Aristotle, HSBC, Clorox, Kellogg, energy names crowd primary; bonds firm; HSBC stronger

By Andrea Heisinger and Cristal Cody

New York, Nov. 14 - A sense of decreased volatility tied to Europe led to a rush of bond sales in the high-grade market on Monday following the long Veterans Day holiday weekend.

The largest deal came from Aristotle Holding, Inc. The sale totaled $4.1 billion after a tranche of 30-year bonds was added. The notes had some difficulty getting priced and all of the tranches priced wider than the price at which they were talked.

Another of the day's sales to crack $1 billion came from HSBC Holdings plc. The U.S.-based unit of the financial services company priced $1.65 billion of debt in two maturities.

Cereal and food processing company Kellogg Co. priced $500 million of five-year paper by mid-afternoon.

Consumer products company Clorox Co. priced $300 million of 10-year notes at the tight end of talk.

Duke Energy Corp. sold $500 million of five-year paper in a quick trade while another company in the same sector, Puget Sound Energy, Inc., priced $250 million of 30-year bonds.

There was a sale from San Diego Gas & Electric Co. The utility sold $250 million of 30-year first mortgage bonds.

Continuing with the energy sector's domination of the day, NiSource Finance Corp. priced $500 million of paper divided evenly between 10-and-30-year maturities.

Norfolk Southern Corp. priced a new 10-year note and also reopened its 100-year bond sold earlier in the year. The upsized sale in two parts totaled $600 million.

There was also a sovereign deal from the International Bank for Reconstruction and Development. The member of the World Bank priced $500 million of two-year notes.

It wasn't that there was any particularly encouraging news to start the week. It was the lack of bad news that led issuers to chance a dip into the bond market, sources said.

"There wasn't as much volatility as expected coming off Europe," one syndicate source said.

There's a "pretty decent calendar" for the week, expected to total $20 billion to $25 billion.

"I guess everyone figured, get 'em while you can," the source said in reference to the day's crop of issuers.

Tuesday is expected to be "pretty busy," a market source said, adding that about half of the week's expected calendar already priced on Monday.

In the secondary market, most of the bonds traded in about 1 basis point, according to traders.

HSBC Holdings' was the exception, trading 5 bps to 14 bps better in trading.

Bank credit default swaps costs were little changed on Monday, a trader said. Bank CDS costs ranged from 2 bps lower to 5 bps higher. Brokerage CDS costs traded 5 bps lower to 5 bps higher on the day.

Corporate bonds ended the day mostly flat. The Markit CDX Series 17 North American high-grade index was unchanged at a spread of 130 bps.

Overall trading volume fell to less than $9 billion on Monday.

Treasuries were flat to better on concerns of how the new Italian and Greek governments will resolve the debt crisis. The 10-year note yield was unchanged at 2.03%. The 30-year bond yield fell 2 bps to 3.08%.

Aristotle's $4.1 billion

Aristotle Holding sold an upsized $4.1 billion of notes (Baa3/BBB+/BBB) in four tranches, an informed source said.

There was a little more than $5.05 billion on the books for the trade, the source said. The 10-year tranche had the most investor interest.

A source away from the trade said that it likely had some difficulty getting priced and that the deal size could have hit $8.4 billion, but instead was less than half that amount.

A $900 million tranche of 2.75% three-year notes priced at a spread of Treasuries plus 240 bps. It was priced at the wide end of guidance in the 235 bps area.

The $1.25 billion of 3.5% five-year notes sold at a spread of Treasuries plus 260 bps. The notes were sold wider than guidance of 250 bps.

There was a $1.25 billion tranche of 4.75% 10-year notes priced at a spread of 280 bps over Treasuries. The notes were priced wider than talk at 270 bps.

Finally, a $700 million tranche of 6.125% 30-year bonds was added and priced at a spread of Treasuries plus 305 bps. It was priced wider than guidance at 305 bps.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC were bookrunners.

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

The proceeds are being used to pay a portion of the cash consideration payable to the stockholders of Medco Health Solutions, Inc. in connection with the merger in which Express Scripts, Inc. and Medco will become subsidiaries of Aristotle, and to repay debt in connection with the merger.

The notes are guaranteed by Express Scripts, and then Medco when the merger is complete.

The prescription-benefit company is based in St. Louis, Mo.

HSBC unit sells two tranches

HSBC Holdings sold $1.65 billion of notes (Aa2/AA-/AA) in two tranches, a source away from the deal said.

The $900 million of 4.875% 10-year notes were priced at a spread of Treasuries plus 285 bps.

A $750 million tranche of 6.1% 30-year bonds sold at 305 bps over Treasuries.

HSBC Securities (USA) Inc. was bookrunner.

The proceeds are being used for general corporate purposes.

In the secondary market, the 10-year notes traded 5 bps tighter at 280 bps bid, a trader said.

Another trader saw the 10-year notes at 282 bps bid, 273 bps offered.

The 30-year notes came in to 291 bps bid.

The unit of London-based financial services company HSBC is based in New York City.

Norfolk Southern upsizes

Norfolk Southern sold an upsized $600 million of senior notes (Baa1/BBB+/BBB+) in two parts, a source close to the trade said.

The deal size was initially $400 million in 10-year notes.

There was a $500 million tranche of 3.25% 10-year notes priced at a spread of Treasuries plus 128 bps.

There also was an added tranche of 6% notes due 2111 that was reopened to add $100 million. The notes priced at a spread of 230 bps over Treasuries.

Total issuance is $500 million, including $400 million sold on May 18 at 175 bps over Treasuries.

Citigroup Global Markets Inc., Goldman Sachs & Co. and Wells Fargo Securities LLC were bookrunners.

The proceeds are being used for general corporate purposes.

The freight railroad operator is based in Norfolk, Va.

Clorox sells 10-year debt

Clorox priced $300 million of 3.8% 10-year senior notes (Baa1/BBB+) at a spread of Treasuries plus 187.5 bps, an informed source said.

The securities were priced at the tight end of guidance in the 200 bps area, plus or minus 12.5 bps, the source said. There was about $1.5 billion of demand on the books after some drops early in the pricing process.

Bookrunners were Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

Proceeds are being used to retire commercial paper.

The consumer products company is based in Oakland, Calif.

NiSource's $500 million

NiSource Finance sold $500 million of senior notes (Baa3/BBB-/BBB-) in two tranches, a market source said.

The $250 million tranche of 4.45% 10-year notes was priced at a spread of Treasuries plus 245 bps.

A $250 million tranche of 5.8% 30-year bonds sold at Treasuries plus 275 bps.

Barclays Capital Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were bookrunners.

The proceeds will be contributed to the pension plans of NiSource, Inc. and certain subsidiaries and to fund a portion of the purchase price for cash tender offers.

The notes are guaranteed by NiSource.

The natural gas and electric generation, transmission and distribution company is based in Merrillville, Ind.

San Diego Gas bonds firm

San Diego Gas & Electric priced $250 million of 3.95% 30-year first-mortgage bonds, series LLL, (Aa3/A+/AA-) at a spread of Treasuries plus 90 bps, a source said.

Bookrunners were BNP Paribas Securities Corp., Bank of America Merrill Lynch, Loop Capital Markets LLC and Morgan Stanley & Co. LLC.

The proceeds are being used for general working capital, including supporting electric and natural gas procurement programs and for expansion and betterment of the utility plant.

In the secondary market, San Diego Gas' bonds due 2041 firmed to 89 bps bid, 86 bps offered, a trader said.

The electric and natural gas provider is based in San Diego.

Toyota Credit's $1 billion

Toyota Motor Credit Corp. priced $1 billion of 1.25% three-year medium-term notes, series B, at a spread of Treasuries plus 95 bps, according to an FWP with the Securities and Exchange Commission.

The notes (Aa3/AA-) were priced at 99.78 to yield 1.325%.

Bookrunners were Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Goldman Sachs & Co.

The notes tightened to 94 bps bid, 91 bps offered in trading, according to a source.

The U.S. financing arm of Toyota is based in Torrance, Calif.

$500 million sale for Kellog

Kellogg sold $500 million of 1.875% five-year senior notes (A3/BBB+/BBB+) to yield Treasuries plus 100 bps, according to an FWP filing with the SEC.

Active bookrunners were Barclays Capital Inc. and J.P. Morgan Securities LLC.

The proceeds are being used for general corporate purposes, including commercial-paper repayment.

Kellogg's notes traded in 1 bp to 99 bps bid, 96 bps offered, a trader said.

The food and cereal company is based in Battle Creek, Mich.

Duke Energy's quick deal

Duke Energy sold $500 million of 2.15% five-year senior notes (Baa2/BBB+) by early afternoon at a spread of Treasuries plus 125 bps, a market source away from the deal said.

BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC were bookrunners.

The proceeds will be used to fund capital expenditures in unregulated businesses and for general corporate purposes.

In secondary trading, the notes due 2016 firmed 1 bp to 124 bps bid, 120 bps offered, a trader said.

The energy company is based in Charlotte, N.C.

Puget Sound Energy's bonds

Puget Sound Energy sold $250 million of 4.434% 30-year senior bonds (A3/A-) at a spread of 135 bps over Treasuries, a market source said.

Bookrunners were Barclays Capital Inc., BNY Mellon Capital Markets LLC and Mitsubishi UFJ Securities (USA) Inc.

The proceeds will be used to repay debt under a capital expenditure credit facility.

The bonds were seen at 134 bps bid, 131 bps offered in secondary trading, a source said.

Another trader saw the bonds due 2041 at 136 bps bid, 134 bps offered.

The electric and natural gas company is based in Bellevue, Wash.

Williams sells 10-year notes

Williams Partners LP sold $500 million of 4% 10-year senior notes (Baa3/BBB-/BBB-) at 99.593, a market source said.

Full terms were not available at press time.

Deutsche Bank Securities Inc., RBS Securities Inc. and Scotia Capital (USA) Inc. were bookrunners.

The proceeds will be used to repay outstanding borrowings under a credit facility and for general partnership purposes.

The energy company is based in Tulsa, Okla.

IBRD prices $500 million

The International Bank for Reconstruction and Development sold $500 million of 0.6% two-year notes (Aaa/AAA) to yield Treasuries plus 37.5 bps, a market source said.

Bookrunner was Barclays Capital Inc.

The member of the World Bank provides loans to developing countries and is based in Washington, D.C.

Paul Deckelman contributed to this review

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