Thermo Fisher sells bonds for merger; Moody's, Ryder tap opportunistically, firm in trading

By Aleesia Forni and Andrea Heisinger

New York, Aug. 15 - Issuance slowed in the high-grade bond market on Wednesday but didn't cease. Thermo Fisher Scientific Inc., Moody's Corp. and Ryder System Inc. priced deals of varying sizes.

Thermo Fisher sold bonds to help finance the acquisition of One Lamda Inc. The science technology company priced $1.3 billion of notes due 2018 and 2023 to help fund the $925 million cash portion of that merger.

Moody's priced paper for the first time in two years. It brought $500 million of 10-year bonds.

Ryder System sold $350 million of notes due 2018.

The preferred stock market had another deal. Protective Life Corp. priced 30-year $25-par subordinated debentures.

The market cooperated for the day at the open following an announcement of better-than-expected retail sales numbers in the United States.

"The market was fine," said a source who worked on the Ryder deal, adding that it was "a good trade."

Although issuance has slowed from Monday and Tuesday, more sales are expected for Thursday.

"I know we potentially have one trade in the broader industrial space," a syndicate source said.

A source who worked on the Moody's deal was aware of three potential trades for Thursday, two of them in the industrial sector. There are also companies already looking ahead to Monday to price bonds, with Friday expected to have little to no new deals.

"We haven't turned it in for the summer just yet," the source said.

Investment-grade bank and brokerage credit default swap costs were mixed on Wednesday, according to a market source.

Bank of America's CDS costs tightened 2 basis points to 224 bps bid, 229 bps offered, while Citi's CDS costs widened 1 bps to 220 bps bid, 225 bps offered. Wells Fargo's CDS costs were 1 bps tighter at 83 bps bid, 88 bps offered.

Brokers were also mixed. Merrill Lynch's CDS costs firmed 3 bps to 237 bps bid, 247 bps offered. Morgan Stanley's CDS costs widened 3 bps to 321 bps bid, 326 bps offered. Meanwhile, Goldman Sachs' CDS costs also widened 3 bps to 251 bps bid, 256 bps offered.

The day's new issues were mostly tighter in trading near the session's close. Moody's 10-year notes, Ryder's notes due 2018 and Thermo Fisher's notes due 2018 were 5 bps to 10 bps tighter. Thermo Fisher's notes due 2023 were flat.

Moody's sells $500 million

Moody's sold $500 million of 4.5% 10-year senior notes (/BBB+/) to yield 280 bps over Treasuries, an informed source said.

The notes tightened 10 bps in trading near the session's close, according to a market source. The notes were quoted at 270 bps bid, 260 bps offered.

The bonds were sold at the tight end of guidance in the 285 bps area, the source said. The trade was more than five times oversubscribed at about $2.7 billion of demand.

The company was set on the $500 million size of the deal despite the heavy investor interest, the informed source said, saying the company "only needed to get $500 million done and thought it would be prudent."

Bank of America Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were the bookrunners.

Proceeds are being used for general corporate purposes including debt repayment.

Moody's, a New York-based credit ratings and research agency, was last in the market with a $500 million issue of 5.5% 10-year notes priced at 300 bps over Treasuries on Aug. 16, 2010.

Ryder's five-year issue

Ryder System offered $350 million of 2.5% senior notes due 2018 (Baa1/BBB/A-) at a spread of Treasuries plus 175 bps, an informed source said.

The notes were seen 5 bps tighter at 170 bps bid, 165 bps offered later in the session, a trader said.

The trade priced at the low end of talk in the 180 bps area, plus or minus 5 bps, the source said.

There was roughly $1.2 billion on the books, the source added.

The bookrunners were Mitsubishi UFJ Securities (USA) Inc., RBS Securities Inc., U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC.

Proceeds are being used for general corporate purposes including the repayment of commercial paper.

Ryder was last in the market with a $350 million sale of 2.5% five-year notes priced at 162 bps over Treasuries on Feb. 21.

The transportation and logistics company is based in Miami.

Thermo Fisher's $1.3 billion

Thermo Fisher Scientific priced $1.3 billion of senior notes (Baa1/A-/BBB+) in two tranches, according to a market source and a press release from the company.

The $500 million of 1.85% notes due 2018 were sold at a spread of 105 bps over Treasuries. The notes were priced at the tight end of guidance in the 110 bps area, plus or minus 5 bps.

An $800 million tranche of 3.15% notes due 2023 priced at Treasuries plus 140 bps. The notes were sold at the low end of talk in the 145 bps area, with a margin of plus or minus 5 bps.

One trader quoted the tranche due 2018 at 96 bps bid, 90 bps offered, while the notes due 2023 were unchanged at 140 bps bid, 133 bps offered.

Goldman Sachs & Co., JPMorgan and RBS were active bookrunners.

Proceeds are being used to fund the $925 million cash consideration of the One Lambda acquisition and for general corporate purposes.

There is a mandatory call on the notes due 2023 if the merger is not done by Dec. 31 or terminated before that date.

Thermo Fisher, a Waltham, Mass.-based science technology company, was last in the market with a $2.1 billion offering of 2.25% five-year notes priced at 115 bps over Treasuries and 3.6% 10-year notes sold at 130 bps over Treasuries on Aug. 9, 2011.

Protective Life prices $25-pars

Protective Life priced $150 million of 6% $25-par 30-year subordinated debentures, a syndicate source said.

Price talk was 6% to 6.125%, according to a trader. The company had initially said it planned to issue $100 million, but the trader expected the deal to grow to at least $250 million.

The company will apply to list the new debt on the New York Stock Exchange under the ticker symbol "PLPE."

Wells Fargo, Bank of America Merrill Lynch and Barclays are the bookrunners.

Proceeds will be used to redeem $125 million of outstanding 7.25% capital securities due 2066 and for general working capital purposes.

Protective Life is a Birmingham, Ala.-based insurance and investment products provider.

Stephanie N. Rotondo contributed to this review

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