Fortive, United Airlines, PSEG Power price; AT&T softens; high-grade credit spreads improve

By Cristal Cody

Eureka Springs, Ark., June 6 – Investment-grade issuers including Fortive Corp., United Airlines, Inc. and PSEG Power LLC tapped the market on Monday.

Public Service Co. of Colorado also brought an offering of 30-year first mortgage bonds.

Market sources expect volume to be lighter over the week with forecasts of $20 billion to $25 billion of supply.

The Markit CDX North American Investment Grade index opened the session 2 basis points tighter and firmed another 2 bps over the session to close at a spread of 74 bps.

In the secondary market, AT&T Inc.’s 4.125% senior notes due 2026 traded 4 bps wider on the day.

Aetna Inc.’s senior notes (Baa2/A/A-) were mostly unchanged earlier in the session.

Fortive prices $2.3 billion

Fortive sold $2.3 billion of senior notes in four tranches on Monday, according to a market source and a company release.

The notes were sold in connection with Fortive’s spinoff from Danaher Corp., which will guarantee the notes until the spinoff occurs.

Fortive priced $300 million of 1.8% notes due June 15, 2019 at Treasuries plus 90 bps.

In the second tranche, the company sold $750 million of 2.35% notes due June 15, 2021 at Treasuries plus 110 bps.

Fortive brought $900 million of 3.15% 10-year notes at Treasuries plus 145 bps.

In the final tranche, the company sold $350 million of 4.3% notes due June 15, 2046 at 175 bps over Treasuries.

Barclays, Goldman Sachs & Co. and Morgan Stanley & Co. LLC were the bookrunners.

Proceeds will be used to make payments to Danaher as consideration for the contribution of assets to Fortive by Danaher in connection with the separation and for general corporate purposes.

Fortive is an industrial growth company based in Everett, Wash.

United sells certificates

United Airlines sold $1,052,816,000 in two classes of series 2016-1 pass-through certificates at par on Monday, according to an FWP filing with the Securities and Exchange Commission.

The company priced $728,726,000 of 3.1% class AA certificates with a final expected distribution date of July 7, 2028 and $324.09 million of 3.45% class A certificates with a final expected distribution date of July 7, 2028.

Morgan Stanley, Credit Suisse Securities (USA) LLC, Goldman Sachs, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., BofA Merrill Lynch, Barclays, BNP Paribas Securities Corp. and Credit Agricole Securities (USA) Inc. were the underwriters.

Proceeds will be used to acquire equipment notes that will be issued to finance the purchase of 18 new aircraft scheduled for delivery between January 2016 and March 2017.

The airline is based in Chicago.

PSEG Power upsizes

PSEG Power sold an upsized $700 million of 3% five-year senior notes with a spread of 180 bps over Treasuries, according to a market source on Monday.

The notes were talked at Treasuries plus 185 bps, plus or minus 5 bps.

The deal was upsized from $500 million.

Barclays, Goldman Sachs, JPMorgan and Morgan Stanley were the bookrunners.

PSEG Fossil LLC, PSEG Nuclear LLC and PSEG Energy Resources & Trade LLC will guarantee the notes.

Proceeds will be used for general corporate purposes, according to a 424B5 filing with the SEC.

The energy company is based in Newark, N.J.

Public Service prices $250 million

Public Service Co. of Colorado priced $250 million of 3.55% first mortgage bonds at 98.96 to yield 3.607% on Monday, according to an FWP filing with the SEC.

The series No. 29 bonds due June 15, 2046 priced with a spread of 105 bps over Treasuries.

The bookrunners were Credit Suisse Securities (USA) LLC, JPMorgan and PNC Capital Markets LLC.

Proceeds will be used to redeem $129.5 million outstanding of 4.375% pollution control refunding revenue bonds due Sept. 1, 2017, to repay short-term debt and to fund the company’s capital expenditure program.

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

AT&T eases

AT&T’s 4.125% notes due 2026 (Baa1//A-) headed out 4 bps weaker at 172 bps bid, a market source said.

AT&T priced a $900 million add-on to the bonds on May 3 at Treasuries plus 150 bps.

The notes originally were priced on Jan. 29 in a $1.5 billion tranche at 195 bps over Treasuries.

AT&T is a Dallas-based telecommunications company.

Aetna steady

Aetna’s 2.4% notes due 2021 were quoted at 98 bps offered in the secondary market early Monday, according to a market source.

The company sold $1.85 billion of the five-year notes on Thursday at Treasuries plus 105 bps.

Aetna’s 3.2% notes due 2026 were unchanged from Friday at 144 bps offered. The notes were sold in Thursday’s offering in a $2.8 billion tranche at Treasuries plus 145 bps.

The diversified health-care benefits company is based in Hartford, Conn.

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