World Bank, Realty Income price as market focuses on Fed; Target mostly tighter

By Cristal Cody and Aleesia Forni

Virginia Beach, June 18 – World Bank and Realty Income Corp. came to Wednesday’s primary market while other issuers stayed on the sidelines as the Federal Reserve’s Federal Open Market Committee wrapped up its two-day meeting.

As expected, the Federal Reserve trimmed its monthly bond-purchasing program by another $10 billion to $35 billion.

The quieter primary saw World Bank bring to market $4.5 billion of two- and seven-year notes, while Realty Income sold a $350 million offering.

Realty Income’s new 10-year issue sold around 15 basis points tighter compared to initial price guidance, and the deal’s orderbook was around three times oversubscribed.

The pace of issuance in the investment-grade bond market is expected to resume on Thursday, according to market sources.

Around $16.2 billion of new paper has priced this week, so far falling in line with earlier expectations of $15 billion to $20 billion of supply.

Investment-grade bonds tightened following the FOMC policy announcement, and spreads headed out about 2 bps tighter, according to market sources.

Realty Income’s 3.875% notes due 2024 traded mostly wrapped around issuance in the secondary market, according to a trader.

Target Corp.’s new senior notes (A2/A/A-) were mixed in trading but remained tighter than where the notes priced on Tuesday, a trader said.

World Bank’s $4.25 billion

World Bank (International Bank for Reconstruction and Development) priced $4.25 billion of two-year and seven-year notes (Aaa/AAA/) in a two-part sale on Wednesday, an informed source said.

The sale included $2.25 billion of 0.625% two-year notes priced at 99.852 to yield mid-swaps minus 6 bps.

There was also $2 billion of 2.25% notes due 2021, which priced at 99.39 to yield 7 bps over mid-swaps.

The bookrunners were Barclays, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Nomura.

World Bank offers loans to developing countries and is based in Washington, D.C.

Realty Income prices tight

The other new issue that priced on Wednesday was $350 million of 3.875% 10-year notes sold by Realty Income.

The notes (Baa1/BBB+/BBB+) priced at Treasuries plus 125 bps, or 99.956, to yield 3.88%.

Pricing was at the tight end of the Treasuries plus 130 bps area talk, which had firmed from earlier guidance in the 140 bps area over Treasuries.

Realty Income’s 3.875% notes due 2024 were quoted at 124 bps offered in the secondary market, according to a trader.

The bookrunners were Citigroup Global Markets Inc., BofA Merrill Lynch, BNY Mellon Capital Markets LLC, JPMorgan, RBC Capital Markets LLC, Regions Financial, U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC.

Proceeds will be used to repay a portion of borrowings outstanding under an acquisition credit facility, for general corporate purposes and for working capital, possibly including acquisitions.

The real estate investment trust for retail and commercial properties is based in Escondido, Calif.

Target mostly better

Target’s 2.3% notes due 2019 tightened to 53 bps bid, 51 bps offered in the secondary market on Wednesday, a trader said.

The retailer sold $1 billion of the five-year notes Treasuries plus 60 bps on Tuesday. The tranche had traded at 56 bps bid, 54 bps offered following the issuance.

Target’s tranche of 3.5% notes due 2024 were seen ending the session at 85 bps bid, 83 bps offered, slightly wider than where the notes traded on Tuesday at 83 bps bid, 81 bps offered after the issue priced.

Target sold $1 billion of the 10-year notes at Treasuries plus 90 bps.

The merchandise chain is based in Minneapolis.

Bank/brokerage CDSs flat to lower

Investment-grade bank and brokerage CDS prices were unchanged to lower, according to a market source.

Bank of America Corp.’s CDS costs declined 2 bps to 59 bps bid, 62 bps offered. Citigroup Inc.’s CDS costs firmed 2 bps to 58 bps bid, 61 bps offered. JPMorgan Chase & Co.’s CDS costs firmed 1 bp to 47 bps bid, 51 bps offered. Wells Fargo & Co.’s CDS costs were unchanged at 36 bps bid, 39 bps offered.

Merrill Lynch’s CDS costs tightened 2 bps to 63 bps bid, 65 bps offered. Morgan Stanley’s CDS costs ended flat at 60 bps bid, 63 bps offered. Goldman Sachs Group, Inc.’s CDS costs firmed 2 bps to 64 bps bid, 67 bps offered.

Paul Deckelman contributed to this review.

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