AbbVie prices huge deal after delay; Boardwalk Pipelines, Invesco sell; secondary sees volume

By Andrea Heisinger

New York, Nov. 5 - A massive sale of high-grade bonds by AbbVie Inc. earmarked to help fund its split from Abbott Laboratories hit the market on Monday, accompanied by other smaller trades.

A spinoff health benefits company, Abbott Labs sold $14.7 billion of notes in six parts after the size was increased from $10 billion in five tranches. There had been chatter about the sale since early last week, a market source said, but the company was advised to push it to this week due to the market closure and backlog caused by Hurricane Sandy.

The offering is not the largest done in the U.S. investment-grade bond market. Pharmaceutical company Roche retains that title with its $16 billion sale in six tranches priced on Feb. 18, 2009, according to Prospect News data. Some, however, do not count that as the largest due to a tranche of one-year floating-rate notes that the sale included. Pfizer Inc. priced $13.5 billion in five tranches on March 17, 2009.

"I heard there was more than $45 billion on the books," a market source said of AbbVie's sale.

Also pricing on Monday was an $800 million sale in two tranches by Interpublic Group of Cos. Inc. The split-rated offering was done off the high-grade desk.

Boardwalk Pipelines, LP priced $300 million of senior notes due 2023, while Invesco Finance plc sold $600 million of 10-year senior notes.

Australian company Leighton Finance USA Property Ltd. sold $500 million of 10-year notes.

City National Corp. gave plans to issue perpetual preferred stock shares as the flow of new deals continued in the preferred stock market.

In the secondary, a trader saw the four tranches of Friday's sale by Verizon Communications Inc. unchanged to slightly wider, while the three notes from Microsoft Corp. were about 7 basis points improved.

Trading volume was quoted at about $7 billion as of mid-afternoon, which a secondary source said was "more than I thought it would be."

"The East Coast is still discombobulated with people working from satellite or foreign offices," the secondary source said, referring to the lingering effects of Hurricane Sandy.

There was no gray market trading seen of the six tranches of AbbVie notes, a trader said.

Boardwalk Pipelines were seen slightly tighter soon after pricing, the trader added.

A crossover trader said, "Everybody was pretty lethargic with respect to what was in the market, owing to the big Abbott deal, which was taking up everbody's time."

AbbVie's massive trade

AbbVie was in the market with a $14.7 billion deal of notes (Baa1/A/) sold in six tranches to help fund its split from Abbott Laboratories, a market source said.

The size was increased from $10 billion in five tranches, the source said. Full terms were not available at press time.

There was $500 million of three-year floating-rate notes sold at par to yield Libor plus 76 bps.

A $3.5 billion tranche of three-year notes priced at a spread of Treasuries plus 85 bps. This was tighter than talk in the 90 bps area.

The $4 billion of five-year notes sold at 115 bps over Treasuries. The spread was wider than guidance in the 110 bps area.

The sale also included $1 billion of six-year notes priced at a spread of Treasuries plus 140 bps. The pricing level was in line with talk.

The $3.1 billion of 10-year paper sold at a spread of 130 bps over Treasuries. These notes were also sold in line with guidance.

Finally, there was $2.6 billion of 30-year bonds priced at Treasuries plus 160 bps. The bonds priced in line with talk.

Barclays, Bank of America Merrill Lynch, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were bookrunners.

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

Proceeds are being used to provide a net cash distribution to Abbott of about $8.5 billion to complete the separation, as well as a $7.7 billion tender offer related to the spin-off.

Abbott Labs was last in the U.S. bond market with a $3 billion sale of senior notes in three tranches on May 24, 2010. That sale included 2.7% five-year notes priced at 70 basis points over Treasuries, 4.125% 10-year notes sold at 90 bps over Treasuries and 5.3% 30-year bonds priced at Treasuries plus 122 bps.

Pharmaceutical health care products company Abbott Labs, as well as AbbVie, are based in Abbott Park, Ill.

Interpublic crossover deal

Interpublic Group priced $800 million of senior notes (Baa3/BB+/BBB) in two maturities, an informed source said.

A $300 million tranche of 2.25% five-year notes sold at a spread of Treasuries plus 160 bps.

The $500 million of 3.75% 10-year notes priced at a spread of 210 bps over Treasuries.

In the secondary, a trader said the notes were seen in the gray market right around the pricing level.

Active bookrunners were Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC.

Proceeds are being used to redeem $200 million of 4.75% convertible senior notes due 2023 and $600 million of 10% senior notes due 2017. If holders convert the 4.75% notes to shares, part of the proceeds may be applied toward share repurchases under a share repurchase program.

The global advertising and marketing company is based in New York City.

Invesco sells $600 million

Invesco Finance priced $600 million of 3.125%10-year senior notes (A3/A-/) at a spread of Treasuries plus 145 bps, an informed source said.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC and Citigroup Global Markets Inc. were bookrunners.

Proceeds are being used to repay all or a portion of amounts outstanding under an existing credit facility and to purchase, redeem or retire outstanding 5.375% notes due 2013 and 5.375% notes due 2014.

The offering is guaranteed by London-based parent company, investment manager Invesco Ltd.

Boardwalk Pipelines' 10-years

Boardwalk Pipelines priced $300 million of 3.375% senior notes due 2023 (Baa2/BBB-/) at a spread of Treasuries plus 170 bps, a market source told Prospect News.

In the secondary market, a trader said the new 10-year notes were offered at 166 bps.

Bookrunners were Barclays, Citigroup Global Markets Inc. and Deutsche Bank Securities Inc.

Proceeds are being used to repay debt under a subordinated loan agreement with BPHC and to reduce borrowings under a revolving credit facility.

The sale is guaranteed by Boardwalk Pipeline Partners, LP.

The natural gas and liquids pipeline and storage company is based in Houston.

Leighton private deal

Leighton Finance USA Property priced $500 million of 5.95% 10-year notes (Baa2/BBB-/) on Monday to yield Treasuries plus 430 bps, an informed source said.

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

Bookrunners were HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC.

The unit of management and contracting company Leighton Holdings Ltd. is based in Sydney, Australia.

City National's preferreds

City National intends to issue series C noncumulative perpetual preferred stock, the company said in a prospectus filed with the Securities and Exchange Commission.

The preferreds will be issued as depositary shares representing a 1/40th interest.

The bank has applied to list the preferreds on the New York Stock Exchange under the symbol "CYNPC."

Goldman, Sachs & co. and JPMorgan Securities LLC are bookrunners.

The Los Angeles-based institution will use proceeds for general corporate purposes, which may include advances to subsidiaries, the repayment of debt and/or the redemption or repurchase of outstanding securities.

Microsoft tightens

The three new tranches of notes from Microsoft's $2.25 billion sale from Friday were seen trading slightly improved on Monday afternoon.

A trader said the 0.875% notes due 2017 were at 21 bps, or a 6 bps gain from pricing of 27 bps over Treasuries.

The 2.125% 10-year note was bid 7 bps tighter at 40 bps. The notes sold at 47 bps over Treasuries.

The 3.5% 30-year bonds were offered 4 bps better than the 67 bps over Treasuries price, or 63 bps.

Verizon trades mixed

The four notes priced by Verizon Communications in a $4.5 billion offering on Friday were seen trading on Monday, but not all were improved.

The 0.7% three-year notes were seen in the morning at 31 bps bid, 26 bps offered, which was 1 bp better than the 32 bps over Treasuries price.

A 1.1% five-year note was priced at 42 bps over Treasuries and seen early in Monday's session at 41 bps bid, and 36 bps offered. Later in the session, they were seen offered at 39 bps.

The 2.45% 10-year notes were mostly unchanged from the 75 bps pricing level. A trader saw them early Monday at 75 bps bid, 73 bps offered. Later, they were quoted at 74 bps offered.

Finally, the 3.85% 30-year bonds were slightly wider in the morning, at a bid of 99 bps and offer of 94 bps. Later in the day, the bonds were bid at 94 bps which was 3 bps improved from the 97 bps price.

Paul A. Harris and Stephanie N. Rotondo contributed to this review

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