Simon, Xerox, URS in latest crop of deals; Phillips 66, HP bonds ratchet tighter in trading

By Andrea Heisinger

New York, March 8 - There was once again no shortage of new deals in the high-grade bond market. Xerox Corp., Simon Property Group LP and URS Corp. each sold multi-tranche deals on Thursday.

Also in the market were Genworth Financial, Inc. with a reopening of notes, DCP Midstream Operating, LP and two utilities, Southern California Edison Co. and Consolidated Edison Co. of New York, Inc.

"Everyone's trying to cram their [deal] in before unemployment," a source said, referring to jobless numbers that come out Friday.

"We're all hoping it slows down a little bit," a syndicate source said. "I think we all need to play clean up and have a break. [There were] a lot of deals this week."

Maker of copiers and other office equipment Xerox priced $1.1 billion of notes with fixed- and floating-rate coupons.

Simon Property sold an upsized $1.75 billion in three parts. The size was increased from an initially announced $1.5 billion.

Engineering firm and government contractor URS priced a $1 billion issue of five- and 10-year notes.

Consolidated Edison priced $400 million of 30-year debentures after the size was increased from $300 million. It was joined by Southern California Edison, which priced $400 million of 30-year mortgage bonds.

Genworth Financial reopened its issue of 7.625% notes due 2021 and added $350 million. The added amount was increased by $50 million.

DCP Midstream priced $350 million of 10-year notes in line with guidance.

There was also an issue of notes from Mitsui Sumitomo Insurance Co. Ltd., a source said late in the day. The $1.3 billion of subordinated 60-year notes priced under Rule 144A and Regulation S. The terms of the deal were not available at press time.

More activity was seen in the preferred stock market.

Alexandria Real Estate Equities Inc. priced $130 million of cumulative preferred stock.

Kimco Realty Corp. announced plans to issue perpetual preferreds. Pricing is expected Friday.

On the secondary side of the market, traders saw two large deals from Hewlett-Packard Co. and Phillips 66 tighten across the board. Both were priced on Wednesday, and in the case of Phillips 66, too late to see trading.

Treasury yields moved wider than the previous day, a source said. The five-year note went out by 3 basis points to 0.86%, the 10-year note was quoted 4 bps wider at 2.01%, and the 30-year bond was out 5 bps at 3.17%.

Credit default swap costs for bank and brokerage names declined for the second day in a row, a source said.

The cost to insure bank paper against default edged between 1 bp and 5 bps better. Brokerage CDS costs were quoted unchanged to 2 bps tighter.

Simon's three tranches

Simon Property Group sold an upsized $1.75 billion of notes (A3/A-/) in three tranches, a source away from the trade said.

Plans for the deal were announced in a prospectus filing with the Securities and Exchange Commission at $1.5 billion in size.

The $600 million of 2.15% five-year notes priced at a spread of Treasuries plus 130 bps.

There was a $600 million tranche of 3.375% 10-year notes sold at 140 bps over Treasuries.

Finally, a $550 million tranche of 4.75% 30-year bonds priced at Treasuries plus 160 bps.

J.P. Morgan Securities LLC, RBS Securities Inc. and UBS Securities LLC were the active bookrunners.

Proceeds are being used to fund a portion of acquisition transactions, to repay borrowings under a senior unsecured credit facility utilized for that purpose or for general corporate purposes.

Simon Property was last in the market with a $1.2 billion issue of five- and 10-year notes on Nov. 10. A 2.8% five-year note from that offering priced at 195 bps, and a 4.125% 10-year note was sold at 215 bps.

The three new tranches were largely unchanged in the secondary market, a trader said.

The five-year notes were quoted unchanged at 130 bps bid, 127 bps offered, and the 10-year notes were slightly wider at 141 bps bid, 136 bps offered.

The tranche of 30-year bonds was also mostly unmoved from where it priced at 160 bps bid, 155 bps offered.

The real estate investment trust is based in Indianapolis.

Xerox prices $1.1 billion

Xerox sold $1.1 billion of senior notes (Baa2/BBB-/BBB) in two tranches, an informed source said.

There was about $4.9 billion on the books total for the trade, the source said. There was more investor interest in the five-year notes, which had about $3.6 billion on the books, than the floaters, which had about $1.3 billion.

The $600 million of floating-rate notes due 2013 sold at par to yield Libor plus 140 bps.

A $500 million tranche of 2.95% five-year notes priced at a spread of Treasuries plus 210 bps.

Bank of America Merrill Lynch, BNP Paribas Securities Corp., Citigroup Global Markets Inc. and JPMorgan ran the books.

Proceeds are being used to refinance existing debt and for general corporate purposes.

The maker of office machines is based in Norwalk, Conn.

URS' private sale

URS sold $1 billion of senior notes (Baa2/BBB-/) in two parts via Rule 144A and Regulation S, a market source said.

The deal was moderately oversubscribed with about $1.5 billion on the books, the source said.

The $400 million of 3.85% five-year notes priced at a spread of Treasuries plus 300 bps.

There was also a $600 million tranche of 5% 10-year notes sold at 300 bps over Treasuries.

Both tranches priced in line with talk in the high 200 bps to low 300 bps range, the market source said.

Bank of America Merrill Lynch, Citigroup, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC were the bookrunners.

Proceeds, along with borrowings under a credit facility, are going to fund the acquisition of Flint Energy Services Ltd., to pay associated fees and expenses and to repay certain outstanding Flint debt.

The new issue is guaranteed by existing and future domestic subsidiaries.

The engineering design firm and U.S. government contractor is based in San Francisco.

SoCal Edison prices

Southern California Edison sold $400 million of 4.05% 30-year first and refunding mortgage bonds, series 2012A, (A3/BBB+/A-) at a spread of 95 bps over Treasuries, an informed source said.

The paper was sold at the tight end of talk in the range of 95 bps to 98 bps, the source said.

Citigroup, Loop Capital Markets, Mitsubishi UFJ Securities (USA) Inc. and RBS Securities were the bookrunners.

Proceeds will be used to repay commercial paper borrowings and for general corporate purposes.

The new 30-year bonds were trading 1 bp tighter at a bid of 94 bps and offer of 91 bps, a trader said.

The electric subsidiary of Edison International is based in Rosemead, Calif.

Con Ed upsizes

Consolidated Edison Co. of New York priced an upsized $400 million of 4.2% 30-year debentures (A3/A-/A-) at a spread of 105 bps over Treasuries, a source who worked on the trade said.

The deal size was increased from $300 million.

The bookrunners were Barclays Capital Inc., Citigroup, Goldman Sachs & Co. and RBS Securities.

Proceeds are being used to redeem the company's 4.65% series C cumulative preferred stock and its 4.65% series D cumulative preferred stock and for general corporate purposes.

The new 30-year bonds were seen in the secondary about 1 bp better at 104 bps bid, 101 bps offered, a trader said.

The utility company is based in New York.

DCP sells at talk

DCP Midstream Operating sold $350 million of 4.95% 10-year senior notes (Baa2/BBB-/BBB-) to yield Treasuries plus 300 bps, an informed source said.

The deal was priced in line with guidance in the 300 bps area, the source said.

"It was a little slow out of the gates, but it got done," the source added.

Morgan Stanley and Wells Fargo were the active bookrunners.

The deal is guaranteed by DCP Midstream Partners, LP.

Proceeds are being used to fund the cash portion of the purchase price of the previously announced contribution by DCP Midstream, LLC to the partnership of the additional 66.67% interest in the Southeast Texas system and pay related expenses, repay all of the outstanding borrowings under its $135 million term loan and for general partnership purposes, including repayment of borrowings under its revolving credit facility. If the Southeast Texas transaction is not consummated, proceeds will be used to repay all of the outstanding borrowings under the partnership's $135 million term loan, to repay debt under its revolving credit facility and for general partnership purposes.

The unit of DCP Midstream LLC is a Denver-based joint venture between Spectra Energy and ConocoPhillips.

Genworth's add-on

Genworth Financial reopened its 7.625% senior notes due 2021 to add $350 million, an informed source said.

The amount of the add-on was increased from $300 million, the source said.

The notes (Baa3/BBB/) were sold at 103 to yield Treasuries plus 517 bps.

Total issuance is $750 million including $400 million of notes sold March 23, 2011 at par to yield 7.625%.

The bookrunners were Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs and UBS Securities.

Proceeds are being used for general corporate purposes including increasing liquidity at the Genworth holding company level.

The financial security company is based in Richmond, Va.

Alexandria sells preferreds

Pasadena, Calif.-based real estate investment trust Alexandria Real Estate Equities pried $130 million of 6.45% series E cumulative redeemable perpetual preferred stock, the company said Thursday.

The company originally announced the preferred sale on Wednesday. Price talk was around 6.5%.

Alexandria priced 5.2 million preferreds at $25 each, the company said in an FWP filed with the SEC.

A market source said the deal was "pretty decent," seeing it trading "right around par" in the gray market.

Another source quoted the issue at $25.01 bid, $25.05 offered.

Bank of America Merrill Lynch, Citigroup and RBC Capital Markets LLC are the bookrunners.

Proceeds will be used to pay down debt under an unsecured line of credit and, pending board approval, to redeem the company's 8.375% series C cumulative redeemable preferred stock (NYSE: AREPC). Those preferreds closed down 12 cents at $25.48.

Kimco preps preferreds

Kimco Realty plans to price class I cumulative redeemable perpetual preferreds, according to an SEC filing.

A trader said price talk was around 6.125% and that it was expected to price Friday.

"It's doing pretty well," he said, seeing it trade at $24.80 in the gray market.

Bank of America Merrill Lynch, Citigroup, UBS Securities and Wells Fargo Securities are the bookrunners.

Proceeds will be used for general corporate purposes, including the reduction of borrowings under a revolving credit facility maturing in October 2015 and the redemption of shares of preferred stock when they become callable.

Kimco is a REIT based in New Hyde Park, N.Y.

HP bonds tighten

The two tranches that made up the $2 billion Hewlett-Packard deal on Wednesday tightened further on Thursday than they had after pricing, a trader said.

The 2.6% five-year notes tightened 10 bps to 165 bps bid, 163 bps offered. They sold at 175 bps over Treasuries.

The 4.05% notes due 2022 came in by 15 bps from their price of 210 bps over Treasuries. The bonds were quoted at 195 bps bid, 192 bps offered.

The computer and technology company is based in Palo Alto, Calif.

Phillips 66 ratchets in

The four tranches in the $5.8 billion deal that Phillips 66 priced late Wednesday were between 20 bps and 35 bps better across the board from where they were sold, a source said prior to the close.

The 1.95% three-year tranche sold at 155 bps over Treasuries and was trading at 135 bps bid, 126 bps offered, the source said.

The 2.95% notes due 2017 were quoted about 35 bps tighter at a bid of 174 bps and offer of 171 bps. They sold at 210 bps over Treasuries.

A 4.3% 10-year note was about 30 bps better than its price of 235 bps over Treasuries, the source said, quoting the tranche at 205 bps bid, 203 bps offered.

The 5.875% 30-year bonds came in slightly less than the other tranches. The bonds were about 23 bps tighter at 252 bps bid, 250 bps offered. They priced at 275 bps over Treasuries.

The refiner will become a spinoff of parent company ConocoPhillips in May.

Stephanie N. Rotondo contributed to this review

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