PepsiCo brings multi-part offering; ING, Georgia Power among issuers; U.S. Bancorp tightens

By Andrea Heisinger and Cristal Cody

New York, Feb. 29 - Issuance continued at a fast pace in the high-grade bond market on Wednesday as companies like PepsiCo, Inc., Georgia Power Co., ING Bank NV, Southwestern Energy Co. and Rayonier Inc. priced deals.

PepsiCo had the largest offering of the day at $2.75 billion in three tranches. The company is taking advantage of the low borrowing rates of the moment after last tapping the market in August.

The deal from the snack food and beverage company had more than $5.75 billion on the books, a syndicate source said.

Georgia Power increased its 30-year bonds to $750 million from $500 million due to demand.

Forest products company Rayonier sold $325 million of 10-year notes to repay borrowings under a revolving credit facility.

There was a $1 billion issue of 10-year notes from Southwestern Energy. The size was increased from $700 million.

ING Bank represented financials for the day. The Amsterdam-based company sold $2 billion of five-year notes under Rule 144A and Regulation S.

The Province of Manitoba priced $600 million of five-year global notes slightly tighter than guidance.

Caisse Centrale Desjardins du Quebec gave the terms of its $1.5 billion sale of five-year covered bonds done under Rule 144A and Regulation S late on Tuesday.

Health Care REIT Inc. and Raymond James Financial Inc. both announced deals in the preferred stock market.

Compared with the deals priced on Tuesday, those sold Wednesday were deemed more interesting as most were upsized and oversubscribed.

"The market was feeling a little saucy today," one syndicate source said.

No hard issuance estimates were floating around for March, sources said, with many desks said to be waiting until Thursday to make predictions based on final numbers from February.

"I know we're supposed to be busy, but I haven't heard any numbers," a market source said.

Thursday is expected to see a continued flow of deals with most desks reporting they have one or two companies looking at the market.

"I don't see it slowing down a lot," the market source said.

Bonds overall were mostly flat in secondary trading.

"It's been relatively light. Most stuff is unchanged," a trader said.

The Markit CDX Series 17 North American Investment Grade index ended unchanged Wednesday at a spread of 94 basis points.

Georgia Power's new 30-year bonds traded 6 bps tighter.

The new debt sold on Tuesday traded better in Wednesday's session. Burlington Northern Santa Fe, LLC's new debentures firmed 3 bps to 4 bps.

H.J. Heinz Co.'s new 10-year notes tightened about 5 bps.

U.S. Bancorp's notes firmed another 5 bps in trading on Wednesday, trading 10 bps better overall, a trader said.

Bank and financial paper traded unchanged to 5 bps stronger on the day, a source said.

No changes were seen in Canadian gold miner Kinross Gold Corp.'s bonds after gold prices fell more than 3% on the day, traders said.

Investment-grade bank and brokerage credit default swaps costs were flat to lower, a source said.

Citigroup's CDS costs fell 5 bps to 208 bps bid, 218 bps offered. JPMorgan's CDS costs traded flat at 105 bps bid, 110 bps offered.

On the brokerage side, Merrill Lynch's CDS costs were unchanged on the day at 285 bps bid, 305 bps offered. Goldman Sachs' CDS costs fell 10 bps to 238 bps bid, 248 bps offered. Morgan Stanley's CDS costs dropped 5 bps to 305 bps bid, 315 bps offered.

Treasuries ended flat to lower. The yield on the benchmark 10-year Treasury note rose 3 bps to 1.97%. The 30-year bond yield edged up 1 bp to 3.08%.

PepsiCo sells $2.75 billion

PepsiCo sold $2.75 billion of senior notes (Aa3/A-/A) in three tranches, a market source said.

There was roughly $5.75 billion on the books for the deal as a whole, the source added. There was the most investor interest in the three-year tranche, which saw about $2.5 billion of demand.

The $750 million of 0.75% three-year paper sold at Treasuries plus 35 bps. This was in line with guidance in the 35 bps area.

A second part was $1.25 billion of 2.75% 10-year notes priced at 80 bps over Treasuries. The notes priced at the low end of guidance in the range of 80 bps to 85 bps.

There was also a $750 million tranche of 4% 30-year bonds sold at Treasuries plus 95 bps. The bonds sold at the tight end of talk in the 95 bps to 100 bps range.

Bank of America Merrill Lynch, Goldman Sachs & Co. and J.P. Morgan Securities LLC were the bookrunners.

Proceeds are being used for general corporate purposes including commercial paper repayment.

PepsiCo last priced $1.25 billion of paper in two parts on Aug. 22. The 0.75% three-year notes from that offering sold at 57 bps over Treasuries, and a 3% tranche of 10-year notes priced at 97 bps over Treasuries.

The snack food and soft drink company is based in Purchase, N.Y.

ING twice oversubscribed

ING Bank sold $2 billion of 3.75% five-year paper (Aa3/A+/) at a spread of 300 bps over Treasuries, a source away from the deal said.

There was more than $4 billion of orders on the books.

The pricing level was at the low end of guidance in the 300 bps to 305 bps range, the source added.

The bonds were sold under Rule 144A and Regulation S.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc. and Goldman Sachs ran the books.

Proceeds are being used for general corporate purposes.

ING was last in the bond market with a $2.5 billion deal in three tranches on June 1, 2011.

The financial services company is based in Amsterdam.

Georgia Power upsizes

Georgia Power sold an upsized $750 million of 4.3% 30-year senior notes, series 2012A, (A3/A/A+) at a spread of Treasuries plus 120 bps, an informed source said.

The deal size was increased from $500 million due to demand, the source said. The notes were sold wider than whispered guidance in the 110 bps area in order to get $750 million priced. They were sold in line with revised talk in the 120 bps area.

"The company said they would grow it up to $750 million if they got a good price," the source said. "They said if we priced it 10 bps wider [at 120 bps], they'd do it."

There was more than $1.5 billion on the books for the trade.

The bookrunners were Bank of America Merrill Lynch, Barclays Capital Inc., Deutsche Bank Securities, SunTrust Robinson Humphrey Inc., UBS Securities LLC and Wells Fargo Securities LLC.

Proceeds are going to repay a portion of outstanding short-term debt, repay two bank loans maturing in March and for general corporate purposes including the company's continuous construction program.

Georgia Power's new 30-year bonds firmed to 114 bps bid, 110 bps offered in the secondary market, a trader said.

The electric subsidiary of Southern Co. is based in Atlanta.

Southwestern's first IG bond

Southwestern Energy priced an upsized $1 billion of 4.1% 10-year senior notes for the first time as an investment-grade issuer, a source who worked on the deal said.

The size of the trade was increased from $700 million. The notes were priced tighter than guidance in the mid-to-high 200 bps area, the source said.

"There was a ton of demand, and the spread was attractive," the source said in reference to why the company upsized by $300 million.

The notes (Baa3/BBB-/BBB-) were priced to yield 212.5 bps over Treasuries.

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

Citigroup Global Markets Inc. and JPMorgan were the bookrunners.

Proceeds are being used to repay debt under a credit facility and for general corporate purposes.

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

Rayonier sells 10-year issue

Rayonier sold an upsized $325 million of 3.75% 10-year senior notes (Baa1/BBB+/) to yield 180 bps over Treasuries, an informed source said.

The size was initially $300 million.

Bank of America Merrill Lynch and JPMorgan were the active bookrunners. Credit Suisse Securities (USA) LLC was passive.

Proceeds are being used to repay $150 million of borrowings under a revolving credit facility, and any remainder is going toward general corporate purposes.

The deal is guaranteed by the subsidiaries that guarantee the senior credit facility.

The international forest products company is based in Jacksonville, Fla.

Manitoba's five-year notes

The Province of Manitoba priced $600 million of 1.3% five-year global debentures (Aa1/AA/) to yield mid-swaps plus 19 bps, or Treasuries plus 46.1 bps, a source away from the trade said.

They priced at a level tighter than talk in the mid-swaps plus 20 bps area.

The bookrunners were CIBC World Markets Corp., HSBC Securities (USA) Inc., National Bank Financial and RBC Capital Markets LLC.

Proceeds are being used for general government programs.

The issuer is based in Winnipeg.

Caisse Centrale sells

Caisse Centrale Desjardins du Quebec gave the terms of its issue that sold late Tuesday. The issuer priced $1.5 billion of 1.6% five-year covered bonds (Aaa/AAA/) at a spread of Treasuries plus 77.2 bps, a source close to the trade said.

The bookrunners were Barclays Capital Inc., BNP Paribas Securities Corp., Citigroup, Morgan Stanley & Co. LLC and RBS Securities Inc.

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

The treasury arm of the Desjardins Group is based in Montreal.

Raymond James's $25-par notes

Raymond James priced $350 million of 6.9% $25-par senior notes due 2042, according to a market source.

The St. Petersburg, Fla.-based financial services firm will apply to list the notes on the New York Stock Exchange.

JPMorgan, Citigroup and Raymond James & Associates Inc. are running the books.

Proceeds will be used to partially fund the company's acquisition of Morgan Keegan & Co. Inc.

Health Care REIT's preferreds

Health Care REIT intends to sell perpetual series J cumulative redeemable preferred stock, according to a filing with the Securities and Exchange Commission.

Health Care will apply to list the preferreds on the NYSE under the ticker symbol "HCNPJ."

Bank of America Merrill Lynch, Morgan Stanley, UBS Investment Bank and Wells Fargo are the bookrunners.

Proceeds will be used to redeem all of the company's 7.875% series D cumulative redeemable preferred stock. Remaining funds will be used for general corporate purposes.

The real estate investment trust is focused on senior housing and health-care facilities and is based in Toledo, Ohio.

BNSF firms

Burlington Northern Santa Fe's new debentures (A3/BBB+/) sold in a $1.25 billion offering on Tuesday traded tighter on Wednesday, a source said.

The 3.05% notes due 2022 firmed to 111 bps bid, 108 bps offered. The notes priced in a $625 million offering at a spread of 115 bps over Treasuries.

The tranche of 4.4% 30-year bonds traded better at 140 bps bid, 135 bps offered. The bonds priced at Treasuries plus 137.5 bps.

The issuer is a Fort Worth-based holding company for a transportation and railroad company.

U.S. Bank tightens

U.S. Bancorp's 3% senior holding company notes due 2022 firmed to 100 bps bid, 95 bps offered, a trader said on Wednesday.

U.S. Bancorp sold $1 billion of the 10-year notes (Aa3/A/AA-) at Treasuries plus 110 bps on Tuesday.

The financial services company is based in Minneapolis.

Heinz better

H.J. Heinz's 2.85% notes due 2022 firmed in the secondary market to 90 bps bid, 85 bps offered, a trader said on Wednesday.

Heinz sold $300 million of the notes (Baa2/BBB+/BBB) at 95 bps over Treasuries on Tuesday.

The food product company is based in Pittsburgh.

Kinross Gold flat

Bonds from Kinross Gold (Baa3/BBB-/BBB-) traded unchanged on the day, sources said.

The 5.125% notes due 2021 were quoted at 316 bps. Kinross sold $500 million of the notes at a spread of 290 bps on Aug. 15.

Kinross' 6.875% bonds due 2041 traded flat at 346 bps. The company sold $250 million of the bonds on Aug. 15 at a spread of 315 bps plus Treasuries.

The mining and gold ore processing company is based in Toronto.

Stephanie N. Rotondo contributed to this review

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