KfW, Roche, Citigroup issue bonds; supply tops $30 billion; Verizon, Bank of America firm

By Aleesia Forni and Cristal Cody

Virginia Beach, Nov. 13 – KfW, Roche Holding AG, Citigroup Inc. and Methanex Corp. were among the issuers pricing new bonds during Thursday’s primary session.

“Fairly strong tone again today,” a market source said. “Expecting the pace to continue throughout the month.”

The primary market saw KfW offer $5 billion of 2.5% 10-year bonds on Thursday at the tight end of talk.

Meanwhile, Roche Holding sold $1 billion of senior notes. The two-part issue consisted of a tap of its existing notes due 2024 and a new 30-year bond.

Citigroup came to the primary with a $1 billion issue of 12-year subordinated notes priced on top of talk.

In a deal announced earlier this week, Canada’s Methanex priced $600 million of senior notes in 10- and 30-year tranches.

In other primary happenings, Macy's Retail Holdings Inc. priced $550 million of 20-year bonds, while TTX Co. sold an upsized $300 million offering.

Och-Ziff Finance Co. LLC, Agrium Inc. and Harley-Davidson Motor Co. also sold new offerings during the session.

The investment-grade primary bond market has seen more than $32 billion of new issuance price this week, topping what sources had predicted to be $25 billion to $30 billion of supply.

In the secondary market, Verizon Communications Inc.’s 4.15% notes due 2024 traded about 5 basis points better, a market source said.

Wal-Mart Stores Inc.'s 3.3% notes due 2024 were quoted flat to 1 bp wider.

In other trading, Bank of America Corp.’s 4% notes due 2024 tightened 1 bp, a market source said.

The Markit CDX North American Investment Grade series 23 index eased 1 bp to a spread of 65 bps.

KfW prices $5 billion

The investment-grade primary market saw KfW price $5 billion of 2.5% 10-year bonds (Aaa/AAA/AAA) on Thursday at mid-swaps plus 10 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes priced at 99.351.

Pricing came at the tight end of talk, which was set in the area of mid-swaps plus 12 bps.

The bookrunners were Deutsche Bank Securities Inc., Goldman Sachs & Co. and RBC Capital Markets LLC.

The German government-owned development bank is based in Frankfurt.

Roche two-parter

Roche Holding priced $1 billion of senior notes (A1/AA/) in two parts on Thursday, a market source said.

The sale included a $350 million tap of the company’s existing 3.35% notes due Sept. 30, 2024 priced at 101.503 to yield 3.167%, or Treasuries plus 82 bps.

Pricing was at the tight end of price talk.

The original $1.3 billion issue sold at Treasuries plus 82 bps on Sept. 22.

There was also $650 million of 4% 30-year bonds priced at 98.436 to yield 4.091%, or Treasuries plus 102 bps.

The notes sold at the tight end of talk.

Proceeds will be used for general corporate purposes.

The bookrunners were Barclays, J.P. Morgan Securities LLC and RBS Securities Inc.

Roche is a Basel, Switzerland-based drug maker.

Citi prices sub notes

Citigroup priced $1 billion of 4.3% subordinated notes (Baa3/BBB+/A-) due 2026 with a spread of Treasuries plus 200 bps, a market source said.

Pricing was on top of talk.

The notes sold at 99.536 to yield 4.35%

Citigroup Global Markets Inc. was the bookrunner.

The bank is based in New York.

Methanex new issue

Also on Thursday, Methanex sold $600 million of senior notes (Baa3/BBB-/) in tranches due 2024 and 2044, according to a market source and an FWP filing with the SEC.

The sale included $300 million of 4.25% notes due 2024 at 99.497 to yield 4.312%, or Treasuries plus 195 bps.

The notes sold in line with talk.

There was also $300 million of 5.65% notes due 2044 sold at 99.353 to yield 5.695%, or Treasuries plus 260 bps.

The notes sold in line with talk, which had widened around 25 bps from initial price thoughts.

BNP Paribas Securities Corp., JPMorgan and RBC Capital Markets are the bookrunners.

Proceeds will be used to repay debt, for capital expenditures and for working capital purposes.

The worldwide methanol supplier is based in Vancouver, B.C.

Macy’s Retail prices

Macy's Retail Holdings priced $550 million of 4.5% senior notes (Baa2/BBB+/BBB) due 2034 with a spread of Treasuries plus 150 bps, according to a market source and an FWP filed with the SEC.

The notes sold in line with price talk.

Pricing was at 98.94 to yield 4.581%.

The notes will be guaranteed by Macy's, Inc.

BofA Merrill Lynch, Credit Suisse Securities (USA) LLC and JPMorgan are the joint bookrunners.

Proceeds will be used for general corporate purposes, which may include working capital, capital expenditures, retirement of debt and repurchasing outstanding common stock.

The department store chain is based in Cincinnati.

Agrium sells $500 million

Agrium priced an upsized $500 million of 5.25% 30-year debentures (Baa2/BBB/) on Thursday with a spread of Treasuries plus 220 bps, according to an FWP filing with the SEC and a market source.

The notes sold in line with talk.

Pricing was at 99.491 to yield 5.283%.

BofA Merrill Lynch, RBC Capital Markets and Scotia Capital USA Inc. are the bookrunners.

Proceeds will be used to reduce short-term debt and for general corporate purposes.

The retailer of agricultural products is based in Calgary, Alta.

Harley-Davidson three-years

In other primary action, Harley-Davidson Motor priced $400 million of 1.55% three-year notes (Baa1/A-/A) at 65 bps over Treasuries, according to an informed source.

The bookrunners were Citigroup Global Markets, RBS Securities and Wells Fargo Securities LLC.

The financing arm of motorcycle maker Harley-Davidson Motor Co. is based in Milwaukee.

TTX upsizes

TTX Co. priced an upsized $300 million of 3.6% 10-year senior notes (Baa1/A+/A-) on Thursday with a spread of Treasuries plus 125 bps, according to a market source.

The notes sold at the tight end of price talk.

Pricing was at 99.985 to yield 3.601%.

BofA Merrill Lynch and Citigroup Global Markets were the bookrunners.

The railroad freight company is based in Chicago.

Och-Ziff brings five-years

Och-Ziff Finance, a wholly-owned subsidiary of Och-Ziff Capital Management Group LLC, priced $400 million of 4.5% senior notes due 2019 at 99.417, according to an 8-K filed with the SEC.

The notes will be guaranteed by OZ Management LP, OZ Advisors LP and OZ Advisors II LP.

Och-Ziff intends to use proceeds from the offering to repay outstanding borrowings under its delayed-draw term loan, with remaining proceeds to be used for general corporate purposes.

The notes were sold via Rule 144A and Regulation S.

Och-Ziff is an institutional alternative asset manager based in New York.

Wal-Mart steady

Wal-Mart’s 3.3% notes due 2024 (Aa2/AA/AA) were quoted flat to 1 bp weaker at 75 bps offered, according to a market source.

The company priced a $500 million add-on to the issue on Oct. 7 at Treasuries plus 73 bps.

Wal-Mart originally sold $1 billion of the notes at Treasuries plus 73 bps on April 15, 2014.

The discount retailer is based in Bentonville, Ark.

Bank of America better

Bank of America’s 4% notes due 2024 (Baa2/A-/A) firmed 1 bp to 122 bps offered, according to a market source.

Bank of America sold $2.75 billion of the notes on March 27, 2014 at Treasuries plus 137 bps.

The financial services company is based in Charlotte, N.C.

Bank/brokerage CDS flat

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

Bank of America's CDS costs were flat at 66 bps bid, 69 bps offered. Citigroup's CDS costs were unchanged at 66 bps bid, 69 bps offered. JPMorgan Chase & Co.'s CDS costs remained at 58 bps bid, 61 bps offered. Wells Fargo & Co.'s CDS costs were also unchanged at 44 bps bid, 47 bps offered.

Merrill Lynch's CDS costs were unchanged at 69 bps bid, 72 bps offered. Morgan Stanley's CDS costs remained at 76 bps bid, 79 bps offered. Goldman Sachs Group, Inc.'s CDS costs were also flat at 79 bps bid, 82 bps offered.

Paul Deckelman contributed to this review.

© 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.