Ryder, Georgia Power, FPL sell bonds, utilities take over; Ryder notes firm; secondary weaker

By Andrea Heisinger and Cristal Cody

New York, Aug. 26 - Ryder System Inc., Georgia Power Co. and FPL Group Capital Inc. priced smaller issues of bonds on a Thursday that was dominated by utilities.

A source who worked on two of the day's sales said that they were "all pretty cut and dry" and that those he worked on were not upsized.

Utilities have been jumping into the market both to finance capital improvement needs and to repay notes.

Georgia Power priced its $500 million of 30-year bonds in short order and at the tight end of guidance.

Ryder System priced its bonds at about the same time, and the transportation and logistics company was the only non-utility in the market. The company sold $300 million of notes due 2016, also at the tight end of price talk.

FPL Group Capital priced $400 million of five-year notes in line with guidance late in the afternoon.

In the secondary market, Ryder System's new notes firmed in trading, while Georgia Power's bonds widened on the bid side, sources said.

The Markit CDX Series 14 North American investment-grade index eased for a second day by 1 basis point to a spread of 114 bps on Wednesday, according to Markit Group Ltd.

Overall investment-grade Trace volume dropped 1.3% to about $10.8 billion, a market source said.

Long-term Treasury yields fell over the day after the government auctioned $29 billion in seven-year notes on solid demand.

The yield on the benchmark 10-year Treasury note fell 5 bps to 2.48%. The yield on the 30-year bond dropped 6 bps to 3.51%.

Georgia Power sells 30-years

Georgia Power priced $500 million of 4.75% 30-year series 2010C senior unsecured notes (A3/A/A+) by early afternoon at 125 bps over Treasuries, a source who worked on the sale said.

The notes priced at the tight end of talk in the range of 125 to 130 bps.

Barclays Capital Inc., Morgan Stanley & Co. Inc., Scotia Capital, UBS Investment Bank and Wells Fargo Securities were the bookrunners.

Proceeds will be used for the redemption of all or a portion of $250 million in 5.7% notes due Jan. 15, 2045, $125 million of 6% notes due Aug. 15, 2044, $100 million of 5.75% senior public income notes due Jan. 15, 2044 and $35 million of Savannah Electric & Power Co.'s 5.75% notes due Dec. 1, 2044 that were assumed in a merger.

The energy sector stayed active in secondary trading, a day after Virginia Electric & Power Co., Southern California Edison Co. and Idaho Power Co. also priced deals that were tighter in the secondary market, according to sources.

Georgia Power's 4.75% bonds widened on the bid side soon after pricing, a trader said.

In late afternoon, the bonds were quoted at 128 bps bid, 125 bps offered.

The company's last bond sale was also a 30-year issue. The $600 million deal priced on May 24 at a comparable 135 bps over Treasuries. Those bonds had a coupon of 5.4%, showing how low borrowing rates have fallen in recent months.

The electric subsidiary of Southern Co. is based in Atlanta.

Dull tone as deals flow

A weaker market tone persisted on Thursday, although it didn't keep issuers out of the market. The day's three deals priced at the sizes they were announced at, and all were sold in line with guidance.

"I don't know that they were hesitant," a source said about why none of the deals was upsized. "I think they all announced pretty early and just knew what they wanted to get done."

The two previous days had seen deals coming into the market in late morning after companies and syndicate desks tested out the tone.

There aren't any new deals planned for Friday, one syndicate source said, but he added that "there could be one snuck in away from us."

Ryder prices $300 million

Ryder System priced $300 million of 3.6% medium-term notes due 2016 (Baa1/BBB+/A-) at a spread of 225 bps over Treasuries, an informed market source said.

This was at the tight end of guidance in the 230 bps area, with a margin of plus or minus 5 bps, the source said.

Mitsubishi UFJ Securities, RBS Securities and Wells Fargo Securities were the bookrunners.

Proceeds are being used for general corporate purposes.

In the secondary market, the notes were quick to tighten, a trader said. The notes were last quoted firmer at 218 bps bid, 212 bps offered.

Ryder's last bond sale was $300 million of 7.2% five-year notes priced on Aug. 4, 2008 at 375 bps over Treasuries.

The transportation and logistics company is based in Miami.

FPL sells $400 million late

FPL Group Capital priced $400 million of 2.6% five-year debentures (Baa1/BBB+/A-) late in the afternoon to yield Treasuries plus 125 bps, a source away from the sale said.

They are guaranteed by parent company NextEra Energy Inc.

Barclays Capital, BNP Paribas Securities, Morgan Stanley and RBS Securities were the bookrunners.

Proceeds will be added to the company's general fund.

FPL's last bond sale was $250 million of 2.55% three-year notes priced on May 13 at a spread of 115 bps. Its last sale of five-year notes was part of a $500 million deal in two tranches on June 11, 2008, with the 5.35% five-years pricing at a spread of 188 bps over Treasuries.

NextEra Energy is an electric company based in Juno Beach, Fla.

© 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.