Santander, Kommuninvest enter primary market; EIB on deck; bank, financial paper mixed

By Aleesia Forni and Cristal Cody

Virginia Beach, April 14 – Santander Holdings USA Inc. and Kommuninvest i Sverige AB made their way to the investment-grade primary during another lackluster session for the market.

Santander priced a $1 billion offering of five-year bonds, garnering an order book that was around 1.5 times oversubscribed and pricing the new deal 10 bps tighter than price talk.

Kommuninvest was in the market with a $500 million offering of two-year notes.

Meanwhile, the European Investment Bank joined the forward calendar, announcing plans to sell a five-year global note this week.

In the preferred market, JPMorgan Chase & Co. sold a $2 billion offering of 5.3% $1,000-par series Z fixed-to-floating rate preferred stock.

So far, the investment-grade bond market has seen a quiet pace of issuance, with only $5.95 billion of supply entering the market this week.

Bank and financial paper was mixed in secondary trading on Tuesday, according to market sources.

JPMorgan Chase’s 3.125% notes due 2025 eased 2 bps after the company reported first-quarter income rose 12%.

Bank of America Corp.’s 4% notes due 2025 traded about 1 bp better.

Goldman Sachs Group Inc.’s 3.5% notes due 2025 were flat.

The Markit CDX North American Investment Grade series 23 index was 1 bp wider at a spread of 62 bps.

Santander prices tight

Santander Holdings sold a $1 billion issue of 2.65% five-year senior notes (Baa2/BBB/) on Tuesday at Treasuries plus 140 bps, according to an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.601 to yield 2.736%.

The notes sold tighter than price talk.

Proceeds will be used for general corporate purposes.

Barclays, BofA Merrill Lynch and Santander were the bookrunners.

Boston-based Santander Holdings USA is the parent company of Sovereign Bank. It is a subsidiary of Spain’s Banco Santander, SA.

Kommuninvest two-year notes

Kommuninvest i Sverige priced $500 million of 0.625% two-year notes (Aaa/AAA/) at mid-swaps minus 5 bps on Tuesday, an informed source said.

BofA Merrill Lynch, Credit Suisse Securities and HSBC were the bookrunners for the Rule 144A and Regulation S deal.

Kommuninvest offers funding to municipalities of Sweden and is based in Orebro.

EIB on deck

Also on Tuesday, The European Investment Bank set price talk for a planned offering of five-year global notes (Aaa/AAA/AAA) in the area of mid-swaps flat, according to a market source.

Barclays, BofA Merrill Lynch and TD Securities are the bookrunners.

The lender for the European Union is based in Kirchberg, Luxembourg.

JPMorgan beats estimates

JPMorgan reported its first-quarter results on Tuesday and also priced a new issue.

On the heels of the earnings release, the New York-based bank brought $2 billion of 5.3% $1,000-par series Z fixed-to-floating rate noncumulative perpetual preferreds.

Initial price talk was 5.5%.

Despite the pricing revision, the deal appeared to be doing well, as a trader quoted the issue at 101.375 bid, 101.5 offered.

However, another market source placed the issue at 100.3 in after-market dealings.

While fixed, the dividend will be payable semiannually. Once floating – at Libor plus 380 bps – the dividend will be payable quarterly.

J.P. Morgan Securities LLC ran the books.

Proceeds will be used for general corporate purposes.

Bank of America firms

Bank of America’s 4% notes due 2025 firmed about 1 bp to 194 bps bid in trading over the day, according to a market source.

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

Bank of America is a financial services company based in Charlotte, N.C.

Goldman unchanged

Goldman Sachs’ 3.5% notes due 2025 (Baa1/A- /A) traded flat at 137 bps bid, a market source said.

Goldman sold $800 million of the notes in a reopening on March 25 at Treasuries plus 145 bps. The notes originally priced on Jan. 20 in a $1.7 billion offering at 170 bps over Treasuries.

The financial services company is based in New York City.

Bank/broker CDS costs mixed

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

Bank of America’s CDS costs were 1 bp lower at 61 bps bid, 64 bps offered. Citigroup Inc.’s CDS costs were flat at 72 bps bid, 75 bps offered. JPMorgan Chase’s CDS costs fell 2 bps to 59 bps bid, 62 bps offered. Wells Fargo & Co.’s CDS costs were down 1 bp to 39 bps bid, 42 bps offered.

Merrill Lynch’s CDS costs declined 1 bp to 64 bps bid, 69 bps offered. Morgan Stanley’s CDS costs increased 1 bp to 72 bps bid, 75 bps offered. Goldman Sachs Group’s CDS costs were flat at 79 bps bid, 82 bps offered.

Stephanie N. Rotondo contributed to this review

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