Reynolds, Energy Transfer, MidAmerican hit primary; Verizon longer-dated tranches firm again

By Cristal Cody and Aleesia Forni

Virginia Beach, Va., Sept. 12 - The high-grade bond market saw five new issuers come to the primary on Thursday on the heels of the record-breaking deal from Verizon Communications Inc. deal sold during the previous session.

The company brought $49 billion of new bonds on Wednesday in eight tranches.

The positive tone to Thursday's market helped pave the way for issuers including Reynolds American Inc., Energy Transfer Partners LP and MidAmerican Energy Co. to price roughly $4.5 billion of new bonds.

The day's largest deal came from Energy Transfer Partners, which sold $1.5 billion of senior notes in three tranches during the session.

Reynolds American sold $1.1 billion of senior notes in tranches due 2023 and 2043, according to a market source.

The deal included a $700 million issue of 4.15% notes due 2020 priced at Treasuries plus 185 bps and $350 million of 4.9% notes due 2024 priced at Treasuries plus 210 bps.

Thursday's session also saw MidAmerican sell $950 million of first mortgage bonds in three tranches.

The company sold $350 million of 2.4% 5.5-year first mortgage bonds at 70 basis points over Treasuries and $250 million of 3.7% first mortgage bonds at Treasuries plus 83 bps.

A $350 million tranche of 4.8% 30-year first mortgage bonds priced at Treasuries plus 95 bps.

Meanwhile, Weyerhaeuser Co. came to market with $500 million of 4.625% notes due 2023 priced with a spread of Treasuries plus 175 bps.

International Game Technology Inc. priced a $500 million offering of 5.35% senior notes due 2023 with a spread of Treasuries plus 250 basis points, according to a market source.

The record-setting week is expected to close on a muted note following a week that has seen roughly $58 billion of new high-grade issuance, according to Prospect News data.

"Expecting a quiet session [on Friday]," one market source said late Thursday, adding that he does not expect any new deals to price.

Verizon's mega offering of notes traded better on Thursday, while investment-grade bond spreads ended weaker, according to market sources.

The Markit CDX Series 20 North American Investment Grade index eased 2 basis points to a spread of 78 bps.

New issues sold over the day from Reynolds American, Weyerhaeuser, Energy Transfer Partners and International Game Technology were not immediately active in aftermarket trading.

"Don't see it," one trader said.

Verizon rises

Secondary market volume waned somewhat in Verizon's new notes (Baa1/BBB+/A-) in afternoon trading on Thursday, but the notes still found room to firm, according to market sources.

"We didn't see too much - yesterday was more active," one trader said. "Most of them out on the curve are a little tighter today."

Verizon's 5.15% notes due 2023 rose to a dollar price of 103 bid, 104 offered going out on Thursday, the trader said.

The notes were seen earlier in the day at 104.25 offered, according to a trader at another desk.

Verizon sold $11 billion of the 5.15% notes due 2023 with a spread of Treasuries plus 225 bps, or 99.676 to yield 5.192%.

Verizon's tranche of 6.55% bonds due 2043 held in the area of 106 bid, 108 offered late afternoon on Thursday, a trader said. The bonds were quoted at 107.787 offered in the morning session on Thursday.

Verizon sold $15 billion of the 30-year bonds at 99.883 to yield 6.559%, or a spread of Treasuries plus 265 bps.

The tranches were part of the New York City-based telecommunications company's $49 billion deal sold on Wednesday to help finance the purchase of Vodafone Group plc's 45% stake in Verizon Wireless.

Energy Transfer three-parter

In primary action, Energy Transfer priced $1.5 billion of senior unsecured notes (Baa3/BBB-/BBB-) in three parts on Thursday, according to an informed source and a FWP filed with the Securities and Exchange Commission.

A $700 million issue of 4.15% notes due 2020 was sold at Treasuries plus 185 bps, or 99.829 to yield 4.178%.

There was also $350 million of 4.9% notes due 2024 priced with a spread of Treasuries plus 210 bps.

Pricing was at 99.181 to yield 5.003%.

Finally, the company sold a $450 million issue of 5.95% 30-year senior notes with a spread of Treasuries plus 225 bps, or 97.647 to yield 6.122%.

Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and UBS Securities LLC were the joint bookrunners.

Proceeds will be used to repay borrowings outstanding under a revolving credit facility.

The energy gathering and transportation company is based in Dallas.

Reynolds prices tight

In other primary action, Reynolds American sold a $1.1 billion two-part offering of senior notes due 2023 and 2043 on Thursday, according to a market source.

Both tranches priced at the tight end of talk.

There was a $550 million issue of 4.85% notes due 2023 sold with a spread of Treasuries plus 195 bps.

The notes priced at 99.922 to yield 4.86%

Reynolds also priced $550 million 6.15% 30-year bonds at Treasuries plus 230 bps, or 99.553 to yield 6.183%.

Joint bookrunners were Citigroup Global Markets Inc., Goldman Sachs & Co. and J.P. Morgan Securities LLC.

Credit Suisse Securities (USA) LLC, Fifth Third Securities Inc., Mizuho Securities, RBC Capital Markets and Scotiabank were passive bookrunners.

Proceeds will be used to redeem about $200 million of the company's 7.3% notes due 2015 and approximately $775 million of its 7.625% notes due 2016.

Any remaining proceeds will be used to repay or prepay the company's term loan and for other general corporate purposes.

The holding company for makers of tobacco products is based in Winston-Salem, N.C.

MidAmerican sells mortgage bonds

Meanwhile, MidAmerican Energy Co. came to Thursday's primary with $950 million of first mortgage bonds in three parts, according to a filing with the Securities and Exchange Commission.

The company sold $350 million 2.4% 5.5-year first mortgage bonds with a spread of 70 bps over Treasuries.

Pricing was at 99.944 to yield 2.411%.

There was also $250 million 3.7% first mortgage bonds priced at Treasuries plus 83 bps, or 99.67 to yield 3.74%.

Finally, a $350 million tranche of 4.8% first mortgage bonds due 2043 sold with a spread of Treasuries plus 95 bps.

MidAmerican sold the notes at 99.528 to yield 4.83%.

Barclays, J.P. Morgan Securities LLC, RBS Securities Inc., BNP Paribas Securities Corp., Mitsubishi UFJ Securities (USA) Inc. and U.S. Bancorp Investments Inc. were the joint bookrunners.

Proceeds will be used to repay maturing long-term debt, with the remainder for general corporate purposes.

The utility is based in Des Moines, Iowa.

Weyerhauser sells 10-years

The primary also saw Weyerhaeuser price a $500 million offering of 4.625% notes (Baa3/BBB-/) due Sept. 15, 2023 on Thursday, according to an FWP filing with the Securities and Exchange Commission.

Pricing was at 99.898 with a spread of Treasuries plus 175 bps.

Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC were the joint bookrunners.

The company plans to use the proceeds, together with cash on hand, to repay existing debt.

Weyerhaeuser is a timber company based in Federal Way, Wash.

International Game sells $500 million

International Game Technology priced a $500 million offering of 5.35% senior notes (Baa2/BBB/) due 2023 with a spread of Treasuries plus 250 basis points, according to a market source.

The notes sold at 99.587 to yield 5.403%.

Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc. and Goldman Sachs & Co. are the joint bookrunners.

The company plans to use proceeds for general corporate purposes, as well as redeeming a portion of its 3.25% convertible notes due 2014.

International Game Technology is a Las Vegas-based manufacturer of gaming machines.

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