Southern Co., Aquarian bring deals; spreads mostly flat; Dollar General weaker

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 19 – The high-grade primary market saw new deals from Southern Co. and Aquarian Co. price on Tuesday.

Southern Co. offered $750 million of senior notes in tranches due 2017 and 2019, according to a market source.

Both tranches of notes sold at the tight end of talk, which had firmed around 10 basis points from earlier guidance.

In other primary action, Aquarian sold a $360 million offering of notes due 2021, though details of that sale were unavailable at press time.

Tuesday’s action brings the week’s total supply to around $1.2 billion for the week.

As the summer lull continues, sources are expecting the quieter pace of the primary market to continue to close out the month.

“We probably won’t see anything too big this week,” a market source said.

The Markit CDX North American Investment Grade series 22 index was mostly unchanged at a spread of 57 bps after tightening 3 bps in the previous session.

Dollar General Corp.’s 3.25% senior notes due 2023 lost a point in secondary trading over the day, according to a market source.

Family Dollar Stores, Inc.’s 5% senior notes due 2021 edged higher.

Dollar General submitted a bid on Monday to acquire Family Dollar for a deal valued at $9.7 billion in cash, an offer that trumps Dollar Tree Inc.’s plan to buy Family Dollar for $8.5 billion in cash and stock.

Southern two-parter

Southern Co. came to Tuesday’s primary with a $750 million issue of senior notes (Baa1/A-/A) in three- and five-year tranches, according to a market source and two separate FWP filings with the Securities and Exchange Commission.

The company priced $400 million of 1.3% three-year notes at 99.968 to yield 1.311%, or Treasuries plus 42 bps.

The notes sold at the tight end of the Treasuries plus 45 bps area talk, which had firmed from earlier guidance in the mid- to high-50 bps area over Treasuries.

A second tranche was $350 million of 2.15% notes due 2019 priced at 99.768 to yield 2.199%, or Treasuries plus 62 bps.

Pricing was at the tight end of the Treasuries plus 65 bps area talk, which had firmed from earlier guidance in the mid- to high-70 bps area over Treasuries.

Barclays, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and UBS Securities LLC are the joint bookrunners.

Proceeds will be used to pay a portion of the company’s outstanding short-term debt and for other general corporate purposes.

The utility company is based in Atlanta.

Dollar General weaker

Dollar General’s 3.25% notes due 2023 ended at 90 to yield 4.688%, down from where the notes closed on Monday at 91 to yield 4.518%, a market source said.

The paper traded in the 95 area on Friday.

Dollar General sold $900 million of the notes on April 8, 2013 at 99.737 to yield 3.281%.

The discount retailer is based in Goodlettsville, Tenn.

Family Dollar better

Family Dollar Stores’ 5% notes due 2021 rose to 106.87 to yield 3.787% on Tuesday, up from 106.71 to yield 3.814% in the previous trading session, according to a market source.

On Friday, the notes traded in the 103 area.

Family Dollar sold $300 million of the notes on Jan. 25, 2011 at 99.494 to yield 5.065%.

The discount retail company is based in Matthews, N.C.

Bank/brokerage CDS costs lower

Investment-grade bank and brokerage CDS prices were lower again on Tuesday, according to a market source.

Bank of America Corp.’s CDS costs ended 1 bps tighter at 66 bps bid, 69 bps offered. Citigroup Inc.’s CDS costs were flat at 67 bps bid, 70 bps offered. JPMorgan Chase & Co.’s CDS costs fell 1 bp to 53 bps bid, 56 bps offered. Wells Fargo & Co.’s CDS costs were 2 bps lower at 42 bps bid, 45 bps offered.

Merrill Lynch’s CDS costs closed 1 bp tighter at 69 bps bid, 73 bps offered. Morgan Stanley’s CDS costs ended 2 bps tighter at 72 bps bid, 75 bps offered. Goldman Sachs Group, Inc.’s CDS costs were 2 bps lower at 73 bps bid, 78 bps offered.

Paul Deckelman contributed to this review.

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