Caterpillar, Total System, United, Hope tap primary; high-grade credit spreads tighten

By Cristal Cody

Tupelo, Miss., May 9 – High-grade deal action included a $2 billion four-tranche offering of notes from Caterpillar Financial Services Corp. on Wednesday.

Total System Services, Inc. also priced a $1 billion two-part offering of senior notes.

In addition, United Airlines, Inc. sold $225.73 million of class B pass-through certificates.

In other investment-grade supply expected during the session, the City of Hope (A1/A+/AA-) of California also planned to price a 30-year bullet bond.

More than $23 billion of high-grade bonds have priced week to date, market sources report.

Syndicate sources expect about $30 billion to $35 billion of supply for the week.

The Markit CDX North American Investment Grade 30 index tightened more than 1 basis point to close at a spread of 62 bps.

Caterpillar sells notes

Caterpillar Financial Services priced $2 billion of medium-term notes (A3/A/A) in four tranches on Wednesday, according to FWP filings with the Securities and Exchange Commission.

Caterpillar sold $600 million of two-year floating-rate notes at par to yield Libor plus 18 bps.

The company brought $650 million of 2.95% two-year fixed-rate notes to the market at 99.981 to yield 2.96%, or a spread of Treasuries plus 43 bps.

The $250 million tranche of five-year floating-rate notes priced at par to yield Libor plus 51 bps.

In the final tranche, Caterpillar sold $500 million of 3.45% five-year fixed-rate notes at 99.932 to yield 3.465%, or a Treasuries plus 63 bps spread.

Citigroup Global Markets Inc., BofA Merrill Lynch and MUFG were the bookrunners.

Nashville-based Caterpillar Financial Services is a financing arm of Caterpillar Inc.

Total System Services prices

Total System Services priced $1 billion of senior notes (Baa3/BBB-/) in two tranches on Wednesday, according to an FWP filing with the SEC.

The company sold $550 million of 4% notes five-year notes at 99.916 to yield 4.018% and a spread of 118 bps over Treasuries.

In the second tranche, the company priced $450 million of 4.45% 10-year notes at 99.756 to yield 4.48%. The notes priced with a spread of 148 bps over Treasuries.

BofA Merrill Lynch and J.P. Morgan Securities LLC were the bookrunners.

Columbus, Ga.-based Total System Services is a global payments processing and solutions provider.

United brings certificates

United Airlines sold $225,729,000 of 4.6% class B pass-through certificates (Baa2//BBB) at par on Wednesday, according to an FWP filing with the SEC.

The certificates have an expected final distribution date of March 1, 2026 and a final maturity date of Sept. 1, 2027.

Credit Suisse Securities (USA) LLC, Citigroup Global Markets and Goldman Sachs & Co. were the active bookrunners.

The airline is based in Chicago.

New issues mostly firm

In the secondary market, new issues were mixed but mostly trading slightly better than issuance, according to market sources earlier in the day.

Kellogg Co.’s $1 billion of senior notes (Baa2/BBB/) priced in two tranches on Monday were flat to about 3 bps tighter on the short end.

The 4.3% notes due May 15, 2028 traded wrapped around issuance at the 140 bps area.

The Battle Creek, Mich.-based cereal maker sold $600 million of the 10-year notes at a Treasuries plus 140 bps spread.

Consolidated Edison Co. of New York, Inc.’s $1 billion of debentures (A2/A-/A-) also priced Monday in two parts firmed about 4 bps in secondary trading.

The electric utility’s $700 million of 4.5% debentures, priced with a Treasuries plus 140 bps spread, were quoted in the 136 bps area.

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