Suncor Energy prices lone new issue; Citigroup flat; Verizon, AT&T improve

By Aleesia Forni and Cristal Cody

Virginia Beach, Nov. 20 – Suncor Energy Inc. issued an upsized offering of senior notes on Thursday during a mostly quiet session for investment-grade bonds.

The company sold its $750 million 10-year bond offering around 20 basis points tight of the mid-point of initial guidance.

Most potential issuers elected to stand down on Thursday, as a massive $8 billion bond from China-based e-commerce group and internet portal Alibaba Group Holding Ltd. took center stage.

The subdued session gave the market “a bit of a break,” one source said, following the more than $100 billion of supply the high-grade bond market has seen so far this year.

In the preferred space, Public Storage launched and priced a $175 million sale of 5.875% series A cumulative perpetual preferreds.

The investment-grade bond market has seen more than $23 billion of new issuance so far this week, falling short of what sources had predicted to be around $30 billion of supply.

Suncor Energy also tapped the Canadian high-grade market on Thursday with a C$750 million offering of 3.1% seven-year notes, according to an informed source.

“They were in the U.S. this morning and Canada this afternoon,” the source said.

The notes due Nov. 26, 2021 (A3/A-/DBRS: A) priced with a spread of 140 bps over the interpolated Government of Canada bond curve, on the tight side of guidance of 145 bps, plus or minus 5 bps, versus the government benchmark.

Investment-grade bonds were flat to mostly better in the secondary market, sources said.

The Markit CDX North American Investment Grade series 23 index firmed 1 bp to a spread of 66 bps.

Bank and financial paper traded mostly unchanged, according to a market source.

Citigroup Inc.’s 3.75% notes due 2024 headed out flat on the day, while JPMorgan Chase & Co.’s 3.625% senior notes due 2024 firmed 1 bp.

In the telecom sector, Verizon Communications Inc.’s 4.15% senior notes due 2024 came in 10 bps in secondary trading, a source said.

AT&T Inc.’s 3.9% notes due 2024 traded 3 bps better, a source said.

Suncor prices tight

Suncor Energy sold an upsized $750 million of 3.6% 10-year senior notes (A3/A-/) on Thursday at Treasuries plus 125 bps, according to a market source and a supplement filed with the Securities and Exchange Commission.

Pricing was at 99.235 to yield 3.692%.

The notes sold at the tight end of talk.

Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., HSBC Securities (USA) Inc., BNP Paribas Securities Corp. and RBS Securities Inc. were the bookrunners.

Proceeds will be used to replenish the company’s cash balances following the recent repayment of outstanding debt, to fund the company’s capital program and for general corporate purposes.

The energy company is based in Calgary, Alta.

Public Storage preferreds

Public Storage priced $175 million of 5.875% series A cumulative perpetual preferred stock, the company said in an FWP filed with the SEC.

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

BofA Merrill Lynch, Morgan Stanley, Wells Fargo Securities LLC and UBS Securities LLC are underwriting the deal, each for 1.75 million shares apiece.

Dividends will be paid on a quarterly basis, commencing March 31.

The preferreds become redeemable on or after Dec. 2, 2019 at par plus accrued dividends.

The Glendale, Calif.-based real estate investment trust intends to use proceeds to make investments in self-storage facilities and in entities that own self-storage facilities, for the development of self-storage facilities and for general corporate purposes.

Citi paper unchanged

Citigroup’s 3.75% notes due 2024 were unchanged over the session at 134 bps offered, according to a market source.

Citigroup sold $1.25 billion of the notes (Baa2/A-/A) on June 9 at a spread of Treasuries plus 115 bps.

The bank is based in New York City.

JPMorgan edges tighter

JPMorgan’s 3.625% senior notes due 2024 (A3/A/A+) firmed 1 bp to 123 bps offered, a market source said.

JPMorgan sold $2 billion of the notes on May 6, 2014 at 110 bps plus Treasuries.

The financial services company is based in New York City.

Verizon perks up

Verizon’s 4.15% notes due 2024 (Baa1/BBB+/A-) were quoted 10 bps better at 139 bps offered, according to a source.

Verizon sold $1.25 billion of the notes on March 10, 2014 at a spread of Treasuries plus 140 bps.

The telecommunications company is based in New York City.

AT&T notes firm

AT&T’s 3.9% notes due 2024 ended the session 3 bps tighter at 135 bps offered after moving out at the start of the week, according to a market source.

The notes (A3/A-/A) closed out the previous week at 120 bps offered.

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

The telecommunications company is based in Dallas.

Bank/brokerage CDS mixed

Investment-grade bank and brokerage CDS prices were mixed, according to a market source.

Bank of America Corp.'s CDS costs were 1 bp tighter at 66 bps bid, 69 bps offered. Citigroup's CDS costs were also 1 bp tighter at 66 bps bid, 69 bps offered. JPMorgan Chase's CDS costs fell 1 bps to 57 bps bid, 60 bps offered. Wells Fargo & Co.'s CDS costs were flat at 45 bps bid, 48 bps offered.

Merrill Lynch's CDS costs decreased 1 bp to 70 bps bid, 73 bps offered. Morgan Stanley's CDS costs were unchanged at 78 bps bid, 81 bps offered. Goldman Sachs Group, Inc.'s CDS costs increased 2 bps to 82 bps bid, 85 bps offered.

Paul Deckelman contributed to this review.

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