a market source and an FWP filed with the Securities and Exchange Commission.

There was $375 million of 1.5% notes due 2018 priced at 99.907 to yield 1.532%, or Treasuries plus 55 bps.

The notes sold at the tight end of guidance set in the 60 bps area over Treasuries. Initial talk was set in the 75 bps area over Treasuries.

A second tranche was $375 million of 2.9% notes due 2022 priced at 99.766 to yield 2.937%, or Treasuries plus 100 bps.

Pricing was at the tight end of guidance, which was set in the area of 105 bps over Treasuries. Initial talk was set in the 115 bps area over Treasuries.

The joint bookrunners are BofA Merrill Lynch, Deutsche Bank Securities and J.P. Morgan Securities LLC.

Proceeds will be used for general corporate purposes.

Based in Corning, N.Y., Corning is a technology manufacturing company.

PS Colorado mortgage bonds

Public Service Co. of Colorado sold $250 million of 2.9% 10-year first mortgage bonds (A1/A/A+) at Treasuries plus 75 bps on Tuesday, according to a market source and an FWP filing with the SEC.

Pricing was at 99.681 to yield 2.937%.

Credit Suisse Securities, RBC Capital Markets LLC, TD Securities and U.S. Bancorp Investments, Inc. are the bookrunners.

Proceeds will be used for general corporate purposes, including the repayment of short-term debt and the funding of a capital expenditure program.

The Denver-based electric utility is a subsidiary of Xcel Energy Inc.

Sweden sets talk

Sweden set price talk for a planned benchmark offering of three-year notes (Aaa/AAA/AAA) on Tuesday in the mid-swaps minus 9 bps area, according to a market source.

The bookrunners are Citigroup Global Markets Inc., HSBC Securities and Nordea.

The notes will be sold via Rule 144A and Regulation S.

AT&T better

AT&T’s 3.9% notes due 2024 traded late afternoon 3 bps better at 127 bps bid, a source said.

AT&T sold $1 billion of the notes on March 5, 2014 at Treasuries plus 125 bps.

AT&T’s 3.4% notes due 2025 were quoted earlier in the day about 1 bp tighter at 147 bps offered.

The company sold $5 billion of the notes on April 23 at Treasuries plus 150 bps.

The telecommunications company is based in Dallas.

Verizon stable

Verizon’s 3.5% notes due 2024 (Baa1/BBB+/A-) were mostly flat at 131 bps bid, according to a market source.

The issue priced in a $2.5 billion offering on Oct. 22, 2014 at a spread of Treasuries plus 135 bps.

The telecommunications company is based in New York City.

Microsoft firms

Microsoft’s 2.7% notes due 2025 firmed 2 bps to 77 bps bid on Tuesday, a source said.

Microsoft sold $2.25 billion of the notes (Aaa/AAA/) on Feb. 9 at 75 bps over Treasuries.

The computer software company is based in Redmond, Wash.

Exxon Mobil soft

Exxon Mobil’s 2.709% notes due 2025 eased 3 bps during the session to 64 bps bid, according to a market source.

Exxon Mobil sold $1.75 billion of the notes (Aaa/AAA/) on March 3 at Treasuries plus 58 bps.

The oil and gas company is based in Irving, Texas.

Canadian Pacific Railway eases

Canadian Pacific Railway 2.9% notes due 2025 traded 4 bps weaker at 102 bps bid, a source said.

The company sold $700 million of the notes (Baa1/ BBB+/) on Jan. 28 at a spread of Treasuries plus 112.5 bps.

Canadian Pacific Railway is a railroad operator based in Calgary, Alta.

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