SoCal Gas, Orange & Rockland price amid market volatility; Bank of America, Citigroup firm

By Aleesia Forni and Cristal Cody

Virginia Beach, June 15 – The investment-grade bond market was quiet to open the week on Monday, with a volatile market backdrop and stalled Greece debt talks helping keep potential issuers on the sidelines.

The primary did see two smaller-sized deals from Southern California Gas Co. and Orange & Rockland Utilities Inc.

Southern California Gas issued $600 million of first mortgage bonds in three- and 10-year tranches between 13 basis points to 15 bps tight of talk.

Orange & Rockland priced a $120 million 30-year bond in line with initial price thoughts.

In forward calendar news, Bank Nederlandse Gemeenten NV set price talk for a planned three-year notes offering expected to come to market later this week.

Players were calling for around $25 billion of new issuance this week, with the bulk of that to price ahead of the Federal Reserve’s statement following its two-day policy meeting, but one source noted that he would be “very surprised” if the primary hosted that amount.

“Probably more like $15 [billion],” he said.

High-grade credit spreads remained weak over the day.

The Markit CDX North American Investment Grade series 23 index eased 2 bps to a spread of 70 bps.

In the secondary market, Bank of America Corp.’s 4% notes due 2025 firmed 3 bps on Monday.

Barclays plc’s 2.875% senior notes due 2020 were unchanged.

Citigroup Inc.’s 3.3% senior notes due 2025 traded 3 bps tighter.

Goldman Sachs Group Inc.’s 3.5% notes due 2025 improved 2 bps on the day.

AT&T Inc.’s 3.4% notes due 2025 were flat.

Verizon Communications Inc.’s 3.5% notes due 2024 eased 3 bps.

SoCal Gas brings two-parter

Southern California Gas was in Monday’s primary market with a $600 million offering of first mortgage bonds (Aa2/A+/AA-) in two tranches, according to a market source and an FWP filed with the Securities and Exchange Commission.

The sale includes $250 million of 1.55% bonds, series QQ, due 2018 priced at 99.997 to yield 1.551%, or Treasuries plus 45 bps.

The notes sold at the tight end of price guidance set in the range of Treasuries plus 45 bps to 50 bps, having tightened from initial talk in the Treasuries plus 60 bps area.

A $350 million 3.2% mortgage bond, series RR, due 2025 priced at 99.763 to yield 3.228%, or Treasuries plus 87 bps.

Pricing was at the tight end of the Treasuries plus 90 bps area talk. Initial guidance was set in the Treasuries plus 100 bps area.

Mizuho Securities, BNP Paribas Securities Corp., CastleOak Securities LP, Credit Agricole and UBS Securities LLC are the bookrunners.

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

The natural gas distributor is based in Los Angeles.

Orange & Rockland 30-year notes

Also on Monday, Orange & Rockland Utilities sold $120 million of 4.95% 30-year senior notes with a spread of Treasuries plus 187.5 bps, a market source said.

The notes (A3/A-/A-) priced at 99.394 to yield 4.989%.

Proceeds will be used for general corporate purposes.

BofA Merrill Lynch and BNY Mellon were the bookrunners.

The electric and natural gas subsidiary of Consolidated Edison is based in Pearl River, N.Y.

BNG on deck

Bank Nederlandse Gemeenten set price talk for a planned benchmark offering of three-year notes in the area of mid-swaps plus 5 bps, according to a market source.

The bookrunners are BNP Paribas Securities, Daiwa, Morgan Stanley & Co. LLC and RBC Capital Markets LLC.

The local government funding agency is based in the Hague, the Netherlands.

Bank of America firms

Bank of America’s 4% notes due 2025 firmed 3 bps over the session to 196 bps bid, according to a market source.

Bank of America sold $2.5 billion of the notes (Baa2/A-/A) on Jan. 16 at Treasuries plus 225 bps.

The financial services company is based in Charlotte, N.C.

Barclays unchanged

Barclays’ 2.875% notes due 2020 were unchanged in secondary trading at 140 bps bid, a market source said.

Barclays sold $1 billion of the notes (Baa3/BBB/A) on June 1 at Treasuries plus 142 bps.

The financial services company is based in London.

Citigroup improves

Citigroup’s 3.3% senior notes due 2025 firmed 3 bps to 140 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 tightens

Goldman Sachs’ 3.5% notes due 2025 firmed 2 bps to 154 bps bid, a market source said.

Goldman priced an $800 million add-on to the notes (Baa1/A-/A) on March 25 at Treasuries plus 145 bps.

The issue 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.

AT&T stable

AT&T’s 3.4% notes due 2025 were unchanged on Monday at 170 bps bid after widening 5 bps in Friday’s session, according to a market source.

The company sold $5 billion of the notes (/BBB+/A-) on April 23 at a spread of Treasuries plus 150 bps.

The telecommunications company is based in Dallas.

Verizon soft

Verizon’s 3.5% notes due 2024 widened 4 bps to 145 bps bid during the trading session, a source said.

The company sold $2.5 billion of the notes (Baa1/BBB+/A-) on Oct. 22 at Treasuries plus 135 bps.

The telecommunications company is based in New York City.

Bank/brokerage CDSs higher

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

Bank of America’s CDS costs were 1 bp higher at 66 bps bid, 71 bps offered. Citigroup’s CDS costs were up 1 bp to 76 bps bid, 81 bps offered. JPMorgan Chase’s CDS costs rose 2 bps to 63 bps bid, 68 bps offered. Wells Fargo & Co.’s CDS costs were up 2 bps at 47 bps bid, 52 bps offered.

Merrill Lynch’s CDS costs were 1 bp higher at 71 bps bid, 75 bps offered. Morgan Stanley’s CDS costs were up 2 bps at 78 bps bid, 83 bps offered. Goldman Sachs Group’s CDS costs were 1 bp higher at 84 bps bid, 87 bps offered.

Paul Deckelman contributed to this review.

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