Wells Fargo prices $6.5 billion; Norfolk Southern, Zions tap primary; corporate inflows rise

By Cristal Cody

Tupelo, Miss., Oct. 24 – Wells Fargo & Co. led supply in the high-grade primary market on Thursday with a $6.5 billion two-part offering of medium-term notes.

Norfolk Southern Corp. also priced $800 million of senior notes in two tranches.

In addition, Zions Bancorporation NA sold $500 million of 10-year subordinated notes.

In other primary action, Canadian National Railway Co. priced C$450 million of 3.05% senior notes due 2050 (A2/A/DBRS: A) on Thursday.

The end-of-week issuance pushed weekly high-grade deal totals to more than $12 billion, nearing the $15 billion to $20 billion of supply forecast by syndicate sources for the week.

Lipper US Fund Flows reported corporate investment-grade funds inflows rose to $3.13 billion for the past week ended Wednesday from $2.89 billion in the previous week and $1.84 billion in the week prior.

The Markit CDX North American Investment Grade 33 index eased about 0.5 basis point to end the session at a spread of 54.5 bps.

Market focus this week has turned to weaker corporate earnings reports. On Thursday, Amazon.com, Inc. posted softer-than-expected third quarter earnings, while revenue beat forecasts.

Wells Fargo prices $6.5 billion

Wells Fargo sold $6.5 billion of medium-term notes (A2/A-/A+) in two tranches on Thursday, according to a market source.

A $3 billion tranche of 2.406% fixed-to-floating-rate notes due Oct. 20, 2025 priced at a spread of 82 bps over Treasuries. The notes were initially talked to print in the Treasuries plus 100 bps to 105 bps spread area.

The rate on the notes will convert to a floating rate of Libor plus 82.5 bps after the initial fixed-rate period.

Wells Fargo sold $3.5 billion of 2.879% notes due Oct. 30, 2030 at a spread of Treasuries plus 112 bps. Initial talk was in the Treasuries plus 125 bps to 130 bps area.

The rate on the 2030 notes will convert to a floating rate of Libor plus 117 bps after the initial fixed-rate period.

Wells Fargo Securities LLC was the bookrunner.

The financial services company is based in San Francisco.

Norfolk Southern sells two tranches

Norfolk Southern priced $800 million of senior notes (Baa1/BBB+) in two tranches on Thursday, according to a market source.

A $400 million tranche of 2.55% 10-year notes priced at a spread of 83 bps over Treasuries. Initial price talk was in the Treasuries plus 105 bps area.

Norfolk Southern sold $400 million of 3.4% 30-year notes at a Treasuries plus 120 bps spread. The bonds were initially talked to print in the 140 bps spread area.

BofA Securities, Inc., Morgan Stanley & Co. LLC and Wells Fargo Securities were the bookrunners.

The Norfolk, Va.-based freight railroad company will use the proceeds for general corporate purposes, including debt repayment.

Zions raises $500 million

Zions Bancorporation (Baa1/BBB+/BBB) priced $500 million of 3.25% 10-year subordinated notes on Thursday at a spread of 153 bps over Treasuries, according to a market source.

Initial price talk was in the Treasuries plus 175 bps area.

Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Morgan Stanley were the bookrunners.

Zions Bancorporation is a bank holding company based in Salt Lake City, Utah.

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