Primary activity resumes as FedEx, Berkshire price; FedEx, Rowan notes firm in trading

By Cristal Cody and Aleesia Forni

Virginia Beach, Jan. 6 - Issuers rushed into the high-grade primary bond market on Monday to begin the first full week of the new year.

FedEx Corp.'s new $2 billion issue of senior notes, which sold in three maturities on Monday, was largely the focus of the session.

The new issue was nearly five times oversubscribed, a source said late during the session.

The company brought to market a $750 million issue of 4% 10-year notes priced with a spread of Treasuries plus 105 basis points and a $500 million issue of 4.9% notes due 2034 sold at 100 bps over Treasuries.

A $750 million tranche of of 5.1% bonds due 2044 was sold at 120 bps over Treasuries.

Meanwhile, Rowan Cos., Inc. came to market on Monday with $800 million of senior notes in two parts, according to a market source.

The company priced $400 million of 4.75% senior notes due 2024 at Treasuries plus 180 bps.

A second tranche was $400 million of 5.85% senior notes due 2044 sold at 195 bps over Treasuries.

In other primary action, Berkshire Hathaway Finance Corp. priced $750 million of senior notes in two tranches on Monday.

The Omaha-based company sold $650 million of floating-rate notes at par to yield Libor plus 15 bps.

The issue also included a tap of the company's existing 2% notes due 2018. The add-on priced at Treasuries plus 25 bps.

Commonwealth Edison Co. was also in the day's primary, selling $650 million of first mortgage bonds in two parts.

The company's deal included $300 million of 2.15% five-year first mortgage bonds sold at Treasuries plus 50 bps and $350 million of 4.7% first mortgage bonds due 2044 priced with a spread of Treasuries plus 80 bps.

The session also saw a new issue from ANZ Banking Group Ltd., which sold $1.8 billion of notes in two tranches.

The deal included $1 billion of 1.25% notes due 2017 priced with a spread of Treasuries plus 50 bps.

There was also $800 million of floating-rate notes priced at par to yield Libor plus 38 bps.

The day's new deals were met with "overwhelming" demand, one market source said on Monday.

"Very strong day today," the source said after the session's close. "Expecting the rest of the week to remain busy."

Sources continue to expect around $20 billion of supply for the week to begin what is expected to be an active month for the high-grade primary market.

Bonds headed out mostly flat on Monday, with new issues slightly tighter in aftermarket trading, according to informed sources.

The Markit CDX North American Investment Grade series 21 index was unchanged late in the day at a spread of 63 bps.

FedEx's tranches tightened 2 bps to 3 bps in the secondary market, a source said.

Rowan's two tranches of notes firmed 3 bps to 4 bps after the issues priced.

Commonwealth Edison's two-part offering traded mostly flat in the aftermarket with the long bonds headed out 1 bp tighter, a trader said.

The issues from Berkshire Hathaway and ANZ Banking were not seen in the secondary market as the session closed, according to market sources.

FedEx sells $2 billion

FedEx priced $2 billion of senior notes (Baa1/BBB/) in 10-, 20- and 30-year tranches on Monday, according to an informed source.

The company priced $750 million of 4% 10-year notes with a spread of Treasuries plus 105 bps.

Pricing was at 99.828 to yield 4.021%.

A $500 million tranche of 4.9% notes due 2034 was sold with a spread of Treasuries plus 100 bps.

The notes priced at 99.86 to yield 5.111%.

Finally, $750 million of 5.1% 30-year bonds was sold at 120 bps over Treasuries, or 99.831, to yield 5.111%.

All three tranches priced at the tight end of talk.

FedEx's 4% notes due 2024 tightened to 102 bps bid, 101 bps offered in the secondary market, a trader said.

The 4.9% notes due 2034 traded at 98 bps bid, 94 bps offered. The tranche of 5.1% bonds due 2044 firmed to 117 bps bid, 116 bps offered.

J.P. Morgan Securities LLC, Goldman Sachs & Co. and Morgan Stanley & Co. LLC were the joint bookrunners for the offering.

FedEx intends to use the proceeds from the offering to make payments under its accelerated share repurchase agreements entered into in connection with the company's previously announced share repurchase program.

Located in Memphis, FedEx is a shipping and logistics management company.

ANZ two-parter

ANZ Banking Group priced $1.8 billion of senior notes in two tranches in a Rule 144A and Regulation S transaction on Monday, an informed source said.

The deal included $1 billion of 1.25% notes due 2017 priced with a spread of Treasuries plus 50 bps.

There was also $800 million of floating-rate notes priced at par to yield Libor plus 38 bps.

ANZ, Morgan Stanley and Goldman Sachs were the joint bookrunners.

The financial services company is based in Melbourne, Australia.

Rowan new issue

Meanwhile, Rowan tapped Monday's market for $800 million of senior notes (Baa3/BBB-/) in two maturities, according to a market source and an FWP filed with the Securities and Exchange Commission.

The sale included $400 million of 4.75% senior notes due 2024 priced with a spread of Treasuries plus 180 bps, or 99.898, to yield 4.763%.

There was also $400 million of 5.85% senior notes due 2044 sold at 195 bps over Treasuries.

Pricing was at 99.972 to yield 5.852%.

Both tranches priced on top of talk.

Rowan's 4.75% notes due 2024 tightened to 177 bps bid, 174 bps offered, a trader said. The 5.85% bonds due 2044 firmed to 191 bps bid, 188 bps offered.

Joint bookrunners were Barclays, Citigroup Global Markets Inc., Goldman Sachs, RBC Capital Markets LLC, Wells Fargo Securities LLC, BofA Merrill Lynch and DNB NoR Markets.

Proceeds will be used for general corporate purposes, including capital expenditures.

The notes are guaranteed by Rowan Cos. plc.

The contract drilling services provider is based in Houston.

Berkshire Hathaway prices

Berkshire Hathaway Finance came to Monday's market to sell $750 million of senior notes (A2/AA/) in fixed- and floating-rate tranches, according to a market source and an FWP filed with the SEC.

The sale included $650 million of floating-rate notes sold at par to yield Libor plus 15 bps.

There was also an add-on to the company's existing 2% notes due Aug. 15, 2018 priced at 100.231 to yield 1.947%, or Treasuries plus 25 bps.

Both tranches priced at the tight end of talk.

BofA Merrill Lynch, Goldman Sachs and Wells Fargo Securities were the joint bookrunners.

Proceeds will be used pay at maturity the company's $375 million of floating-rate notes due 2014 and $375 million of 1.5% senior notes due 2014. Any remaining proceeds will be used for general corporate purposes.

The notes will be guaranteed by Berkshire Hathaway Inc., the Omaha-based holding company for various subsidiaries.

ComEd offers $650 million

Commonwealth Edison sold a $650 million two-part issue of first mortgage bonds (A3/A-/BBB+) on Monday, according to a syndicate source and a filing with the SEC.

The deal included $300 million of 2.15% first mortgage bonds, series 115, due Jan. 15, 2019 priced with a spread of Treasuries plus 50 bps, or 99.778, to yield 2.197%.

A second tranche was $350 million of 4.7% first mortgage bonds, series 116, sold at Treasuries plus 80 bps.

The 4.7% bonds mature on Jan. 15, 2044 and were priced at 99.967 to yield 4.702%.

In the secondary market, Commonwealth Edison's 2.15% bonds due 2019 traded wrapped around issuance at 50 bps bid, 46 bps offered, according to a trader.

The tranche of 4.7% bonds due 2044 firmed to 79 bps bid, 78 bps offered.

BNP Paribas Securities Corp., JPMorgan, Scotia Capital (USA) Inc., Credit Agricole Securities (USA) Inc., RBC Capital Markets and U.S. Bancorp Investments Inc. were the joint bookrunners.

Proceeds will be used to refinance $17 million of the company's 5.85% bonds due Jan. 15, 2014 and $600 million of its first mortgage 1.625% bonds due Jan. 15, 2014 and for general corporate purposes.

ComEd is an electricity provider based in Chicago. It is a subsidiary of Exelon Corp.

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