Wells Fargo prices $3.75 billion to end busy week; Johnson & Johnson, Goldman, MUFG tighten

By Aleesia Forni and Cristal Cody

New York, Feb. 26 – Wells Fargo & Co. sold a $3.75 billion issue of five-year notes in two parts to cap off what has been a lively week for the high-grade primary.

The market hosted roughly $45.2 billion of new investment-grade issuance during the week just completed, blowing away earlier predictions of around $30 billion.

Wells Fargo’s new deal continued the week’s trend and received a solid reception from investors. The deal priced around 12.5 basis points inside initial price guidance and attracted an order book that was more than four times oversubscribed.

With a significant pipeline of potential issuers, the pace of activity is expected to carry over into the week ahead, with some sources calling for another $40 billion-plus week.

One market source noted the potential for a larger merger-and-acquisition financing deal, along with another bout of issuance from the financial sector.

Toronto-Dominion Bank sold C$1.25 billion of 4.859% non-viability contingent capital medium-term note subordinated debentures due March 4, 2031 at par on Friday. The debentures priced at a spread of 360 bps over the interpolated Government of Canada bond curve.

Market tone improved over the week, “especially with the J&J deal,” a trader said Friday. “It seemed like it quieted down fairly early today.”

Wells Fargo’s new notes were not seen in aftermarket trading late afternoon on Friday.

Johnson & Johnson’s senior notes (Aaa/AAA/AAA) that priced in seven tranches totaling $7.5 billion on Thursday tightened in the secondary market Friday.

Goldman Sachs Group Inc.’s 3.75% senior notes due 2026 firmed about 8 bps over the day.

Mitsubishi UFJ Financial Group, Inc.’s new 3.85% senior notes due 2026 improved about 5 bps.

Kellogg Co.’s 4.5% senior notes due 2046 that priced on Thursday traded 5 bps better earlier in the session.

The Markit CDX North American Investment Grade index closed on Friday 2 bps tighter at a spread of 110 bps.

Funds see inflows

Lipper US Fund Flows reported $141.8 million of inflows from corporate investment-grade bond funds for the week ended Feb. 24.

This figure follows the prior week’s $1.12 billion of outflows and brings the total year-to-date outflows to about $5.6 billion.

Wells Fargo prices tight

In primary news on Friday, Wells Fargo sold $3.75 billion of five-year notes (A2/A/AA-) in fixed- and floating-rate tranches, according to an informed source and an FWP filed with the Securities and Exchange Commission.

There was $2.75 billion of 2.5% fixed-rate notes sold at 99.977 to yield 2.505%, or Treasuries plus 125 basis points.

A $1 billion floating-rate piece sold at par to yield Libor plus 134 bps.

The fixed-rate tranche was initially talked in the area of 137.5 bps over Treasuries, and the floaters were talked at the Libor equivalent.

Proceeds will be used for general corporate purposes.

Wells Fargo Securities LLC is the bookrunner.

The bank is based in San Francisco.

Johnson & Johnson firms

Johnson & Johnson’s 2.45% notes due 2026 were offered at 69 bps in secondary trading on Friday, according to a trader.

The company sold $2 billion of the bonds on Thursday at a spread of Treasuries plus 75 bps.

Johnson & Johnson’s $2 billion tranche of 3.7% bonds due 2046, which printed on Thursday at Treasuries plus 115 bps, traded at 109 bps bid, 107 bps offered.

The consumer products company is based in New Brunswick, N.J.

Goldman tightens

Goldman Sachs Group’s 3.75% notes due 2026 tightened to 188 bps bid, 190 bps offered in the secondary market, a trader said.

The notes headed out on Thursday at 196 bps bid.

Goldman sold $1.75 billion of the notes (A3/BBB+/A) on Monday as part of a $3.6 billion three-part sale at a spread of Treasuries plus 203 bps.

The financial services company is based in New York City.

Mitsubishi better

Mitsubishi UFJ Financial Group’s 3.85% notes due 2026 headed out at 197 bps offered, about 5 bps tighter than where the paper traded on Thursday, according to market sources.

The company priced $2.5 billion of the notes (A1/A) in a $5 billion three-tranche offering on Tuesday at a spread of Treasuries plus 215 bps.

The financial services company is based in Tokyo.

Kellogg improves

Kellogg’s 4.5% bonds due 2046 tightened to 195 bps offered in the secondary market in early secondary trading on Friday, a source said.

The company sold $650 million of the notes (Baa2/BBB/BBB) on Thursday in a $1.4 billion two-tranche offering at Treasuries plus 200 bps.

The maker of cereal and convenience foods is based in Battle Creek, Mich.

© 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.