VF, Hyatt, Micron, Kroger, Jefferies in primary market; credit spreads ease; Cargill firms

By Cristal Cody

Tupelo, Miss., April 21 – Investment-grade supply included about $5.77 billion of bonds priced on Tuesday.

VF Corp. priced $3 billion of senior notes in four tranches with proceeds set in part to repay borrowings under the company’s senior revolving credit facility.

VF announced on March 23 that it drew down $1 billion from its senior revolving credit facility and announced earlier in April that it will draw down the $1 billion remaining on the facility.

Micron Technology, Inc. sold $1.25 billion of three-year senior notes and plans to use the proceeds to repay debt under the company’s $2.5 billion revolving credit facility due July 3, 2023 that was fully drawn down in March. The revolving credit facility has an interest rate of Libor plus 125 basis points.

Meanwhile on Tuesday, Hyatt Hotels Corp. priced an upsized $900 million of senior notes in two tranches.

Kroger Co. sold $500 million of 10-year senior notes.

In addition, Jefferies Group LLC priced an upsized $115 million add-on to its 5.125% senior notes due Jan. 20, 2023.

Week to date, investment-grade volume totals about $9.42 billion.

High-grade issuers priced $3.65 billion of bonds on Monday.

About $40 billion to as much as $60 billion of issuance is expected by market participants this week.

Investment-grade supply is slowing from the record $100 billion-plus weekly volume seen in March and the first week of April with numerous companies in earnings blackout reporting periods.

A Rule 144A and Regulation S offering of dollar-denominated 40-year fixed-to-floating-rate notes from Nationwide Mutual Insurance Co. was postponed due to market conditions on Monday and remains in the deal pipeline.

Market tone soured on Monday as the prices of crude oil went into negative territory and remained weak on Tuesday but improving on reports of additional business stimulus measures passed in the U.S. Senate.

The Markit CDX North American Investment Grade 33 index eased nearly 5 bps to a spread of 97.65 bps after widening about 6 bps on Monday.

The iShares iBoxx Investment Grade Corporate Bond ETF closed down 0.35% at 129.36, slightly improved from a 0.59% decline over the morning.

The Pimco Investment Grade Corporate Bond Index ETF ended off 0.05% at 110.04. The index was down 0.38% in early trading.

Stocks indexes fell 1.98% to 2.85% early Tuesday and headed out 2.67% to 3.48% weaker on the day.

In the secondary market, high-grade bonds were mixed but some new issues have improved, sources report.

Cargill Inc.’s $1.5 billion of senior notes (A2/A/A) priced in two tranches on Monday firmed about 2 bps to 7 bps on the short end, a source said.

The company’s $750 million of 1.375% notes due July 23, 2023 priced at a Treasuries plus 115 bps spread.

Initial price talk was in the Treasuries plus 160 bps area.

Cargill sold $750 million of 2.125% notes due April 23, 2030 at a spread of 150 bps over Treasuries.

The notes were talked to price in the Treasuries plus 195 bps area.

VF prices $3 billion notes

VF priced $3 billion of senior notes (A3/A/) in four tranches on Tuesday, according to a market source and an FWP filing with the Securities and Exchange Commission.

A $1 billion offering of 2.05% two-year notes priced at a spread of 185 bps over Treasuries, compared to initial talk in the 195 bps area. The notes were placed at 99.982 to yield 2.059%.

VF sold $750 million of 2.4% five-year notes at 99.827 to yield 2.437% and a Treasuries plus 210 bps spread.

The five-year notes were talked at the 220 bps spread area.

A $500 million tranche of 2.8% seven-year notes priced at 99.836 to yield 2.826% and a spread of 235 bps over Treasuries, compared to initial guidance in the 250 bps over Treasuries area.

In the final tranche, $750 million of 2.95% 10-year notes priced at 99.785 to yield 2.975%, or a Treasuries plus 240 bps spread.

The 10-year notes were initially talked to print at the 255 bps spread area.

Barclays, BofA Securities Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, HSBC Securities (USA) Inc., ING Financial Markets LLC, U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC were the bookrunners.

The lifestyle apparel company is based in Greensboro, N.C.

Micron raises $1.25 billion

Micron Technology sold $1.25 billion of 2.497% three-year senior notes (Baa3/BBB-/BBB-) on Tuesday at par to yield a spread of Treasuries plus 225 bps, according to a market source and an FWP filing.

Initial price talk was in the Treasuries plus 300 bps area with guidance tightened to the 237.5 bps area, plus or minus 12.5 bps.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Morgan Stanley, Credit Agricole Securities (USA) Inc., HSBC Securities and MUFG were the bookrunners.

Micron is a Boise, Idaho-based semiconductor company.

Hyatt Hotels upsizes

Hyatt Hotels priced an upsized $900 million of senior notes (Baa3/BBB-/) in two parts on Tuesday, according to a market source and an FWP filing.

Hyatt sold $450 million of five-year notes at par to yield 5.375%.

The notes were talked to print at the 5.875% area.

A $450 million tranche of 10-year notes priced at par to yield 5.75%.

Initial price talk on the 10-year notes was in the 6.25% area.

The deal was upsized by $100 million, or $50 million per tranche.

Goldman Sachs & Co. LLC, BofA Securities, J.P. Morgan, Fifth Third Securities Inc., Scotia Capital USA Inc. and SunTrust Robinson Humphrey Inc. were the bookrunners.

Chicago-based Hyatt Hotels operates full service hotels, resorts and residential and vacation properties.

Kroger sells 10-year notes

Kroger priced $500 million of 2.2% 10-year senior notes (Baa1/BBB/) at 99.786 to yield 2.224% and a spread of Treasuries plus 165 bps on Tuesday, according to a market source and an FWP filing.

Initial price talk was in the Treasuries plus 215 bps area.

BofA Securities, Citigroup, U.S. Bancorp, Mizuho Securities USA Inc., PNC Capital Markets LLC and Wells Fargo were the bookrunners.

Kroger is a Cincinnati-based grocery retailer.

Jefferies brings add-on

Jefferies Group (Baa3/BBB/BBB) priced an upsized $115 million add-on to its 5.125% senior notes due Jan. 20, 2023 on Tuesday at a spread of 387.5 bps over Treasuries, according to a market source.

The deal was upsized from $100 million.

Jefferies LLC was the bookrunner.

The company originally sold $600 million of the notes on Jan. 15, 2013 at 99.721 to yield 5.161%, or a spread of 332.5 bps. The total outstanding is now $715 million.

Jefferies is an investment bank based in New York.

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