AT&T, Willis, American Financial, CenterState in primary; telco space ‘winner’; inflows rise

By Cristal Cody

Tupelo, Miss., May 21 – The high-grade primary market remained active on Thursday ahead of the long holiday weekend.

AT&T Inc. marketed a five-tranche tranche offering of senior notes (Baa2/BBB/A-) expected to top $7 billion, a source said.

The deal includes fixed-rate notes due 2027, 2031, 2041, 2051, 2060.

Initial price talk on the seven-year notes is in the Treasuries plus 220 basis points area.

A tranche of notes due June 1, 2031 is talked at the 240 bps spread area; notes due June 1, 2041 are initially guided to print in the 245 bps spread area; notes due June 1, 2051 are talked to print at the 260 bps over Treasuries area; and a tranche of 40-year notes is talked at the 280 bps over Treasuries area.

Also on Thursday, Willis North America Inc. priced a $275 million add-on to its 2.95% senior notes due Sept. 15, 2029.

CenterState Bank Corp. sold $200 million of 10-year fixed-to-floating rate subordinated notes during the session.

American Financial Group, Inc. priced an upsized $150 million of 40-year subordinated debentures.

Also, Athene Global Funding offered dollar-denominated three-year senior secured notes (/A/A) initially talked to price in the Treasuries plus 275 bps spread area on Thursday.

In the Canadian primary market, Telus Corp. priced C$1 billion of senior notes (Baa1/BBB+/DBRS: BBB) in two tranches during the session.

The deal included C$600 million of new 2.35% notes due Jan. 27, 2028 and a C$400 million add-on to Telus’ 3.95% notes due Feb. 16, 2050.

The telecommunications space has been a “winner in Covid-19,” a source said Thursday. “Telcos are the winners – they’ve been very busy this year, though this is Telus’ first trade of 2020. Not surprising, they had a great outcome.”

AT&T also was in the primary market on Tuesday with €3 billion of euro-denominated notes sold in three tranches.

More than $40 billion of high-grade bonds have priced week to date, beating forecasts of about $30 billion to $40 billion of supply over the holiday-shortened week.

The financial markets will close early at 2 p.m. ET on Friday and reopen on Tuesday following the Memorial Day holiday on Monday.

Investment-grade corporate funds saw inflows of $5.33 million for the past week ended Wednesday, up slightly from $5.25 billion of flows in the previous week and $6.63 billion in the week prior, according to Refinitive Lipper US Fund Flows.

The Markit CDX North American Investment Grade 33 index eased about 2 bps over the session to a spread of 85.93 bps.

In the secondary market, existing telecommunications bonds from AT&T and Verizon Communications Inc. were mixed on Thursday, a source said.

Elsewhere, new issues are trading mostly tighter than issuance this week, another source said.

Nucor Corp.’s $1 billion of notes (Baa1/A-/) priced in two tranches on Wednesday firmed 15 bps to 20 bps.

The 2% notes due June 1, 2025 were seen 20 bps better at the 150 bps area.

The Charlotte, N.C.-based steel producer sold $500 million of the five-year notes at 99.848 to yield 2.032%, or a spread of Treasuries plus 170 bps.

Initial price talk was in the Treasuries plus 215 bps area.

Nucor’s $500 million of 2.7% notes due June 1, 2030, priced at 99.721 to yield 2.732%, or a Treasuries plus 205 bps spread, tightened 15 bps in secondary trading.

The notes were talked to print at the 245 bps spread area.

Willis reopens notes

Willis North America priced a $275 million add-on to its 2.95% guaranteed senior notes due Sept. 15, 2029 (Baa3/BBB/) on Thursday at 102.666 to yield 2.617%, or a 195 bps over Treasuries spread, according to a market source and an FWP filing with the Securities and Exchange Commission.

Initial price talk was in the 225 bps over Treasuries spread area.

The company previously sold $450 million of the notes at 99.819 to yield 2.971%, or Treasuries plus 150 bps, on Sept. 3, 2019.

The total outstanding is now $725 million.

BofA Securities Inc. and HSBC Securities (USA) Inc. were the bookrunners.

The company is a subsidiary of Willis Towers Watson plc, a London-based global risk adviser and insurance and reinsurance broker.

CenterState prices $200 million

CenterState Bank priced $200 million of 10-year fixed-to-floating rate subordinated notes (Kroll: BBB) on Thursday at par to yield 5.75%, according to an FWP filing.

The rate will reset June 1, 2025 to a floating rate of SOFR plus 561.7 bps.

Keefe, Bruyette & Woods, Inc. and U.S. Bancorp Investments Inc. were the bookrunners.

The bank is based in Winter Haven, Fla.

American Financial upsizes

American Financial Group priced an upsized $150 million of 5.625% subordinated debentures due June 1, 2060 (Baa2/BBB-/) on Thursday, according to a market source and a news release.

Initial price talk was at the 5.75% area.

BofA Securities, Morgan Stanley & Co. LLC, UBS Securities LLC, Wells Fargo Securities, LLC and J.P. Morgan Securities LLC were the bookrunners.

The offering was upsized from $100 million.

American Financial Group is a Cincinnati-based holding company for property and casualty insurance subsidiaries.

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