GE Capital, MetLife, RBS, CenterPoint sell on massive day in high-grade; market volume jumps

By Andrea Heisinger and Cristal Cody

New York, Jan. 4 - General Electric Capital Corp., MetLife Global Funding I, Royal Bank of Scotland plc, Deutsche Bank AG, CenterPoint Energy Resources Corp., Allegheny Technologies Inc., Enterprise Products Operating LLC, ERAC USA Finance Co., Rabobank Nederland, Health Care Service Corp., Buckeye Partners, LP and European Investment Bank all priced bonds on a hectic Tuesday in the high-grade market.

There was more than $20.95 billion of bonds priced, including the $3.5 billion sale from EIB.

"It was absolutely insane out there," a source said of the day's volume. "I would say we'll be mopping up later [in the week]."

The big deal of the day came from General Electric Capital with its $6 billion sale in four tranches. It was upsized considerably from the initial range announced, and both of the fixed-rate tranches tightened in from whispered guidance.

Another huge corporate offering came from MetLife Funding. The financing arm of the insurance company sold $1.5 billion in three tranches.

RBS added to the list of financial names tapping the market with its $2 billion sale.

Dutch financial Rabobank sold $2.75 billion of long and short bonds. Germany's Deutsche Bank priced $1 billion of five-year notes in a fairly quick sale that came in line with guidance.

On the non-financial side there was Enterprise Products Operating with its $1.5 billion sale of five-year and 30-year maturities.

Specialty metals company Allegheny Technologies priced $500 million of 10-year notes to help pay for an acquisition.

Petroleum pipeline name Buckeye Partners sold $650 million of 10-year notes, also to finance a portion of an acquisition.

CenterPoint Energy, the electric and natural gas utility, sold $550 million of notes with 10- and 30-year maturities under Rule 144A.

Another sale done under Rule 144A was an upsized one from Health Care Service. The size was increased to $500 million from $400 million.

Enterprise Holdings guaranteed an issue of three-year notes by ERAC USA Finance that was increased to $500 million from $350 million.

A sovereign sale came from EIB. The lender to the European Union priced $3.5 billion of five-year notes.

More sales are expected for Wednesday, although maybe not such massive deals, sources said.

Secondary volume up

The busy day in primary kept secondary traders active and trading in corporate volume was "strong" by early afternoon, a source said.

Overall investment-grade Trace volume ended the day up 57% at nearly $17 billion, a market source said.

In secondary trading, CenterPoint Energy's two-part deal firmed more than 5 basis points in trading, sources said.

The bids on Allegheny Technologies' new notes due 2021 quickly firmed, but no offers were seen until late at the end of the day, according to a trader.

Also, the two tranches of bonds sold by Enterprise Products were better in secondary trading, sources said.

In other data, the Markit CDX Series 14 North American investment-grade index firmed 1 bp on Tuesday to a spread of 82 bps, according to Markit Group Ltd.

Treasuries sold off soon after the minutes of the Dec. 14 meeting of the Federal Reserve's Federal Open Market Committee were released on Tuesday. The Federal Reserve indicated a strong stance in sticking to its quantitative easing program. It will buy $600 billion in Treasuries by the end of the second quarter at a pace of about $75 billion a month.

Trading was choppy throughout the day, but by late afternoon, Treasuries ended mostly flat. The 10-year note yield was unchanged at 3.33%. The 30-year bond yield rose 1 bp to 4.41%.

GE Capital's blockbuster sale

GE Capital priced $6 billion of notes (Aa2/AA+) in four tranches late in the day, according to a source who worked on the sale.

The $1 billion of two-year floating-rate notes priced at par to yield Libor plus 57 bps. They sold in line with guidance.

A $1.25 billion tranche of three-year floaters priced at par to yield Libor plus 85 bps. The notes also priced in line with talk.

The third part of the sale was $1.75 billion of 2.1% three-year notes priced at a spread of 110 bps over Treasuries. They were priced in line with revised talk in the 110 bps area and tighter than initial whispers in the 112.5 bps area.

Finally, there was $2 billion of 4.625% 10-year notes priced at 99.601 to yield 4.673% with a spread of 135 bps over Treasuries. The tranche sold tighter than whispered guidance in the 145 bps area and at the tight end of revised talk in the 137.5 bps area.

There was between $12 billion and $13 billion in total demand for the notes, the source said. The deal was described as going "extremely well."

The deal morphed from the time it was announced in the morning to when it launched in the afternoon.

The size was initially announced at between $3 billion and $4 billion and was increased on demand.

A two-year floating-rate tranche was added on "demand from a personal account," the source said. The company increased the deal to the maximum size of $6 billion.

About $7 billion of the total amount on the books for the sale was in the 10-year tranche, the source said.

Bank of America Merrill Lynch, Barclays Capital Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. Inc. were the bookrunners.

Proceeds are going toward general corporate purposes.

The financial services arm of General Electric Co. is based in Norwalk, Conn.

MetLife prices three tranches

MetLife Global Funding priced $1.5 billion of notes (Aa3/AA-) in three tranches by late afternoon, a market source said.

A $500 million tranche of three-year floating-rate notes priced at par to yield Libor plus 75 bps.

The second tranche was $500 million of 2% three-year notes priced at a spread of Treasuries plus 100 bps.

The final part of the deal was $500 million of 3.125% five-year notes sold at a spread of 115 bps over Treasuries.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc., JPMorgan and UBS Securities LLC were the bookrunners.

Proceeds are being used for general corporate purposes.

The funding arm of Metropolitan Life Insurance Co. is based in New York.

RBS prices $2 billion

Royal Bank of Scotland sold $2 billion of senior notes (Aa3/A+/AA-) late in the day in two tranches, a market source away from the deal said.

A $500 million tranche of 3.25% three-year notes priced at a spread of Treasuries plus 235 bps.

The second part was $1.5 billion of 6.125% 10-year notes priced at 285 bps over Treasuries.

RBS Securities Inc. was the bookrunner for the deal, the proceeds of which are going toward general corporate purposes.

The notes are guaranteed by RBS Group plc.

In the secondary market, the tranche of 10-year notes were seen at 285 bps bid, 280 bps offered, a trader said.

The financial services company is based in Edinburgh.

Rabobank sells $2.75 billion

Rabobank Nederland was one of the many financial names in the market with its $2.75 billion sale of notes (Aaa/AAA) in two tranches, a source said.

The $1.25 billion tranche of 1.85% three-year notes priced at a spread of 85 bps over Treasuries.

A $1.5 billion tranche of 4.5% 10-year notes priced at 120 bps over Treasuries.

The sale was initially announced in a single tranche of three-year notes, and the 10-year maturity was added later.

The bookrunners were Barclays Capital, Credit Suisse Securities LLC, Goldman Sachs & Co. and Morgan Stanley.

The financial services company is based in Utrecht, the Netherlands.

CenterPoint's Rule 144A deal

CenterPoint Energy Resources sold a downsized $500 million of notes (Baa3/BBB) in two tranches, according to a market source.

A $250 million tranche of 4.5% 10-year notes sold at a spread of Treasuries plus 120 bps.

The second part of the deal was $250 million of 5.85% 30-year bonds priced at a 145 bps over Treasuries spread.

The notes were sold under Rule 144A.

Bank of America Merrill Lynch, RBC Capital Markets Corp., RBS Securities Inc. and SunTrust Robinson Humphrey were the bookrunners.

Proceeds are going to pay amounts due in connection with the retirement of $550 million of 7.75% notes due 2011 at maturity.

Centerpoint Energy's notes, once freed to trade, quickly tightened in the secondary market, sources said.

The notes due 2021 firmed to 117 bps bid, 116 bps offered, a trader said. The notes continued to tighten, with one source seeing them at 115 bps bid, 110 bps offered.

The bonds due 2041 were seen at 143 bps bid, 139 bps offered and later at a bid of 138 bps. Another source saw the bonds trading better at 138 bps bid, 133 bps offered.

The electric and natural gas company is based in Houston.

Enterprise sells tight to talk

Enterprise Products Operating priced $1.5 billion of senior notes (Baa3/BBB-/BBB-) in two tranches, a market source away from the deal said.

The $750 million of 3.2% five-year notes priced at a spread of 120 bps over Treasuries. This was at the tight end of guidance in the 125 bps area.

A second tranche of $750 million of 5.95% 30-year bonds sold at Treasuries plus 155 bps. The price was at the tight end of talk in the 160 bps area.

The bookrunners were JPMorgan, BNP Paribas Securities Corp., Deutsche Bank Securities, DnB NOR Markets, RBS Securities and Scotia Capital USA Inc.

Proceeds are being used to reduce borrowings under a revolving credit facility, repay outstanding amounts of $450 million in notes due February 2011 and for general corporate purposes.

The deal is guaranteed by Enterprise Products Partners LP.

The two tranches of bonds sold by Enterprise Products also were better in secondary trading, according to traders.

One source saw the notes due 2016 at 117 bps bid but no offers. Later, a trader on another desk quoted the five-year notes at 118 bps bid, 113 bps offered.

Also in trading, the bonds due 2041 were quoted at 152 bps bid, 149 bps offered and were firmer by the end of the day at 150 bps bid, 145 bps offered, traders said.

The natural gas and crude oil pipeline company is based in Houston.

Deutsche Bank's $1 billion

Deutsche Bank priced $1 billion of 3.25% five-year notes (Aa3/A+/AA-) at a spread of Treasuries plus 130 bps, a syndicate source away from the sale said.

This was in line with talk in the 130 bps area.

Deutsche Bank Securities was the bookrunner.

Proceeds are being used for general corporate purposes, including debt repayment.

No secondary activity was immediately seen in the debt, a source said.

The financial services company is based in Frankfurt.

Allegheny's 10-year notes

Allegheny Technologies priced $500 million of 5.95% 10-year senior notes (Baa3/BBB-) at a spread of Treasuries plus 262.5 bps, an informed source said.

JPMorgan, Citigroup and Morgan Stanley were active bookrunners.

Proceeds are being used to finance the cash portion of the merger consideration for the acquisition of Ladish Co., Inc.

The notes were active on the bid side, a trader said.

"Saw bids starting at 260, 255, 248, 246," the trader said. "No offers."

But by late afternoon, the bonds were "finally" seen offered at 238 bps, the trader said.

The specialty metals company is based in Pittsburgh.

ERAC USA prices upsized deal

ERAC USA Finance sold an upsized $500 million of 2.25% three-year notes (Baa1/BBB+) at a spread of 130 bps over Treasuries, an informed source said.

The size was increased from $350 million, a source said.

The notes were sold under Rule 144A.

Bank of America Merrill Lynch, Barclays Capital and Deutsche Bank Securities were the bookrunners.

The deal is guaranteed by Enterprise Holdings Inc.

The funding subsidiary of Enterprise Rent A Car Co. is based in St. Louis.

Buckeye Partners' $650 million

Buckeye Partners sold $650 million of 4.875% 10-year senior notes (Baa2/BBB) at a spread of Treasuries plus 160 bps, according to an FWP filing with the Securities and Exchange Commission.

Barclays Capital and SunTrust Robinson Humphrey were the bookrunners.

Proceeds are being used to finance a portion of the pending acquisition of an 80% interest in Borco from Vopak. If Vopak exercises the tag right, any additional proceeds will be used to fund the remaining 20% interest in Borco.

In secondary trading, the notes due 2021 were slightly tighter at 158 bps bid, 152 bps offered, a source said.

The refined petroleum products pipeline system is based in Houston.

Health Care Service's 10-year

Health Care Service priced an upsized $500 million of 4.7% 10-year notes (A2/AA-) at a spread of Treasuries plus 140 bps, an informed source said late in the day.

They were sold under Rule 144A.

Bank of America Merrill Lynch and JPMorgan ran the books.

Proceeds will be used to repay existing notes and for general corporate purposes.

The health benefits company is based in Chicago.

EIB sells $3.5 billion

The EIB priced $3.5 billion of five-year notes (Aaa/AAA) at a spread of Treasuries plus 38.55 bps, or mid-swaps plus 15 bps, a source close to the deal said late in the day.

The full terms were not available at press time.

Barclays Capital, Goldman Sachs and JPMorgan were the bookrunners.

The lending unit of the European Union is based in Kirchberg, Luxembourg.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.