CVS, State Street, Entergy Louisiana price; Intel firms; PPL unchanged; credit spreads tighten

By Cristal Cody

Eureka Springs, Ark., May 16 – Investment-grade pricing action on Monday included new deals from CVS Health Corp. and State Street Corp.

CVS Health brought $3.5 billion in a two-part offering of senior notes during the session.

State Street sold $1.5 billion of senior notes in two parts.

Also in the primary market, San Diego Gas & Electric Co. priced $500 million of 2.5% first mortgage bonds at 99.675 to yield 2.537%.

Entergy Louisiana, LLC tapped the market on Monday with a $325 million sale of 3.05% collateral trust mortgage bonds due June 1, 2031.

In the secondary market earlier in the day, Intel Corp.’s new senior notes (A1/A+/A+) traded about 1 basis point to 5 bps tighter than issuance.

PPL Capital Funding Inc.’s 3.1% senior notes due 2026 (Baa2/BBB+/) were wrapped around issuance.

The Markit CDX North American Investment Grade index firmed 2 bps to close the day at a spread of 81 bps.

CVS Health prices $3.5 billion

CVS Health sold $3.5 billion in a two-part offering of senior notes, according to a market source and a FWP filing with the Securities and Exchange Commission on Monday.

CVS Health priced $1.75 billion of 2.125% five-year notes at 99.721 to yield 2.184%, a spread of Treasuries plus 92 bps. The notes came at the low end of guidance for a spread of Treasuries plus 95 bps, plus or minus 3 bps.

The second tranche of $1.75 billion of 2.875% 10-year notes was sold at 99.139 to yield 2.975%. The notes priced with a spread of 122 bps over Treasuries, also on the tight side of talk of 125 bps, plus or minus 3 bps, over Treasuries.

Bookrunners were Barclays, BofA Merrill Lynch, BNY Mellon Capital Markets LLC, Mizuho Securities USA Inc. and Wells Fargo Securities LLC.

The Woonsocket, R.I.-based pharmacy retailer plans to use the proceeds for general corporate purposes.

State Street prices $1.5 billion

State Street sold $1.5 billion of senior notes in two parts on Monday, according to a market source and a FWP filing with the Securities and Exchange Commission.

State Street sold $750 million of 1.95% five-year notes at 99.948 to yield 1.961%. The notes priced with a spread of 70 bps over Treasuries, on the tight side of guidance of Treasuries plus 75 bps, plus or minus 5 bps.

The company also sold $750 million of 2.65% 10-year notes at 99.86 to yield 2.666%, and a spread of 92 bps over Treasuries. The tranche also came at the rich end of talk that had been set at Treasuries plus 95 bps, plus or minus 3 bps.

BofA Merrill Lynch, Deutsche Bank Securities Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the bookrunners.

The Boston-based financial holding company plans to use the proceeds for general corporate purposes.

San Diego Gas sells $500 million

San Diego Gas & Electric priced $500 million of 2.5% first mortgage bonds at 99.675 to yield 2.537% on Monday, according to a FWP filing with the Securities and Exchange Commission.

The series QQQ bonds priced with a spread of 78 bps over Treasuries.

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

Proceeds will be used to redeem $105 million of outstanding 5% tax-exempt industrial development revenue bonds maturing in 2027, to repay about $200 million of outstanding commercial paper bearing interest at rates of 0.45% per year or less and maturing at various dates in May 2016 and for other general corporate purposes.

The public utility serves San Diego and southern Orange counties in California.

Entergy Louisiana sells bonds

Entergy Louisiana sold $325 million of 3.05% collateral trust mortgage bonds due June 1, 2031 at 99.402 to yield 3.1% on Monday, according to a FWP filing with the Securities and Exchange Commission.

The bonds priced with a spread of 135 bps over Treasuries.

BNP Paribas Securities Corp., Goldman, Sachs & Co., BofA Merrill Lynch and MUFG were the bookrunners.

Proceeds will be used to repay prior to maturity $240 million of 6.2% first mortgage bonds due July 2033 and $85 million of 6.18% first mortgage bonds due March 2035 and for general corporate purposes.

The utility company is based in Jefferson, La.

Dell secureds possible Tuesday

Also in the primary, the Monday session produced news on Dell Inc.’s $16 billion minimum six-part offering of senior secured notes (BBB-) backing the acquisition of EMC Corp.

Early guidance was updated.

Final talk had been expected to surface as early as late Monday, however it was not available at press time.

The overall secured bond portion of the financing – the final size of which remains to be determined – was said to be playing to $30 billion of demand at midday Monday. Demand was most concentrated on the 10-year notes, with the second-most amount of demand being for the five-year tranche, with the three-year tranche seeing the third-most demand, and the 30-year tranche seeing the fourth-most.

As reported, dealers are keen to move as much secured paper as possible in order to hold the line on the aggregate interest rate of the acquisition financing.

An offering of speculative-grade senior unsecured notes could surface as early as this week, sources said on Monday. However the overall size of the unsecured portion of the bonds is now expected to be around $3.25 billion, they say, drastically reduced from the $9 billion which had been expected in recent weeks.

In part because the junk-rated unsecured bond offering is expected to shrink, high-yield investors are highly likely to put in for the investment-grade-rated secured bonds, sources say.

Intel improves

In the secondary market, Intel’s new 1.7% notes due 2021 were quoted at 49 bps offered in the secondary market early Monday, according to a market source.

The company sold $500 million of the five-year notes on Thursday at 50 bps over Treasuries.

Intel’s 2.6% notes due 2026 were seen trading at 85 bps offered. The notes priced in a $1 billion tranche in Thursday’s sale at 87.5 bps over Treasuries.

Intel is a semiconductor maker based in Santa Clara, Calif.

PPL flat

PPL Capital Funding’s 3.1% notes due 2026 traded wrapped around issuance in secondary trading earlier in the day at 135 bps offered, a source said.

The company sold $650 million of the notes on Thursday at 135 bps over Treasuries.

The energy and utility holding company is based in Allentown, Pa.

-Paul A. Harris contributed to this review

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