Sanofi, DuPont, Wells Fargo lead issuers with huge deals; AT&T, Verizon better; Sprint down

By Andrea Heisinger and Cristal Cody

New York, March 22 - The investment-grade market was well stocked with new paper on Tuesday from names like Sanofi-aventis SA, E.I. duPont de Nemours & Co. and Wells Fargo & Co.

There was about $13.5 billion of new deals for the day, or roughly double the amount of the entire previous week.

Issues came from all sectors, but the majority came from utility and financial names. Both Sanofi and DuPont priced huge deals to help pay for acquisitions.

Sanofi brought the jumbo offering that syndicate desks had been saying was coming since late in the previous week. It totaled $7 billion in six tranches after a three-year fixed-rate tranche was added.

"It was the big one of the day for sure," said a source who was a passive bookrunner. "It took all day."

The second largest sale came from Wells Fargo at $2.5 billion in a single tranche of 10-year senior holding company notes. The notes were priced at the tight end of guidance.

Next up was DuPont with its $2 billion sale in four parts. It was composed of a floating-rate tranche and three fixed-rate notes.

A $1 billion offering of five-year notes was priced in line with talk by the Bank of Nova Scotia.

A $600 million upsized sale of 10-year notes came from Nationwide Financial Services, Inc. The sale was offered under Rule 144A.

Another sale in the financial sector was from Genworth Financial, Inc. The financial security and insurance company sold an upsized $400 million of 7.625% 10.5-year senior notes (Baa3/BBB).

Deutsche Bank Securities Inc. and Goldman Sachs & Co. were bookrunners.

Full terms for the sale were not available at press time.

Puget Sound Energy, Inc. priced an upsized $300 million of 30-year senior notes. The deal was increased from $250 million. Puget was joined in the market by another utility, Appalachian Power Co., which sold $350 million of notes due 2021.

Covered bonds were priced by DnB NOR Boligkreditt AS. The $2 billion sale of five-year notes priced under Rule 144A, slightly wider than guidance in the mid-swaps.

Overall investment-grade Trace volume was nearly 50% higher on Tuesday, rising to more than $15 billion, a market source said.

In the secondary market, Wells Fargo's deal tightened, while Telephone and Data Systems, Inc.'s notes were trading weaker, sources said.

AT&T Inc.'s bonds, which widened 10 bps to 15 bps the previous day on the news it would buy T-Mobile USA from Deutsche Telekom AG, narrowed in trading on Tuesday. Other bonds in the telecom sector, including from Verizon Communications Inc. and Sprint Nextel Corp., were mixed after also widening on Monday, a trader said.

The Markit CDX Series 15 North American investment-grade index, which eased 9 bps the previous day, was 1 bp weaker on Tuesday at a spread of 97 bps, according to Markit Group Ltd.

Treasuries held in on Tuesday, with yields flat on the short end and down 2 basis points on the long end of the curve. The 10-year note yield ended the day unchanged at 3.32%. The 30-year bond yield fell 2 bps to 4.43%.

Primary absorbs double digits

It was the busiest day as far as total issuance in the high-grade market since Jan. 20, when about $17 billion was priced, according to Prospect News data.

Syndicate desks were swamped by day's end trying to clean up after several large deals came to the market.

"I think we'll be mopping up until Friday," one source said.

A source who didn't work on Sanofi said that it likely took a while to price due to a lack of outstanding debt and the need for price discovery.

"I mean, you had all those bookrunners and six tranches," he said. "It was a lot [to coordinate]."

Sanofi's massive $7 billion

Sanofi-aventis priced a jumbo deal of $7 billion of new paper (A2/AA-) late in the day in an increased six tranches, a market source said.

The sale had been initially announced in five parts, and a fixed-rate three-year note was added.

A $1 billion tranche of one-year floating-rate notes priced at par to yield Libor plus 5 bps.

A second tranche of floaters was $1 billion with a two-year maturity priced at par to yield Libor plus 20 bps.

The third tranche was $750 million of three-year floaters that sold at par to yield Libor plus 31 bps.

A $750 million tranche of three-year notes sold at a spread of Treasuries plus 55 bps.

The $1.5 billion of five-year notes priced at a spread of 70 bps over Treasuries.

Finally, there was a $2 billion tranche of 10-year notes priced at Treasuries plus 80 bps.

Full terms were not available at press time due to the lateness of pricing.

According to Prospect News data, Sanofi has no recent outstanding debt with which to compare pricing levels.

Bookrunners were BNP Paribas Securities Corp., Merrill Lynch, Pierce, Fenner & Smith Inc., J.P. Morgan Securities Inc. and Societe Generale.

Proceeds are being used to fund, in part, the consideration payable to biotechnology company Genzyme Corp. for its acquisition worth $20.1 billion. Any remainder will be used for general corporate purposes.

No secondary trading was immediately seen in the new bonds. In the gray markets, the 10-year notes from Sanofi-aventis were quoted at 78 bps bid, 75 bps offered, a trader said. The five-year notes were seen at 68 bps bid, 65 bps offered.

The pharmaceutical company is based in Paris.

DuPont sells $2 billion

E.I. duPont de Nemours sold $2 billion of notes (A2/A/A) in four parts late in the day, according to a source away from the deal.

The $600 million of three-year floating-rate notes sold at par to yield Libor plus 42 bps.

Another $400 million tranche of 1.75% three-year notes priced at a spread of Treasuries plus 65 bps.

A third tranche was $500 million of 2.75% five-year notes priced at 75 bps over Treasuries.

The final part was $500 million of 4.25% 10-year notes that sold at a spread of Treasuries plus 95 bps.

The notes feature a change-of-control put at 101 if the acquisition of Danisco A/S is not completed by Oct. 31.

Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and J.P Morgan Securities LLC were bookrunners.

Proceeds are being used for the $6.3 billion acquisition of Danisco. Other capital market transactions and $3 billion cash at hand will also be used.

The chemical company is based in Wilmington, Delaware.

Wells Fargo prices 10-years

San Francisco-based financial services company Wells Fargo sold a benchmark $2.5 billion of 4.6% 10-year holding company notes (A1/AA-/AA-) at Treasuries plus 130 bps, said an informed source.

The notes sold at the tight end of guidance in the 130 to 135 bps range, the source said.

Wells Fargo Securities LLC was bookrunner.

Proceeds are being used for general corporate purposes.

In the secondary market, the notes due 2021 were seen trading tighter late afternoon at 127 bps bid, 124 bps offered, a trader said.

Earlier, another trader saw the notes at 128 bps bid, 125 bps offered.

The bank and financial services company is based in San Francisco.

Scotiabank's $1 billion deal

The Bank of Nova Scotia priced $1 billion of 2.9% five-year senior notes at a spread of 90 bps over Treasuries, a market source said late in the day.

The notes sold in line with guidance in the 90 bps area. The securites (Aa1/AA-/AA-) priced at 99.834 to yield 2.936%.

Bookrunners were Barclays Capital Inc., Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Inc., Morgan Stanley & Co., Inc. and Scotia Capital (USA) Inc.

Co-managers were Goldman Sachs & Co., UBS Securities LLC and J.P. Morgan Securities LLC.

Proceeds are being used for general corporate purposes.

The financial services company is based in Toronto.

Nationwide's $600 million

Nationwide Financial priced an upsized $600 million of 5.375% 10-year notes on Tuesday at 212.5 basis points over Treasuries, said a source close to the trade.

The size was increased from a previously announced $500 million.

The notes (Baa2/BBB-/BBB-) were priced at 99.42 to yield 5.451%. They have a make-whole redemption at 35 bps over Treasuries.

The deal was done under Rule 144A.

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

No bids were immediately seen on the new notes due 2021 from Nationwide Financial in secondary trading, sources said.

"The bonds traded at 207 [offered]," one trader said.

The unit of the insurance company is based in Columbus, Ohio.

Puget Sound upsizes 30-years

Puget Sound Energy sold a slightly upsized $300 million of 5.638% 30-year senior notes (A3/A-) at a spread of Treasuries plus 118 bps, according to an FWP with the Securities and Exchange Commission.

The size was increased from $250 million, a source said.

KeyBanc Capital Markets Inc., Scotia Capital (USA) Inc. and SunTrust Robinson Humphrey Inc. were bookrunners.

Proceeds are going to repay short-term debt under a capital expenditure credit facility, incurred to fund utility capital expenditures. They will also be used to replenish cash used to repay $260 million of 7.69% medium-term notes that matured on Feb. 1.

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

Appalachian's $350 million

Appalachian Power sold $350 million of 4.6% 10-year senior notes, series T, (Baa2/BBB/BBB) to yield 130 bps over Treasuries, according to an FWP with the SEC.

Barclays Capital Inc., Credit Agricole Securities and Morgan Stanley & Co., Inc. were bookrunners.

Proceeds are being used for general corporate purposes relating to the utility business, including paying an outstanding $250 million of 5.55% senior notes at maturity on April 1, funding a construction program, repaying affiliates and replenishing working capital.

The utility is based in Columbus, Ohio.

DnB NOR's covered bonds

Norway's DnB NOR Boligkreditt priced $2 billion of five-year covered bonds at a spread of 66 bps over mid-swaps, a source away from the trade said.

This was in line with talk in the mid-swaps plus 65 bps area, a source said.

The notes (Aaa/AAA/AAA) priced under Rule 144A.

Full terms were not available at press time.

Barclays Capital Inc., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Inc. and Morgan Stanley & Co., Inc. were bookrunners.

The subsidiary of DnB NOR Bank ASA is based in Oslo.

AT&T better, telecom mixed

AT&T's bonds, which widened 10 bps to 15 bps the previous day on the news it would buy T-Mobile USA from Deutsche Telekom AG, "is probably about 5 basis points better," a trader said.

AT&T's 5.8% notes due 2019 traded at 70 bps bid, 65 bps offered, compared to 72 bps bid, 67 bps offered on Monday.

Other bonds in the telecom sector, including from Verizon Communications and Sprint Nextel, were mixed after also widening on Monday.

"Sprint bonds are down a point. Verizon is 2 basis points better," a trader said.

Telephone and Data drops

Telephone and Data Systems priced $300 million, or 12 million shares, of 7% senior notes due 2060 (Baa2/BBB-/BBB) on Monday at par of $25.

The deal "went well," trading at $24.75/$24.80, a trader said, noting, "For a deal that has retail in it, that's not that bad."

The telecommunications company is based in Chicago.

Stephanie Rotondo contributed to this review

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