National Australia Bank, Fannie Mae brave volatile market conditions; Barclays, Disney improve

By Aleesia Forni and Cristal Cody

New York, Jan. 6 – National Australia Bank joined Fannie Mae in the high-grade primary on Wednesday as another bout of market volatility kept most potential issuers on the sidelines.

The market’s overall tone was weaker during the session on tumbling oil prices, continued concerns over slowing growth spurred by negative data out of China and North Korea’s claim that it had successfully tested a hydrogen nuclear device.

This follows an onslaught of new issuance on Tuesday, with more than $20 billion of new paper pricing on the heels of an empty Monday primary.

“It’s not pretty,” one market source said of the market on Wednesday.

So far, this week has hosted around $27 billion of new issuance, already in line with what was predicted to be a $25 billion to $30 billion week for the market.

Investment-grade bonds were mixed in secondary trading over the session.

New paper from Barclays plc traded 3 basis points better in the secondary market.

Walt Disney Co.’s 3% senior notes due 2026 sold on Tuesday traded about 1 bp tighter.

Ford Motor Credit Co. LLC’s 4.389% notes due 2026 edged 1 bp wider.

The Markit CDX North American Investment Grade 25 index eased 2 bps to close at a spread of 93 bps.

NAB four-parter

National Australia Bank garnered nearly $9 billion of orders for its new $3.5 billion issue of senior notes (Aa2/AA-) that priced on Wednesday in four tranches, a market source said.

All tranches sold at the tightest side of price guidance.

The sale included $1.25 billion of 2% three-year notes priced at 99.751 to yield 2.086%, or Treasuries plus 85 bps.

Also, a $500 million tranche of three-year floaters sold at par to yield Libor plus 78 bps, inside price talk in the 83 bps area over Libor.

The bank also priced $1 billion of 2.625% five-year notes at 99.698 to yield 2.69%, or Treasuries plus 105 bps.

Finally, $750 million of 3.375% 10-year bonds priced with a 130 bps spread over Treasuries. Pricing was at 99.228 to yield 3.467%.

Bookrunners were BofA Merrill Lynch, Citigroup Global Markets Inc., National Australia Bank and RBC Capital Markets LLC.

Melbourne-based National Australia Bank is the nation’s largest lender.

Fannie Benchmark Notes

Also on Wednesday, Fannie Mae sold $3 billion of 1.375% Benchmark Notes due Jan. 28, 2019 at Treasuries plus 13 bps, according to a company news release.

Pricing was at 99.938 to yield 1.396%.

Barclays, J.P. Morgan Securities LLC and Nomura Securities International, Inc. are the joint lead managers.

Fannie Mae is a Washington, D.C.-based mortgage credit provider.

Barclays firms

Barclays’ 4.375% senior notes due 2026 traded slightly better at 217 bps bid, 214 bps offered in the secondary market on Wednesday, a trader said.

Barclays sold $2.5 billion of the notes (Baa3/BBB/A) on Tuesday at a spread of Treasuries plus 220 bps.

The financial services company is based in London.

Disney improves modestly

Walt Disney’s 3% notes due 2026 headed out on Wednesday at 79 bps bid, 78 bps offered, according to a trader.

Disney sold $1 billion of notes (A2/A/A) on Tuesday at Treasuries plus 80 bps.

The entertainment and media company is based in Burbank, Calif.

Ford Motor Credit softens

Ford Motor Credit’s 4.389% notes due 2026 traded slightly softer at 216 bps offered on Wednesday, a trader said.

The notes (Baa3/BBB-/BBB-) priced in a $1.2 billion tranche on Tuesday at a spread of 215 bps over Treasuries.

Ford Motor Credit is the financing arm of Dearborn, Mich.-based automaker Ford Motor Co.

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