Sprint, McDonald’s price notes; Assurant plans investor calls for deal; Campbell Soup softens

By Cristal Cody

Tupelo, Miss., March 14 – Deal action on Wednesday included new investment-grade bonds from Sprint Corp. and McDonald’s Corp.

Sprint’s offering of $3,937,500,000 of senior secured notes announced at the start of the week priced in two tranches.

McDonald’s tapped the high-grade bond market with $1.5 billion of senior medium-term notes in three tranches. The deal had a total order book of $6.65 billion, a source said.

Primary action has thinned since Monday’s heavy volume of more than $14 billion of bonds, but several issuers are eyeing transactions, sources report.

Coming up on Thursday, Assurant Inc. will kick off a round of fixed income investor calls for a three-part note offering.

Other issuers, including Rio Tinto plc and Valero Energy Partners LP, have held roadshows and investor calls ahead of possible deals.

Also on Thursday, the Federal Home Loan Bank System said it plans to issue global bonds due March 30, 2020.

New issues have priced with wider concessions and are trading weaker in the secondary market, putting pressure on supply, according to a BofA Merrill Lynch note released on Wednesday.

“We estimate average new issue concessions widened to 13.8 [basis points] so far this week from 10.9 bps last week and 6.9 bps during the week of February 26,” the note said.

Campbell Soup Co.’s $5.3 billion notes (Baa2/BBB/) priced in seven tranches on Monday were softer along with several other new issues, according to market sources.

The company’s notes traded as much as 7 bps wider on Wednesday.

McDonald’s new notes were mixed in the secondary market.

The Markit CDX North American Investment Grade 29 index closed the day about 1 bp softer at a spread of 55 bps.

Sprint prices $3.94 billion

Sprint priced a $3,937,500,000 offering of senior secured notes (Baa2//BBB) in two tranches on Wednesday, according to a market source.

Subsidiaries Sprint Spectrum Co. LLC, Sprint Spectrum Co. II LLC and Sprint Spectrum Co. III LLC issued the notes.

Sprint sold $2.1 billion of 4.738% class A-1 notes due March 20, 2025 at par to yield a spread of 212.5 bps over Treasuries.

The companies priced $1,837,500,000 of 5.152% class A-2 notes due March 20, 2028 at par to yield a Treasuries plus 240 bps spread.

The Rule 144A and Regulation S deal was announced Monday. The seven-year notes were talked in the Treasuries plus 212.5 bps to 225 bps area with a yield in the range of 4.75% to 4.875%, and the 10-year notes were initially talked to price in the Treasuries plus 237.5 bps to 250 bps area with a yield in the range of 5.15% to 5.275%.

Price guidance later was set at Treasuries plus 212.5 bps with a yield of 4.73% for the 2025 notes and to a spread of Treasuries plus 240 bps and a yield of 5.15% for the 2028 notes.

Goldman Sachs & Co. was the left lead bookrunner. J.P. Morgan Securities LLC and Mizuho Securities USA Inc. also were bookrunners.

Sprint is an Overland Park, Kan.-based wireless telecommunications services and internet carrier holding company.

McDonald’s brings three tranches

McDonald’s priced $1.5 billion of senior medium-term notes (Baa1/BBB+/) in three tranches on Wednesday, according to an FWP filing with the Securities and Exchange Commission.

McDonald’s sold $500 million of 3.35% five-year notes at 99.962 to yield 3.358%, or a spread of Treasuries plus 75 bps.

McDonald’s placed $500 million of 3.8% 10-year notes at a Treasuries plus 100 bps spread. The notes due April 1, 2028 priced at 99.891 to yield 3.813%.

In the final tranche, the company priced a $500 million add-on to its 4.45% notes due March 1, 2047 at 99.836 to yield 4.46%, or a spread of 140 bps over Treasuries.

The company originally sold $550 million of the 4.45% notes on March 6, 2017 at a spread of 137 bps over Treasuries. The total outstanding now is $1.05 billion.

J.P. Morgan Securities, BofA Merrill Lynch, Morgan Stanley & Co. LLC, Wells Fargo Securities LLC, Citigroup Global Markets Inc., Mizuho Securities and SunTrust Robinson Humphrey, Inc. were the bookrunners.

In the secondary market, the notes were mixed, an informed source said.

McDonald’s 3.35% notes due 2023 firmed to 73 bps bid, while the 3.8% notes due 2028 traded at 101 bps bid, 99 bps offered. The 4.45% notes due 2047 were quoted at 140 bps bid, 138 bps offered.

The fast food chain is based in Oak Brook, Ill.

Assurant eyes three-part deal

Assurant (Baa2/BBB+/) will start a two-day round of fixed income investor calls on Thursday for a three-tranche note offering, according to a market source and a 424B5 filed with the SEC.

The company plans to price two tranches of fixed-rate senior notes due 2023 and 2028 and one tranche of fixed-to-floating rate subordinated notes due 2048.

Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Wells Fargo Securities LLC and U.S. Bancorp Investments Inc. are the bookrunners.

For the fixed-to-floaters, interest will accrue at a fixed rate until 2028 and then at a rate based on Libor.

The fixed-to-floaters are non-callable. The fixed-rate notes feature make-whole and par calls.

Proceeds from the deal will be used, along with proceeds from the March 12 sale of mandatory convertible preferred stock, available cash on hand and common stock, to finance the company's planned acquisition of TWG Holdings Ltd. and refinance its $350 million of 2.5% senior notes due 2018.

Assurant is a New York-based provider of risk management products and services.

Campbell Soup eases

Campbell Soup’s 3.65% notes due March 15, 2023 traded on Wednesday at 110 bps offered in the secondary market, a trader said.

The company sold $1.2 billion of the 3.65% notes on Monday at a Treasuries plus 105 bps spread.

Campbell Soup’s 4.15% notes due March 15, 2028 softened to 137 bps offered in secondary trading.

The $1 billion tranche of 10-year notes priced in Monday’s sale with a spread of 130 bps over Treasuries.

The company plans to use the proceeds to fund the cash consideration of its merger with Snyder’s-Lance, Inc.

Campbell Soup is a convenience foods company based in Camden, N.J.

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