United Technologies brings $9.8 billion of notes in multi-tranche deal; McDonald's trades down

By Sheri Kasprzak and Aleesia Forni

New York, May 24 - One major offering conducted in multiple tranches dominated the investment-grade primary market on Thursday.

United Technologies Corp. came to market with $8.3 billion of fixed-rate notes in four tranches and $1.5 billion of floating-rate notes in two tranches, according to an FWP filing with the Securities and Exchange Commission.

The fixed-rate notes included $1 billion of 1.2% three-year notes, $1.5 billion of 1.8% five-year notes, $2.3 billion of 3.1% 10-year notes and $3.5 billion of 4.5% 30-year notes.

The three-year notes priced at a spread of Treasuries plus 80 basis points. The notes were priced at 99.944 to yield 1.219%.

The five-year notes priced at a spread of Treasuries plus 105 bps. The notes were priced at 99.914 to yield 1.818%.

The 10-year notes priced at a spread of Treasuries plus 135 bps. The notes were priced at 99.923 to yield 3.109%.

The 30-year notes priced at a spread of Treasuries plus 173 bps. The notes were priced at 98.767 to yield 4.576%.

All of the fixed-rate notes feature a make-whole call option. The three-year notes are callable at Treasuries plus 12.5 bps, and the five-year notes are callable at Treasuries plus 15 bps. The 10-year notes are callable at Treasuries plus 20 bps, and the 30-year notes are callable at Treasuries plus 25 bps.

Floating-rate notes

The floating-rate notes include $1 billion of 18-month notes and $500 million of three-year notes.

The 18-month notes are due Dec. 2, 2013 and bear interest at Libor plus 27 bps.

The three-year notes bear interest at Libor plus 50 bps.

The notes (A2/A/A) were sold through joint bookrunners Bank of America Merrill Lynch, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, BNP Paribas Securities Corp., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. and RBS Securities Inc.

Proceeds from all of the notes will be used to partially fund the acquisition of Goodrich Corp. The remainder will be used for general corporate purposes.

Svensk deal fared well

A $1 billion offering of notes from AB Svensk Exportkredit saw decent demand in spite of less-than-stellar market conditions, said a statement released by the export industry lender.

The company sold $1 billion of 1.75% notes (Aa1/AA+/) that are due May 30, 2017. The notes were priced at a spread of Treasuries plus 108.9 bps. The notes priced at 99.653 to yield 1.823%.

More than 60 investors participated in the offering, according to the company's statement, the majority of which were from the United States and Europe. The offering was oversubscribed.

The SEC-registered notes were sold through joint lead managers HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, Bank of America Merrill Lynch and Nomura International Inc.

The notes feature an optional redemption after the occurrence of certain tax events at par plus accrued interest to the redemption date.

Proceeds will be used for working capital.

Svensk is based in Stockholm.

McDonald's trades down

The secondary market saw Wednesday's $900 million issue from McDonald's Corp. tighten on Thursday, according to a market source.

The company's $500 million 0.75% three-year notes traded at 40 bps bid, 35 bps offered at Thursday's close after pricing at a spread of Treasuries plus 45 bps.

The $300 million 1.875% seven-year notes traded down 11 bps on the day and saw 77 bps bid, 75 bps offered at the end of New York's session on Thursday. The notes priced at Treasuries plus 88 bps.

The fast-food chain is based in Oak Brook, Ill.

Citigroup tightens

In other trading, Citigroup Inc.'s 8.5% notes due 2019 saw 326 bps at Thursday's close, down 5 bps from Wednesday's session.

The New York-based financial services company sold $1 billion of the notes on June 11, 2009 at a spread of 437.5 bps plus Treasuries.

Goldman 2037's down

Goldman Sachs Group, Inc.'s notes due 2037 were also down on Thursday, trading 2 bps tighter at 442 bps bid.

The bank sold $2.5 billion of the 6.75% senior notes in September 2007 at a spread of Treasuries plus 190 bps.

Goldman Sachs is based in New York.

Merrill Lynch flat

Merrill Lynch saw its 6.875% notes due 2018 trade flat on the day, remaining at 425 bps bid at Thursday's close.

New York-based Merrill Lynch priced $5.5 billion of the notes at 320 bps over Treasuries on April 22, 2008.

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