ANZ, Citigroup, Home Depot price; Vornado upsizes; energy bonds firm in aftermarket

By Aleesia Forni and Cristal Cody

Virginia Beach, June 9 – Issuers including ANZ Banking Group Ltd. and Citigroup Inc. kicked off what is expected to be yet another busy week for the high-grade bond market.

Home Depot Inc. and John Deere Capital Corp. were both in the market pricing $2 billion offerings of senior notes.

Vornado Realty LP, Oglethorpe Power Corp., Arizona Public Service Co. and TTX Co. also came to Monday’s primary with smaller-sized deals to round out the day’s $8.7 billion of supply.

Meanwhile, the preferred market saw Capital One Financial Corp. price $500 million of 6.25% series C fixed-rate noncumulative perpetual preferred stock.

In forward calendar news, Svensk Exportkredit AB set price talk for its planned $1 billion five-year global bond offer, while Wintrust Financial Corp. announced plans to price an offering of subordinated notes.

Around $20 billion to $25 billion of new issuance is expected this week, down from last week’s figure of more than $30 billion of supply.

Investment-grade bonds were mostly unchanged to slightly better on the day, according to market sources.

The Markit CDX North American Investment Grade series 22 index headed out flat at a spread of 57 basis points.

Electric utility bonds brought over the session tightened in aftermarket trading, a trader said.

Oglethorpe Power’s 4.55% bonds due 2044 firmed 2 bps, while Arizona Public Service’s 3.35% notes due 2024 also traded 2 bps better.

John Deere Capital’s notes traded 1 bp to 2 bps better on the bid side, a trader said.

Citigroup’s new paper headed out wrapped around issuance, according to a trader.

Home Depot’s two tranches of notes were mixed in the secondary market, a trader said.

The new long bonds from TTX also were active as the session closed, a trader said.

ANZ three-parter

The session’s largest new issue was priced by ANZ Banking Group.

The bank sold $2.25 billion of senior notes in three tranches on Monday, according to a market source.

A $250 million tranche of three-year floaters priced at par to yield Libor plus 26 bps, while $750 million of 1.25% three-year notes sold at 99.982 to yield 1.256%, or Treasuries plus 40 bps.

There was also $1.25 million of 2.25% five-year notes priced at 99.868 to yield 2.278%, or Treasuries plus 60 bps.

Pricing on both fixed-rate tranches was tight of guidance.

ANZ, BofA Merrill Lynch, J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the bookrunners.

The financial services company is based in Melbourne, Australia.

John Deere offering

Also on Monday, John Deere Capital sold $2 billion of senior notes (A2/A/) in three tranches, according to three separate FWP filings with the Securities and Exchange Commission.

The deal included $750 million of floating-rate notes due 2016 priced at par to yield Libor plus 10 bps.

A second tranche was $750 million of 1.125% three-year notes, which sold with a spread of 28 bps over Treasuries. Pricing was at 99.953 to yield 1.141%.

John Deere Capital’s 1.125% notes due 2017 traded better at 27 bps bid, 24 bps offered, according to a trader.

The 3.35% notes due 2024 tightened to 73 bps bid, 71 bps offered going out the door.

There was also $500 million of notes due 2024 sold at Treasuries plus 75 bps, or 99.449, to yield 3.359%.

Bookrunners were Barclays, Citigroup Global Markets Inc., HSBC Securities (USA) Inc. and Mitsubishi UFJ Securities (USA) Inc.

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

Home Depot brings $2 billion

Home Depot also sold $2 billion of senior notes (A2/A/) on Monday, with both tranches of the new issue pricing at the tight end of talk.

A $1 billion tranche of 2% five-year notes priced at 99.617 to yield 2.081%, or Treasuries plus 40 bps.

There was also $1 billion of 4.4% long 30-year bonds priced at 98.447 to yield 4.494%, or Treasuries plus 105 bps.

Home Depot’s 2% notes due 2019 traded slightly weaker at 41 bps bid, 36 bps offered, according to a trader.

The company’s tranche of 4.4% notes due 2045 firmed to 102 bps bid, 100 bps offered in the secondary market.

Barclays, BofA Merrill Lynch, Morgan Stanley & Co. LLC and JPMorgan were the joint bookrunners.

Proceeds will be used for general corporate purposes, including repurchasing shares of its common stock.

Home Depot is an Atlanta-based home improvement retailer.

Citigroup prices tight

Citigroup priced $1.25 billion of 3.75% notes due 2024 at the tight end of talk on Monday with a spread of Treasuries plus 115 bps, according to an informed source.

The notes (Baa2/A-/A) priced at 99.876 to yield 3.765%.

Citigroup’s notes due 2024 were wrapped around issuance at 115 bps bid, 113 bps offered in the secondary market, a trader said.

Citigroup Global Markets was the bookrunner.

The bank is based in New York.

Vornado upsizes

Vornado Realty priced an upsized $450 million of 2.5% five-year senior notes with a spread of Treasuries plus 90 bps, according to a market source and an FWP filed with the SEC.

Pricing was at the tight end of talk.

The notes (Baa2/BBB/) sold at 99.619 to yield 2.581%.

BofA Merrill Lynch, Deutsche Bank Securities Inc., UBS Securities LLC, Barclays, RBS Securities Inc. and Wells Fargo Securities, LLC were the joint bookrunners.

Proceeds will be used to fund eligible green projects, including the development and redevelopment of such projects.

The real estate investment trust is based in New York City.

TTX prices 30-years

In other primary action on Monday, TTX sold $250 million of 4.65% senior notes (Baa1/A+/) due 2044 with a spread of Treasuries plus 125 bps, according to an informed source.

Citigroup Global Markets, JPMorgan and Wells Fargo Securities were the joint bookrunners.

TTX’s notes due 2044 traded at 124 bps bid, 121 bps offered in the secondary market, a trader said.

Proceeds will be used for general corporate purposes, including the repayment of existing debt and the acquisition of new railcars.

The railroad freight company is based in Chicago.

Oglethorpe prices tight

Oglethorpe Power was also in the market with a $250 million offering on Monday.

The company priced 30-year first mortgage bonds with a spread of Treasuries plus 115 bps, according to a market source and an FWP filed with the SEC.

The mortgage bonds priced at the tight end of talk, the source said.

Pricing was at 99.37 to yield 4.589%.

Oglethorpe Power’s 4.55% bonds due 2044 firmed to 113 bps bid, 111 bps offered in the secondary market, according to a trader.

The joint bookrunners were Goldman Sachs & Co. and Wells Fargo Securities.

Proceeds will be used for the long-term financing of general and environmental capital expenditures of the company’s existing generation facilities and for general corporate purposes.

The electric supply cooperative is based in Tucker, Ga.

Arizona Public’s $250 million

Arizona Public Service sold $250 million of 3.35% senior notes (A3/A-/A-) due 2024 on Monday with a spread of Treasuries plus 75 bps, according to an informed source and an FWP filed with the SEC.

Pricing was at 99.908 to yield 3.361%.

BNP Paribas Securities Corp., BNP Mellon Capital Markets LLC, JPMorgan and Scotia Capital (USA) Inc. were the bookrunners.

Proceeds will be used to repay part of the company’s $300 million of 5.8% senior notes due June 30, 2014.

Arizona Public Service is an electric utility based in Phoenix and a subsidiary of Pinnacle West Capital Corp.

Capital One sells preferreds

The preferred market saw series C fixed-rate noncumulative perpetual preferreds announced by Capital One Financial on Monday.

The deal launched and priced by the day’s close, with $500 million of the preferreds coming at par to yield 6.25%.

The McLean, Va.-based company originally said it would sell at least $250 million of the shares, which were initially being talked in the 6.375% to 6.5% area.

Talk was then revised to 6.25% to 6.375%.

The trader saw a less 12-cent bid, less 5-cent offer in the early gray market. After pricing, a market source said the issue was trading around $24.90, but that it “softened after they doubled the size” to $24.83 bid, $24.87 offered.

BofA Merrill Lynch, JPMorgan, UBS Securities LLC, Wells Fargo Securities and Morgan Stanley are the joint bookrunning managers.

Svensk sets talk

Svensk Exportkredit is planning to price $1 billion of five-year global bonds in the area of mid-swaps plus 15 bps, according to a market source.

Barclays, BofA Merrill Lynch, Citigroup Global Markets and Daiwa are the bookrunners.

Based in Stockholm, Svensk is the lender to Sweden's export industry.

Wintrust eyes sub notes

Wintrust Financial is set to price an offering of subordinated notes due 2024, according to a 424B2 filed with the SEC.

RBC Capital Markets LLC is the sole bookrunner.

Proceeds from the sale will be used for general corporate purposes.

Wintrust is a Rosemont, Ill.-based financial holding company.

Bank/brokerage CDSs mostly lower

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

Bank of America Corp.’s CDS costs declined 1 bp to 56 bps bid, 59 bps offered. Citigroup’s CDS costs also declined 1 bp to 56 bps bid, 59 bps offered. JPMorgan Chase & Co.’s CDS costs firmed 1 bp to 46 bps bid, 49 bps offered. Wells Fargo & Co.’s CDS costs ended flat at 32 bps bid, 35 bps offered.

Merrill Lynch’s CDS costs declined 1 bp to 59 bps bid, 63 bps offered. Morgan Stanley’s CDS costs ended 2 bps lower at 57 bps bid, 60 bps offered. Goldman Sachs Group, Inc.’s CDS costs firmed 2 bps to 62 bps bid, 65 bps offered.

Paul Deckelman and Stephanie N. Rotondo contributed to this review.

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