Goldman, Wells Fargo price as Colgate ties record-low coupon; banks firm, Coors tightens

By Andrea Heisinger and Cristal Cody

New York, April 30 - A jump in new issues was expected in the high-grade bond market for the week and began Monday with Goldman Sachs Group Inc., Wells Fargo & Co. and Colgate-Palmolive Co. pricing deals.

A two-tranche deal of passthrough certificates was announced and priced by US Airways. The $623.379 million of certificates are split-rated and the offering was upsized to add four more aircraft.

Goldman Sachs priced $2 billion of three-year paper to strong demand. It was joined by Wells Fargo, which sold $1.5 billion of five-year notes.

Colgate-Palmolive sold $500 million of 10-year notes in a deal with more than $2 billion in demand on the books.

There also was an auction of noncumulative preferred stock announced by Zions Bancorporation.

After a string of stagnant weeks in the primary, companies coming out of earnings blackout or needing capital are tapping the bond market.

Tuesday is expected to see another jump in issuance.

"Get ready, we're going to be busy," a syndicate source said.

A market source later said, "We should have a couple of people on the move tomorrow."

April was light on issuance, but May should be slightly busier.

"After a couple of painfully slow weeks I think we're ready for this [issuance increase]," the market source said.

Investment-grade bonds traded flat to weaker. The Markit CDX Series 18 North American investment-grade index eased 1 basis point to a spread of 95 bps.

Bank issues firmed in secondary trading. Goldman's new notes due 2015 traded 7 bps better, while Wells Fargo's notes due 2017 tightened 2 bps.

Colgate-Palmolive's notes traded about 2 bps better.

The Molson Coors Brewing Co. senior notes (Baa2/BBB-/DBRS: BBB) that priced the previous week are trading stronger, a bond source said Monday.

Treasuries ended with slight gains. The benchmark 10-year note yield fell 2 bps to 1.91%. The 30-year bond yield edged 1 bp lower to 3.11%.

Colgate sells at low coupon

Colgate-Palmolive sold $500 million of 2.3% 10-year senior notes (Aa3/AA-/AA-) to yield Treasuries plus 58 bps, an informed source said.

The deal was sold tighter than guidance in the high 60 bps area, the source said. There was about $2 billion on the books with 160 line items, they said, adding that the deal didn't explicitly have a do-not-grow clause on it. But the company only had the need for a small amount of capital, sources said.

The coupon tied the record low for a 10-year note set by Proctor & Gamble Co. in a $2 billion two-tranche deal on Feb. 1. The P&G notes priced at a slightly lower spread of 55 bps over Treasuries.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC ran the books.

The proceeds are being used for general corporate purposes, including retirement of commercial paper.

Colgate was last in the market Nov. 3, 2011 with a $1 billion deal in three tranches. The 2.45% 10-year notes from that offering priced at 55 bps over Treasuries.

In the secondary market, Colgate-Palmolive's notes due 2022 were seen trading tighter at 56 bps bid, 55 bps offered, according to a trader.

The consumer products company is based in New York City.

Wells Fargo prices at talk

Wells Fargo sold $1.5 billion of 2.1% five-year senior holding company notes (A2/AA+/AA-) at a spread of 130 bps over Treasuries, a source close to the trade said.

The paper priced in line with guidance in the 130 bps area, the source said.

Wells Fargo Securities LLC was bookrunner.

The notes due 2017 traded tighter in the secondary market to 128 bps bid, 126 bps offered, a trader said.

The bank and financial services company is based in San Francisco.

Goldman offers $2 billion

Goldman Sachs Group priced $2 billion of 3.3% three-year bonds at a spread of Treasuries plus 295 bps, a source away from the trade said.

The paper (A1/A-/A) was priced in line with guidance in the 295 bps area. As of early afternoon there was more than $3 billion of demand on the books, a market source said.

Goldman Sachs & Co. was bookrunner.

In late afternoon trading, the notes due 2015 tightened to 288 bps bid, 284 bps offered, a trader said.

The financial services company and investment bank is based in New York City.

US Airways pass throughs

US Airways announced and priced $623.379 million of class A, B and C passthrough certificates, series 2012-1, an informed source said.

The size of the deal was increased from $356.978 million.

The airline priced $379.785 million, up from $268.658 million, of 5.9% class A certificates (Ba2/BBB/A-) with a final expected distribution date of Oct. 1, 2024 and final maturity of April 1, 2026. The certificates priced at par to yield 5.95% with a spread of 399 basis points over Treasuries and have an initial average life of 8.3 years.

There also is a $124.958 million, upsized from $88.32 million, tranche of 8% class B certificates (B2/B+/BB-) with a final distribution on Oct. 1, 2019 and final maturity on April 1, 2021. The certificates also were priced at par to yield 8% with a spread of Treasuries plus 719 bps and an initial average life of 6.1 years.

A $118.636 million tranche of 9.125% class C certificates (B3/B/B) has a final expected distribution date and final maturity of Oct. 1, 2015. The certificates sold at par to yield 9.125% with a spread of 875 bps over Treasuries and an initial average life of 2.6 years.

All of the tranches are guaranteed by US Airways Group, Inc.

Bookrunners were Citigroup Global Markets, Inc., Goldman Sachs & Co. and Morgan Stanley & Co. LLC.

The proceeds are being used to acquire equipment notes secured by 12 new Airbus aircraft, increased from eight, and two Airbus aircraft already owned by US Airways.

The commercial airline is based in Tempe, Arizona.

Zions to auction preferreds

Zions Bancorporation will auction off $143.75 million of 7.9% series F fixed-rate noncumulative perpetual stock, according to a prospectus filed with the Securities and Exchange Commission.

The stock will be issued as depositary shares representing a 1/40th interest in each preferred share. Liquidation preference is $1,000 or $25 per each depositary share.

The shares will be sold via an online auction. The minimum bid price is $23.50 and the maximum price is $25.00.

The results of the auction will determine the final selling price. The auction will begin at 3 p.m. ET on May 1 and close at 3 p.m. ET on May 2.

Zions will apply to list the preferred shares on the New York Stock Exchange under the ticker symbol "ZBPF."

Deutsche Bank Securities Inc. is bookrunner and Zions Direct Inc. is the auction agent.

The proceeds will be used to redeem all of the 11% series E resettable noncumulative perpetual preferreds.

Molson Coors stronger

Molson Coors Brewing's 3.5% notes due 2022 firmed about 1 bp on the day to 49 bps bid on Monday, a source said.

The notes were quoted 10 bps tighter at 150 bps bid, 147 bps offered on Friday. The company sold $500 million of the 10-year notes at 160 bps over Treasuries.

Molson Coors' 5% bonds due 2042 traded stronger on the day at 173 bps bid. The bonds were quoted on Friday at 178 bps bid, 175 bps offered. Molson Coors sold $1.1 billion of the 30-year bonds at Treasuries plus 190 bps.

Molson Coors is a beer brewer based in both Denver and Montreal.

Stephanie N. Rotondo contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.