RPM, Boston Properties, Protective Life sell oversubscribed deals; Boston, New York Life gains

By Andrea Heisinger and Paul Deckelman

New York, Oct. 6 - RPM International Inc., Boston Properties LP and Protective Life Corp. priced issues quickly on Tuesday, with most of the deals done by early afternoon.

At least two of them were upsized slightly from the amount of bonds planned, sources close to the deals said.

Protective Life sold $700 million of notes in 10- and 30-year tranches. $400 million were in the 10-year maturity, with the remaining $300 million in 30-year notes.

Boston Properties upsized its sale of 10-year notes to $700 million from $500 million. The sale priced at the tight end of guidance.

RPM International also upsized its deal of 10-year notes, but only slightly, to $300 million from $250 million.

New deal activity is expected to stay strong on Wednesday, but then taper off on Thursday and into an unofficial half-day on Friday ahead of the three-day market close for Columbus Day.

Among the established issues in the secondary arena on Tuesday, a market source said the CDX Series 13 North American high-grade index widened by 1 basis point to a mid bid-asked spread level of 103 bps.

Advancing issues fell behind decliners Tuesday, although by a relative handful of issues - several dozen out of the nearly 3,800 tracked.

Overall market activity, reflected in dollar-volume totals, rose 31% from Monday's already busy pace.

Spreads in general were seen slightly tighter, in line with modestly higher Treasury yields; for instance, the yield on the benchmark 10-year notes widened by 3 bps on Tuesday to 3.25%.

The new Boston Properties 10-year bonds were seen having tightened from the spread over comparable Treasuries at which the deal had priced earlier in the day.

Also tightening was New York Life Insurance Co.'s new issue of 30 year bonds, which had priced on Monday

"Just in general," a trader said, "investment grade spreads were quite a bit tighter. It seemed like there were a lot of buyers out there."

But the trader also noted that "with some of the spreads coming in so quickly between [Monday] and today, some of the dollar prices are just getting kind of high, and forcing some people to the sidelines - they don't want to pay the high dollar price."

Protective Life prices two tranches

Protective Life priced $700 million of senior notes in two tranches, an informed source said.

The $400 million of 7.375% 10-year notes priced at a spread of Treasuries plus 412.5 bps.

A $300 million tranche of 8.45% 30-year notes priced at Treasuries plus 437.5 bps.

Both tranches came in line with price guidance of 412.5 bps for the 10-year notes and 437.5 bps for the 30-year notes.

There was about $2.7 billion on the books for the sale, the source said.

Bookrunners were Bank of America Merrill Lynch, Barclays Capital and Wells Fargo Securities.

Proceeds are being used to purchase newly-issued surplus notes of insurance subsidiary Golden Gate Capital Insurance Co.

The holding company for subsidiaries providing financial and insurance products is based in Birmingham, Ala.

Boston Properties offers $700 million

Boston Properties offered an upsized $700 million of 5.875% 10-year senior unsecured notes at Treasuries plus 262.5 bps, an informed source said.

The size was initially $500 million, a source away from the sale said. The deal came in at the tight end of talk in the 275 bps area, the informed source said.

"It went well," he said. "It came in from talk. It's trading around the new issue bid."

Bank of America Merrill Lynch, Citigroup Global Markets and Deutsche Bank Securities were bookrunners.

After a healthy amount of real estate companies and investment trusts issuing bonds in recent weeks, a source close to this deal said he wasn't sure why they are all jumping in.

"I'm not sure," he said. "I'm guessing the market feels good across the board. There were a lot of new issues that set the precedent."

Simon Property Group, LP, Duke Realty LP, Mack-Cali Realty LP, Hospitality Properties Trust, Weingarten Realty Investors, Federal Realty Investment Trust, Kimco Realty Corp., Vornado Realty LP and Developers Diversified Realty Corp. are among those that have issued in the sector since August.

Proceeds will be used for general corporate purposes, including investment opportunities and debt reduction.

The issuing subsidiary of real estate investment trust Boston Properties Inc. is based in Boston.

RPM upsizes 10-years

Specialty chemical producer RPM International sold an upsized $300 million of 6.125% 10-year unsecured notes at Treasuries plus 287.5 bps.

The size was increased from $250 million. The notes came in at the tight end of guidance that was in the 300 bps area, with a margin of plus or minus 12.5 bps, the source said.

The sale was largely oversubscribed, with about $1.5 billion on the books, he said.

Proceeds will be used to repay, redeem or refinance $163.7 million of notes due Oct. 15, and a portion of the $120 million in borrowings under an accounts receivable facility.

Bank of America Merrill Lynch and Wells Fargo Securities ran the books.

The issuer and its subsidiaries are based in Medina, Ohio.

Issuance steady for Wednesday

The tone remained better on Tuesday, and that is expected to spill over into Wednesday, which most sources are considering about the last day any bond sales will get done for the week.

Third-quarter earnings season kicks off on Wednesday with Alcoa announcing its numbers after the market close.

"We might have one trade tomorrow," a syndicate source on a large desk said, "and nothing for Thursday."

A second syndicate source on a smaller desk said that he had "potentially one for Wednesday. We should be pretty busy."

Boston Properties tighten in secondary

When the new Boston Properties 5.875% notes due 2019 were freed for secondary dealings, a trader - noting that the upsized $700 million issue had priced well inside of price talk projecting a 287.5 bps spread - saw the new issue having tightened further still to 255 bps bid.

The issue - upsized from the originally planned $500 million - had priced earlier that session at 262.5 bps over.

New York Life notes narrow

The trader also saw New York Life's new 6.75% notes due 2039 having tightened considerably from where the big insurer's $1 billion offering had priced on Monday.

The bonds - which had priced at 275 bps over - had firmed by the end of the session to around 265 bps bid, 260 bps offered.

Goldman is golden

Also among the financials, the trader saw "a lot of activity in Goldman [Sachs & Co.], after an [equity] analyst raised them from underperform to outperform, and their bonds came in quite a bit."

The new York-based investment giant's 5.625% notes due 2017 were seen having tightened by around 35 bps on the day to around the 175 bps over level.

Bank, broker CDS costs narrow

A trader who follows the credit default swaps market said that the cost of insuring holders of big bank paper against a default tightened between 5 bps and 10 bps on Tuesday, while CDS costs for major brokerage house paper were 9 bps to 12 bps tighter.

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