IBM, P&G, Praxair, Ventas, Rabobank price in busy primary; Rabobank, Ventas paper firms

By Andrea Heisinger and Cristal Cody

New York, Feb. 1 - Predictions of a busy day in the high-grade bond market came true on Wednesday as multi-tranche deals from Procter & Gamble Co. and International Business Machines Corp. were among a steady flow of new deals in the market.

Procter & Gamble sold $2 billion of notes in tranches of two-year floating-rate notes and 10-year fixed-rate notes. The consumer products company set a new record low for a 10-year note coupon.

The deal from IBM totaled $2.5 billion and was made up of three- and five-year paper. Both tranches also set record-low coupons for their maturities.

Praxair, Inc. was one issuer that upsized its offering of $600 million of 10-year notes. The initial size was $500 million.

Real estate investment trust Ventas, Inc. subsidiaries Ventas Realty, LP and Ventas Capital Corp. sold $600 million of 10-year notes guaranteed by the parent company. The size of the deal was increased from $400 million due to demand, a source said.

There was also a continuation of deals from Yankee issuers as Rabobank Nederland priced $3 billion of 10-year notes.

Low yields were part of the reason that companies are jumping into the bond market following earnings, and the tone has also remained positive despite a drop in equities to end Tuesday.

"It was crazy out there," one syndicate source said. There were "a lot of high-quality" names.

The day was heavy on the large corporate deals, which was a change from the last week or two that were dominated by small sales or others in the preferred stock market.

"We had north of $16 billion for the day, so no one's complaining," a syndicate source who worked on the IBM deal said. That total included the massive $7 billion offering from Brazil's Petrobras.

While the primary and secondary sides of the market may both need time to absorb all of the new paper, it's likely there will be more sales pricing on Thursday.

"I think it will definitely quiet down, but [due to] the fact that today went well, we'll probably see some people come in [tomorrow] just because of that," the syndicate source said.

Overall trading volume climbed to nearly $17 billion on Wednesday.

The new issues mostly traded stronger in the secondary market, traders said.

Rabobank's notes due 2022 traded more than 15 basis points better.

About $1 million of the new Proctor & Gamble notes traded tighter at 51 bps bid soon after pricing, a trader said.

Ventas Realty/Ventas Capital's paper firmed 7 bps to 8 bps by late afternoon.

The new issues from IBM and Praxair traded in 1 bp to 2 bps.

The Markit CDX Series 17 North American investment-grade index firmed 1 bp to a spread of 100 bps.

Treasuries were weaker on more positive economic data. The 10-year Treasury note yield rose 4 bps to 1.83% from 1.84%. The 30-year bond yield climbed 5 bps to 2.99%.

IBM sets record coupons

IBM sold $2.5 billion of new paper (Aa3/A+/A+) in two parts, a source close to the trade said.

There was about $7 billion on the books for the trade, the source said.

"It was a very high-quality book," they added.

The $1.5 billion of 0.55% three-year notes priced at a spread of Treasuries plus 42 bps. The tranche priced tighter than guidance in the 45 bps to 50 bps range.

There was also a $1 billion tranche of 1.25% five-year notes sold at a spread of 62 bps over Treasuries. This tranche also priced tighter than talk in the 65 bps to 70 bps range.

Each of the tranches set a record-low coupon for its maturity, a source who worked on the deal said. The previous lows both came from Colgate-Palmolive Co., which had priced a three-year note with a 0.6% coupon and a five-year note with a 1.3% coupon. Those records both came from a $1 billion deal in three tranches priced on Nov. 3, 2011.

Bookrunners were Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, Mizuho Securities USA Inc., Morgan Stanley & Co. LLC, RBC Capital Markets LLC and Wells Fargo Securities LLC.

Proceeds are being used for general corporate purposes.

IBM was last in the market with a $1.85 billion deal of three- and 10-year maturities that priced on Oct. 27, 2011. The 0.875% three-year notes from that offering were priced at a comparable 40 bps over Treasuries.

In the secondary market, IBM's three-year notes were quoted at 40 bps bid, 38 bps offered and later at 39 bps bid, 36 bps offered, traders said.

The notes due 2017 were seen at 61 bps bid, 59 bps offered and closing tighter at 59 bps bid, 55 bps offered.

The technology company is based in Armonk, N.Y.

P&G prices two tranches

Procter & Gamble priced $2 billion of notes (Aa3/AA-) in two parts, an informed source said.

There was roughly $6 billion in demand for the notes, or about $3 billion for each tranche, the source said.

The $1 billion of two-year floating-rate notes were priced at par to yield Libor plus 8 bps.

There was also a $1 billion tranche of 2.3% 10-year paper sold at a spread of Treasuries plus 55 bps. The tranche sold at the low end of guidance in the 58 bps area, plus or minus 3 bps.

A market source said that the 2.3% coupon on the 10-year notes was the lowest on record, besting the 2.45% coupon on a 10-year note priced by Colgate-Palmolive in the same $1 billion, three-tranche deal that IBM bested the record on.

Citigroup Global Markets Inc., Goldman Sachs & Co. and J.P. Morgan Securities LLC were the bookrunners.

Proceeds are being used for general corporate purposes.

Procter & Gamble's notes due 2022 were seen tighter at 51 bps bid, 50 bps offered, a trader said.

The consumer products company is based in Cincinnati.

Praxair's upsized trade

Industrial gas supplier Praxair sold an upsized $600 million of 2.45% 10-year notes (A2/A) to yield 65 bps over Treasuries, a market source said.

The paper was priced tighter than guidance in the 70 bps area, the source said, while the deal size was increased from $500 million.

Bookrunners were Bank of America Merrill Lynch, Citigroup and HSBC Securities (USA) Inc.

Proceeds are going to repay short-term debt, to fund share repurchases under a repurchase program and for general corporate purposes.

In secondary trading, Praxair's notes due 2022 were seen at 62 bps bid, 59 bps offered and later at 63 bps bid, 60 bps offered, according to traders.

The issuer is based in Danbury, Conn.

Ventas sells $600 million

Ventas Realty and Ventas Capital priced an upsized $600 million of 4.25% 10-year senior notes (Baa2/BBB/BBB+) at a spread of 250 bps over Treasuries, a source away from the trade said.

The deal size was increased from $400 million on demand, a second source said.

Bookrunners were Bank of America Merrill Lynch, Barclays Capital Inc., Goldman Sachs and JPMorgan.

Proceeds are being used to repay debt under an unsecured revolving credit facility, for working capital and for other general corporate purposes, including funding future acquisitions or investments.

The notes are guaranteed by Ventas, Inc.

The notes due 2022 from Ventas Realty/Ventas Capital traded at 242 bps bid, 238 bps offered late afternoon, a trader said. The notes were quoted later in the day at 243 bps bid, 239 bps offered.

The real estate investment trust for senior housing and health care properties is based in Chicago.

Rabobank's $3 billion deal

Rabobank Nederland sold $3 billion of 3.875% 10-year notes (Aaa/AAA) at a spread of Treasuries plus 215 bps, a market source away from the trade said.

Bank of America Merrill Lynch, Credit Suisse Securities and Goldman Sachs were the bookrunners.

Proceeds are being used for general corporate purposes.

The notes are guaranteed by the company's New York branch.

Rabobank last sold debt in the U.S. market in a $1.5 billion deal of 5.25% 30-year bonds at 115 bps over Treasuries on May 17, 2011.

Rabobank 10-year's notes traded better at 203 bps bid, 200 bps offered, a trader said.

Another trader saw the notes firmer going out on the day at 199 bps bid, 196 bps offered.

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

Realty Income faring well

Realty Income Corp.'s $325 million issue of 6.625% monthly income class F cumulative redeemable preferreds was moving up, a market source reported.

One trader placed the issue at $24.85 shortly before the bell. After the market closed, a source said he saw the paper offered at $24.89.

The deal priced Tuesday and was upsized from $150 million.

The Escondido, Calif.-based real estate investment trust intends to list the preferred shares on the New York Stock Exchange.

Stephanie N. Rotondo contributed to this review

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