Ventas, Worthington Industries price tight; Exxon better; Johnson & Johnson long bonds fall

By Cristal Cody and Aleesia Forni

Virginia Beach, April 10 - The pipeline was light for new bonds on Monday with new deals pricing from Ventas Realty LP and Worthington Industries Inc.

Ventas Realty came to market with a $700 million issue of senior notes in tranches due 2017 and 2024, according to a market source and an FWP filing with the Securities and Exchange Commission.

The sale included $300 million of 1.25% three-year notes sold at 55 basis points over Treasuries and $400 million of 3.75% notes due 2024 priced at Treasuries plus 120 bps.

Worthington Industries priced a $250 million issue of 4.55% 12-year notes with a spread of Treasuries plus 195 bps, which came at the tight end of the Treasuries plus 200 bps area talk.

Also on Thursday, Federal Home Loan Banks sold $3 billion of 0.875% three-year global bonds on top of talk of Treasuries plus 10.5 bps.

Even with earnings season underway, the high-grade bond market has seen more than $18 billion of paper price this week.

Thursday's two new high-grade deals attracted strong demand from investors, with both issues pricing at the tight of talk.

Additionally, a market source noted that Ventas Realty's deal was more than five times oversubscribed.

Although spreads in the investment-grade market opened the day tighter, bonds widened 2 bps to 3 bps by the end of the session as stocks slid, according to market sources.

The Markit CDX North American Investment Grade series 22 index gave back the previous day's gains and closed 3 bps wider at a spread of 68 bps.

Moody's Investors Service's downgrade of Automatic Data Processing, Inc. to Aa1 left only three U.S. companies with Aaa ratings: Microsoft Corp., Exxon Mobil Corp. and Johnson & Johnson, according to informed sources on Thursday.

"GE lost their triple A in 2009, and that was the last one to go off the previous grid," one source said.

In the secondary market, Exxon Mobil's notes (Aaa/AAA/) brought in March climbed higher over the day, according to a market source.

Johnson & Johnson's paper (Aaa/AAA/AAA) was mixed, with the short-dated notes better and the tranche of long bonds down more than 2 points since Tuesday, a source said.

Microsoft's bonds (Aaa/AAA/AA+) were mixed in trading, according to a market source.

Ventas Realty two-parter

Ventas Realty sold $700 million of senior notes on Thursday in three- and 10-year tranches, according to a market source and an FWP filing with the SEC.

The sale included $300 million of 1.25% three-year notes, which sold at 55 bps over Treasuries, or 99.815 to yield 1.313%.

A second tranche was $400 million of 3.75% notes due 2024 priced at Treasuries plus 120 bps.

The notes sold at 99.304 to yield 3.834%.

Citigroup Global Markets Inc., Barclays and RBC Capital Markets LLC were the joint bookrunners.

The notes are guaranteed by Ventas, Inc.

Proceeds will be used to repay debt under an unsecured revolving credit facility and for working capital and general corporate purposes, including funding acquisitions and investments.

The real estate investment trust for housing and health-care properties is based in Chicago.

Worthington prices tight

Worthington Industries sold $250 million of 4.55% senior notes (Baa3/BBB/) due 2026 on Thursday with a spread of Treasuries plus 195 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 99.789 to yield 4.573%.

The notes sold at the tight end of the Treasuries plus 200 bps area talk.

J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the joint bookrunners.

Proceeds will be used to repay borrowings under the company's revolver and to repay amounts outstanding under its revolving trade accounts receivable securitization facility.

Any remaining proceeds will be added to the company's working capital and be used for general corporate purposes, which may include the repayment of other debt.

The metal processing company is based in Columbus, Ohio.

FHLB issues global bonds

Federal Home Loan Banks priced $3 billion of 0.875% global bonds due May 24, 2017 on Thursday with a spread of Treasuries plus 10.5 bps, according to a company news release.

The notes sold on top of talk.

Pricing was at 99.807 to yield 0.938%.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Goldman Sachs & Co. were the lead managers.

FHLBanks are 12 government-sponsored funding providers.

Exxon rises

Exxon's 3.176% notes due 2024 rose to 101.50 on Thursday from 100.38 on Wednesday, according to a market source.

The notes priced in a $1 billion offering on March 17 at par.

The oil and gas company is based in Irving, Texas.

J&J long bonds lower

Johnson & Johnson's 3.375% notes due 2023 rose to 104.29 from 103.64 in the previous session, a source said.

The company sold $550 million of the notes on Dec. 2 at 99.879 to yield 3.382%.

Johnson & Johnson's long bonds are lower since the paper traded at a high of 108.38 on Tuesday, according to the market source. The 4.375% bonds due 2033 headed out at 105.90 on Thursday.

The company sold $650 million of the bonds on Dec. 2 at 99.433 to yield 4.418%.

The health-care products manufacturer is based in New Brunswick, N.J.

Microsoft mixed

Microsoft's 3.625% notes due 2023 edged up to 103.88 from 103.33 on Wednesday, according to a market source.

Microsoft sold $1.5 billion of the notes on Dec. 3 at 99.423 to yield 3.684%.

The company's 4.875% notes due 2043 fell to 108.99 from 109.24.

Microsoft sold $500 million of the bonds in December at 99.654 to yield 4.897%.

The computer software and services company is based in Redmond, Wash.

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage credit default swap prices rose, according to a market source.

Bank of America Corp.'s CDS costs eased 2 bps to 64 bps bid, 67 bps offered. Citigroup Inc.'s CDS costs rose 2 bps to 73 bps bid, 76 bps offered. JPMorgan Chase & Co.'s CDS costs eased 2 bps to 56 bps bid, 59 bps offered. Wells Fargo & Co.'s CDS costs rose 1 bp to 36 bps bid, 39 bps offered.

Merrill Lynch's CDS costs eased 1 bp to 69 bps bid, 70 bps offered. Morgan Stanley's CDS costs rose 1 bp to 79 bps bid, 82 bps offered. Goldman Sachs Group, Inc.'s CDS costs widened 2 bps to 88 bps bid, 91 bps offered.

Paul Deckelman contributed to this review

© 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.