Charter leads $22 billion day as tone improves; bank paper flat to wider in secondary

By Aleesia Forni

Virginia Beach, July 9 – Charter Communications Inc. came to the primary market with $15.5 billion of acquisition financing on Thursday as the high-grade market’s tone turned positive, thanks in part to a rebound in Chinese stocks.

Other issuers including John Deere Capital Corp., American Honda Finance Corp., Commonwealth Bank of Australia, International Finance Corp. and Ventas Realty, LP also rushed the high-grade primary to take advantage of market conditions.

Proceeds from Charter’s six-part megadeal will be used to help finance the company’s acquisition of sector peer Time Warner Cable Inc.

Tranches of the sale priced between 5 basis points to 15 bps tight of initial thoughts, and the deal’s book nabbed more than $40 billion of orders.

In other primary happenings, John Deere Capital priced a $1 billion two-part offering at the tight end of price guidance, American Honda Finance sold a $1.25 billion offering of senior notes, and Ventas Realty priced an upsized $500 million issue of long 10-year notes.

In total, the high-grade primary market hosted more than $22 billion of new issuance on Thursday, pushing the week’s total to $36 billion.

Meantime, the Markit CDX North American Investment Grade series 23 index was 1 bps tighter at a spread of 72 bps.

Bank and financial paper was flat to 1 bp wider overall during the session, according to a market source.

Bonds from Goldman Sachs Group, Inc. and JPMorgan Chase & Co. widened slightly on the day, while Citigroup Inc.’s 3.3% senior notes due 2025 firmed 1 bp.

Charter megadeal

Charter Communications priced $15.5 billion of senior secured notes (Ba1/BBB-) in six parts on Thursday, according to informed sources.

The company issued $2 billion of 3.579% five-year notes at par with a spread of Treasuries plus 200 bps.

The notes sold on top of talk. Initial guidance was set in the Treasuries plus 215 bps area.

A $3 billion tranche of 4.464% seven-year notes sold at par, on top of talk with a spread of Treasuries plus 245 bps.

The notes were initially talked in the Treasuries plus 255 bps area.

There was also a $4.5 billion tranche of 4.908% 10-year notes, which priced at par to yield Treasuries plus 260 bps.

Pricing was on top of guidance. Initial talk was set in the area of Treasuries plus 275 bps.

A $2 billion tranche of 6.384% notes due Oct. 23, 2035 priced at par with a spread of Treasuries plus 325 bps.

The 20-year tranche sold on top of guidance, which had firmed from initial talk in the Treasuries plus 330 bps area.

There was also a $3.5 billion tranche of 6.484% 30-year notes that sold at par.

The notes sold on top of talk with a spread of Treasuries plus 335 bps.

The tranche was initially talked in the Treasuries plus 340 bps area.

Finally, $500 million of 6.834% notes due Oct. 23, 2055 sold at par, or Treasuries plus 370 bps.

Pricing was on top of talk, which had firmed from initial price thoughts in the Treasuries plus 375 bps area.

Proceeds from the offering will be used to help fund the company’s acquisition of Time Warner Cable.

The Rule 144A and Regulation S offering was brought to market via Goldman Sachs & Co., BofA Merrill Lynch (through that company’s Merrill Lynch, Pierce, Fenner & Smith Inc. subsidiary), Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and UBS Securities LLC.

Charter is a Stamford, Conn.-based provider of cable, internet and phone service.

IFC global bonds

Also during the session, International Finance priced a $2.25 billion offering of 1.625% five-year global bonds (Aaa/AAA) at mid-swaps plus 2 bps, a market source said.

Pricing came at the tight end of guidance, which was set in the mid-swaps plus 3 bps area after having firmed from initial talk in the 4 bps area over mid-swaps.

Citigroup Global Markets Inc., Credit Suisse Securities, Goldman Sachs and TD Securities are the banks on the deal.

The World Bank member and lender to the private sector in developing countries is based in Washington, D.C.

American Honda three-years

American Honda Finance was also in Thursday’s primary with a $1.25 billion offering of senior notes (A1/A+/) in two parts, a market source said.

There was $750 million of 1.6% three-year notes sold with a spread of Treasuries plus 70 bps.

A $500 million three-year floating-rate tranche sold with a coupon of Libor plus 46 bps.

Both tranches sold at the tight end of price guidance.

Proceeds will be used for general corporate purposes.

Citigroup Global Markets, J.P. Morgan Securities LLC, Mizuho Securities and Wells Fargo Securities LLC were the bookrunners.

The U.S. arm of Honda Financial Services is based in Torrance, Calif.

John Deere two-parter

John Deere Capital priced a $1 billion two-part issue of senior notes (A2/A) on Thursday, according to a market source and an FWP filed with the Securities and Exchange Commission.

A $500 million tranche of 1.6% three-year notes sold at 99.962 to yield 1.613%. The notes sold with a spread of Treasuries plus 68 bps.

Pricing was at the tight end of guidance set in the Treasuries plus 70 bps area after having tightened from initial talk in the Treasuries plus 80 bps area.

Also priced was $500 million of 2.375% five-year notes at 99.916 to yield 2.393%, or Treasuries plus 83 bps.

Guidance was set in the Treasuries plus 85 bps area, which had tightened from talk in the Treasuries plus 95 bps area.

A planned three-year floating-rate tranche was dropped prior to the deal’s launch.

Proceeds will be used for general corporate purposes.

The bookrunners are Goldman Sachs, JPMorgan and MUFG.

The funding arm of agriculture and industrial equipment maker Deere & Co. is based in Moline, Ill.

CBA covered bonds

Meanwhile, Commonwealth Bank of Australia sold a $1 billion 2.125% five-year covered bond (Aaa//AAA) on Thursday at mid-swaps plus 45 bps, according to a market source.

Pricing was at 99.887 to yield 2.149%.

The bond sold in line with talk that had firmed from the mid- to high-40 bps area over mid-swaps.

The bookrunners were CBA, HSBC Securities, RBC Capital Markets LLC and TD Securities.

The banking and financial services company is based in Sydney, Australia.

Ventas upsizes

Ventas Realty sold an upsized $500 million offering of 4.125% senior notes (Baa1/BBB+/BBB+) due Jan. 15, 2026 on Thursday at Treasuries plus 192 bps, according to a market source and an FWP filing with the SEC.

The notes sold at the tight end of the Treasuries plus 195 bps area guidance.

Pricing was at 99.218 to yield 4.218%.

The bookrunners are UBS Securities, Citigroup Global Markets and Credit Agricole.

The notes are guaranteed by Ventas, Inc.

Proceeds will be used for working capital and other general corporate purposes, including to fund pending or future acquisitions and investments.

The real estate investment trust for housing and health-care properties is based in Chicago.

Anheuser-Busch offering

Also on Thursday, Anheuser-Busch InBev Finance Inc. priced $565 million of 4.6% 30-year senior notes (A2/A) at par, according to an FWP filed with the SEC.

There is a guarantee by Anheuser-Busch InBev SA/NV, Anheuser-Busch InBev Worldwide Inc., Brandbev Sarl, Brandbrew SA, Cobrew NV and Anheuser-Busch Cos. LLC.

Deutsche Bank AG, Taipei branch is the bookrunner.

Application will be made for the notes to be admitted to listing on the Taipei Exchange.

Proceeds will be used for general corporate purposes.

The brewery is based in Leuven, Belgium.

Citigroup wider

Moving to the secondary market, Citigroup’s 3.3% notes due 2025 weakened 1 bp over the session to 146 bps bid, according to a market source.

Citigroup sold $1.5 billion of the notes (Baa2/A-/A) on April 22 at Treasuries plus 135 bps.

The investment bank is based in New York.

Goldman widens

Goldman Sachs’ 3.5% notes due 2025 were 1 bp better on the day at 156 bps bid, a source said.

Goldman sold $800 million of the notes (Baa1/A-/A) in a March 25 reopening at 145 bps over Treasuries.

The notes originally priced on Jan. 20 in a $1.7 billion offering at Treasuries plus 170 bps.

The financial services company is based in New York City.

JPMorgan soft

JPMorgan Chase’s 3.125% notes due 2025 eased 1 bp on Tuesday to 140 bps bid, according to a market source.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Jan. 16 at 145 bps over Treasuries.

The financial services company is based in New York City.

Bank/brokerage CDS costs fall

Investment-grade bank and brokerage CDS prices were lower on Thursday, according to a market source.

Bank of America Corp.’s CDS costs declined 1 bp to 71 bps bid, 76 bps offered. Citigroup’s CDS costs were 1 bp lower 82 bps bid, 87 bps offered. JPMorgan Chase’s CDS costs were also 1 bp lower at 79 bps bid, 74 bps offered. Wells Fargo & Co.’s CDS costs were down 1 bp to 51 bps bid, 56 bps offered.

Merrill Lynch’s CDS costs were 1 bp lower at 75 bps bid, 78 bps offered. Morgan Stanley’s CDS costs ended 1 bp lower at 82 bps bid, 86 bps offered. Goldman Sachs’s CDS costs were down 1 bp at 90 bps bid, 94 bps offered.

Paul Deckelman contributed to this review

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