Mitsubishi, RBC, Nippon Life price as financials dominate; bank, telecom bonds weaken

By Aleesia Forni and Cristal Cody

Virginia Beach, Oct. 9 – Financial issuers dominated the primary market on Thursday during a volatile session for high-grade bonds.

The primary saw new deals price from Royal Bank of Canada, American International Group Inc., Invista Finance LLC and Nippon Life Insurance Co.

Mitsubishi UFJ Trust and Banking’s new $1.5 billion offering “went over pretty well,” a market source said, attracting an order book that was more than two times oversubscribed.

Both tranches of the trade sold around 10 basis points tighter than initial guidance.

Royal Bank of Canada came to market with a $1.3 billion offering of three-year notes in fixed- and floating-rate tranches.

Meanwhile, Invista Finance priced its new $750 million issue of notes due 2019 in line with initial price talk.

In other primary happenings on Thursday, American International Group tapped its existing 4.5% notes due 2044 to add $750 million.

The offering sold at the tight end of price talk, which had firmed around 10 bps compared to initial guidance.

The session also saw a $2 billion trade priced by Nippon Life Insurance, though details of the sale were unavailable at press time.

Thursday’s more than $6 billion of new issuance pushes this week’s total supply to $16.5 billion, falling in line with what was predicted to be a $15 billion to $20 billion week.

Investment-grade credit spreads opened the day about 1 bp weaker and ended 3 bps wider, according to market sources on Thursday.

The Markit CDX North American Investment Grade series 23 index eased 3 bps to a spread of 70 bps.

Bonds were mixed in trading with bank paper and telecom bonds slightly weaker, market sources said.

In the secondary market, Citigroup Inc.’s 2.5% notes due 2019 ended weaker on the day, a source said.

AT&T Inc.’s 4.8% notes due 2044 tightened 2 bps in early trading, according to a market source. The bonds headed out down nearly a point, a source said.

Mitsubishi sells $1.5 billion

Mitsubishi UFJ Trust and Banking priced $1.5 billion of senior notes (Aa3/A+/) in three- and five-year tranches on Thursday, market sources said.

The sale included $750 million of 1.6% three-year notes priced at 99.93 to yield 1.623%, or Treasuries plus 75 bps.

There was also $750 million of 2.45% notes due 2019 priced at 99.93 to yield 2.465%, or Treasuries plus 90 bps.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and MUFG were the bookrunners for the Rule 144A and Regulation S deal.

The bank is based in Tokyo.

RBC two-parter prices

Also on Thursday, Royal Bank of Canada priced $1.3 billion of senior notes (Aa3/AA-/AA) on Thursday in fixed- and floating-rate tranches due 2017, according to two separate FWP filings with the Securities and Exchange Commission.

The sale included $300 million of three-year floaters priced at par to yield Libor plus 26 bps.

A second tranche was $1 billion of 1.4% notes due 2017 at 99.985 to yield 1.405%, or Treasuries plus 53 bps.

Pricing was at the tight end of talk.

RBC Capital Markets, LLC, Credit Suisse Securities (USA) LLC and JPMorgan were the bookrunners.

RBC is a Montreal-based financial services company.

Invista in line with talk

Invista Finance sold $750 million of 4.25% senior notes due 2019 at par with a spread of Treasuries plus 268.2 bps, according to a market source.

The notes (Ba1/BBB/) sold in line with guidance, which was set in the 4.25% area.

The bookrunners were BofA Merrill Lynch, Deutsche Bank Securities Inc., Wells Fargo Securities LLC, HSBC Securities (USA) Inc. and RBS Securities Inc.

Invista Finance is a subsidiary of Invista BV, a Wichita, Kan.-based producer of polymers and fibers, primarily for nylon, spandex and polyester applications.

AIG add-on prices

Also on Thursday, American International Group priced a $750 million add-on to its existing 4.5% senior notes (Baa1/A-/) due July 16, 2044 at Treasuries plus 137 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 101.103 to yield 4.432%.

The notes sold at the tight end of talk.

Proceeds will be used for general corporate purposes.

The original $1.5 billion of 4.5% 30-year bonds sold with a spread of Treasuries plus 117 bps on July 9.

BNP Paribas Securities Corp., BofA Merrill Lynch and Credit Suisse were the bookrunners.

The insurance company is based in New York City.

Citigroup active

Citigroup’s 2.5% notes due 2019 tightened about 1 bp from where the notes went out on Wednesday to 80 bps offered, a market source said early Thursday.

The notes (Baa2/A-/A) ended the day at 100.34, down from 100.69 in the previous session, according to a market source.

Citigroup priced $2 billion of the notes on July 22 at 99.939 to yield 2.513%, or a spread of Treasuries plus 85 bps.

The bank is based in New York.

AT&T lower

AT&T’s 4.8% notes due 2044 were quoted 2 bps tighter early in the session at 162 bps offered, according to a market source.

The notes (A3/A-/A) traded lower on the day at 101.95 from 102.87 on Wednesday, a source said.

AT&T sold $2 billion of the 30-year bonds at 99.636 to yield 4.823%, or a spread of Treasuries plus 140 bps, on June 3.

The telecommunications company is based in Dallas.

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