Mizuho, JPMorgan, Citigroup price following dovish Fed statement; Apple firms; Exxon steady

By Aleesia Forni and Cristal Cody

Virginia Beach, March 19 – The rapid pace of issuance resumed on Thursday on the heels of the release of a dovish statement from the Federal Reserve.

Financial names made up the bulk of the day’s new bonds, with Mizuho Bank Ltd., JPMorgan Chase & Co. and Citigroup Inc. pricing deals.

Mizuho Bank sold the session’s largest new issue, bringing to market $2.5 billion of notes in four tranches.

The fixed-rate tranches sold around 15 basis points tight compared to initial talk, and the deal attracted an order book that was around 3.6 times oversubscribed.

In other primary happenings, JP Morgan sold an upsized $1.25 billion add-on in line with initial guidance, while Citigroup’s new $1 billion subordinated note priced around 17 bps tight of talk.

RenaissanceRe Finance Inc. sold a $300 million 10-year offering of notes on Thursday in its first entry into the investment-grade primary market since 2010.

The deal sold at the same level as initial price talk, and its order book was around 1.3 times oversubscribed.

The session also saw Oncor Electric Delivery Co. LLC sell $725 million of notes in 10- and 30-year tranches

In total, around $5.7 billion of paper sold during the session, pushing the week’s total supply to $17.675 billion.

Investment-grade bonds were mixed over the session, while credit spreads softened, sources said.

The Markit CDX North American Investment Grade series 23 index eased 2 bps to a spread of 64 bps.

In the secondary market, Apple Inc.’s 2.5% notes due 2025 traded about 1 bp better.

Microsoft Corp.’s 2.7% notes due 2025 were flat on the day.

Exxon Mobil Corp.’s senior notes (Aaa/AAA/) headed out unchanged but remain weaker than issuance.

Mizuho sells $2.5 billion

Mizuho Bank priced $2.5 billion of senior notes (A1/A+) in four parts on Thursday, a market source said.

The bank’s sale included $500 million of three-year floaters priced at par to yield Libor plus 64 bps.

Guidance was set at the Libor equivalent to the three-year fixed-rate notes.

There was also $500 million of 1.8% three-year notes priced at 99.869 to yield 1.845%, or 85 bps over Treasuries.

The notes sold at the tight end of guidance that had been set in the Treasuries plus 90 bps area, tightened from initial talk in the Treasuries plus 100 bps area.

A $1 billion tranche of 2.4% five-year notes sold at a spread of 95 bps over Treasuries.

Pricing was at 99.874 to yield 2.427%.

Guidance was set in the 100 bps area over Treasuries. Initial talk was for a spread in the area of 110 bps over Treasuries.

Finally, $500 million of 3.2% 10-year notes priced at 99.796 to yield 3.224%, or Treasuries plus 125 bps.

Pricing was at the tight end of the 130 bps area over Treasuries guidance which was tightened from initial talk set in the Treasuries plus 140 bps area.

BofA Merrill Lynch, Goldman Sachs & Co., J.P. Morgan Securities LLC and Mizuho Securities are the bookrunners.

Proceeds will be used for general corporate purposes.

Mizuho Bank is the retail and corporate banking unit of Tokyo-based Mizuho Financial Group Inc.

JPMorgan upsizes

JPMorgan Chase sold an upsized $1.25 billion add-on to its existing 2.25% senior notes (A3/A/A+) due Jan. 23, 2020 on Thursday at Treasuries plus 95 bps, according to an informed source.

Pricing was in line with initial price thoughts. The size was expanded from $1 billion.

The notes sold at 99.273 to yield 2.41%.

The original $2.5 billion issue sold at 110 bps over Treasuries on Jan. 15.

J.P. Morgan & Co. LLC was the bookrunner.

The financial services company is based in New York City.

Citigroup sub notes

Citigroup priced $1 billion of 3.875% subordinated notes (Baa3/BBB+/A-) due March 26, 2025 on Thursday at a spread of Treasuries plus 193 bps, according to a market source.

Pricing was at 99.852 to yield 3.893%.

The notes came at the tight of talk that had indicated a spread in the 195 bps area, a level tightened from 200 bps initially.

Citigroup Global Markets Inc. was the bookrunner.

Citigroup is a provider of financial services based in New York.

Oncor’s two-parter

Oncor Electric priced $725 million of senior notes (Baa1/A/BBB+) in two tranches on Thursday, a market source said.

The company priced $350 million of 2.95% 10-year notes at 99.724 to yield 2.982%, or Treasuries plus 100 bps.

The notes sold at the tight end of guidance set in the 105 bps area. Initial talk was in the area of 110 bps over Treasuries.

There was also a $375 million tranche of 3.75% 30-year bonds sold at 99.215 to yield 3.794%, or 125 bps over Treasuries.

Pricing was at the tight end of the Treasuries plus 130 bps area guidance which tightened from initial price thoughts set in the area of 135 bps over Treasuries.

Proceeds will be used to repay debt and for general corporate purposes.

The notes were sold via Rule 144A and Regulation S.

The bookrunners were Barclays, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, RBC Capital Markets LLC and RBS Securities Inc.

The electric company is based in Dallas.

RenaissanceRe brings 10-years

RenaissanceRe Finance sold a $300 million issue of 3.7% senior notes (A3/A/) due April 1, 2025 on Thursday at 175 basis points over Treasuries, according to a market source.

Pricing was at 99.8 to yield 3.724%.

The notes sold in line with initial guidance.

The bookrunners were Morgan Stanley & Co. LLC and Barclays.

The notes will be fully and unconditionally guaranteed by RenaissanceRe Holdings Ltd.

Proceeds will be used to repay a bridge loan used to finance a portion of the company’s acquisition of Platinum Underwriters Holdings, Ltd.

RenaissanceRe is a Hamilton, Bermuda-based reinsurance company.

XLIT, HSBC plan deals

In forward calendar news, XLIT Ltd. and HSBC Holdings plc announced plans to bring to market new deals.

HSBC Holdings is planning to sell subordinated contingent convertible perpetual tier 1 notes (Baa3/BBB/), according to a market source and a 424B2 filed with the Securities and Exchange Commission.

HSBC Securities (USA) Inc. is the bookrunner.

The notes become callable in March 2025 and every five years thereafter.

The London-based banking institution plans to use proceeds for general corporate purposes.

Also on Thursday, XLIT said it plans to price a $1,033,000,000 two-part offering of guaranteed subordinated notes, according to a market source and a 424B5 filing with the Securities and Exchange Commission.

The notes will be sold in tranches due 2025 and 2045.

Joint bookrunners are Morgan Stanley & Co. LLC, Goldman Sachs & Co., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and HSBC Securities (USA) Inc.

The notes will be guaranteed by XL Group plc.

XL Group provides insurance and reinsurance coverage. Its corporate headquarters are in Dublin, and its executive offices are in Hamilton, Bermuda.

Bank/broker CDS costs lower

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

Bank of America’s CDS costs were unchanged at 64 bps bid, 67 bps offered. Citigroup Inc.’s CDS costs remained at 72 bps bid, 75 bps offered. JPMorgan Chase’s CDS costs were unchanged at 62 bps bid, 65 bps offered. Wells Fargo & Co.’s CDS costs were flat at 39 bps bid, 42 bps offered.

Merrill Lynch’s CDS costs were flat at 68 bps bid, 72 bps offered. Morgan Stanley’s CDS costs fell were also flat at 72 bps bid, 77 bps offered. Goldman Sachs Group’s CDS were unchanged at 81 bps bid, 84 bps offered.

Apple improves

In secondary trading, Apple’s 2.5% notes due 2025 firmed 1 bp to a level of 80 bps bid in secondary trading, a source said.

Apple sold $1.5 billion of the notes (Aa1/AA+/) on Feb. 2 at a spread of Treasuries plus 85 bps.

The computer and mobile communications device company is based in Cupertino, Calif.

Microsoft stable

Microsoft’s 2.7% notes due 2025 were unchanged at 73 bps bid in the secondary market, a source said.

Microsoft sold $2.25 billion of the notes (Aaa/AAA/) on Feb. 9 at Treasuries plus 75 bps.

The computer software company is based in Redmond, Wash.

Exxon unchanged

Exxon Mobil’s 1.912% notes due 2020 were quoted late afternoon flat on the day at 36 bps bid, according to a market source.

The company sold $1.15 billion of the notes on March 3 at Treasuries plus 30 bps.

Exxon Mobil’s 2.709% notes due 2025, priced on March 3 in a $1.75 billion offering at Treasuries plus 58 bps, headed out Thursday unchanged on the session at 72 bps bid, the source said.

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

-Paul Deckelman contributed to this review

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