Morning Commentary: USAA, UBS, Scotiabank, DXC, Valero, Charter, Marriott offer notes

By Cristal Cody

Tupelo, Miss., April 14 – Several new deals are expected to price in the high-grade primary market over Tuesday’s session, including Yankee bonds, market sources report.

USAA Capital Corp. is on deck with two tranches of sustainability bonds (Aa1/AA) that include $400 million of three-year senior notes talked to price in the Treasuries plus 170 basis points area and $400 million of 10-year senior notes talked in the 180 bps spread area.

UBS AG, London Branch is in the dollar market with an offering of two-year senior notes (Aa3/AA-) that are initially guidance to print in the 200 bps over Treasuries area.

Also, Bank of Nova Scotia intends to bring new three-year senior bail-inable notes (A2/A+/AA-) to the primary market on Tuesday. Initial price talk is in the Treasuries plus 155 bps area.

Meanwhile, several other issuers expect to price bonds during the session.

DXC Technology Co. is offering two tranches of three- and five-year senior notes (Baa2/BBB+). Initial guidance on the three-year notes is in the Treasuries plus 387.5 bps area, while the five-year notes are talked at the 400 bps spread area.

DXC joins a growing list of companies that have drawn down credit lines and issued bonds thereafter, sources note.

DCX announced on April 2 that it would borrow the remaining $2.5 billion under its $4 billion multi-currency revolving credit facility to increase its cash position.

In other issuance expected Tuesday, Valero Energy Corp. is offering two tranches of fixed-rate senior notes (Baa2/BBB/BBB) during the session. The three- and five-year notes are talked to price in the Treasuries plus 300 bps area.

Charter Communications, Inc. subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. plan to tap the primary market on Tuesday with two tranches of senior secured notes (Ba1/BBB-/BBB-).

Charter’s deal includes 11-year notes talked to price with a spread in the Treasuries plus 250 bps area and 31-year notes talked at the 275 bps spread area.

Also on Tuesday, Marriott International, Inc. plans to price $1 billion of five-year senior notes (Baa3/BBB-) that are talked to print in the 7.25% area.

Marriott announced that on Monday it entered into a $1.5 billion 364-day senior revolving credit facility with the principal expected to be reduced by new debt issuances, including senior notes, equity offerings and asset sales. The company announced on April 3 that it has fully drawn down a $4.5 billion credit facility.

On Monday, high-grade volume totaled nearly $20 billion with supply led by a $9.5 billion five-part offering from Exxon Mobil Corp.

About $25 billion to as much as $50 billion of issuance is expected this week.

In the secondary market, new issues that priced on Monday mostly tightened, sources said.

Walgreens Boots Alliance, Inc.’s $1.5 billion of senior notes (Baa2/BBB/BBB-) improved 10 bps from issuance across both tranches.

The Deerfield, Ill.-based drugstore chain sold $500 million of 3.2% notes due April 15, 2030 at 99.992 to yield 3.201%, or a spread of Treasuries plus 235 bps. Initial talk was in the 287.5 bps area.

Walgreens’ $1 billion tranche of 4.1% notes due April 15, 2050 were priced at par to yield a Treasuries plus 270 bps spread, versus talk in the 300 bps over Treasuries area.

Overall secondary corporate volume totaled $20.88 billion on Monday, according to Trace data.

© 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.