Primary picks up with State Street, McGraw Hill, Burlington deals; Time Warner Cable soft

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 13 – Investment-grade primary activity resumed on Thursday following a two-day lull, with issuers bringing $8.9 billion of bonds to market.

The active session came on the heels of China’s central bank slowing the pace of the depreciation of the yuan and saying there would be no reason for its currency to fall further.

Taking advantage of the stronger market tone, a hodgepodge of issuers including State Street Corp., McGraw Hill Financial, Inc., Burlington Northern Santa Fe LLC, Capital One NA and FMS Wertmanagement entered the day’s primary.

McGraw Hill Financial sold $2 billion of senior notes in connection with its acquisition of SNL Financial LC.

Burlington Northern issued an upsized $1 billion two-part offering, with tranches pricing between 10 basis points to 12 bps tight of initial price thoughts.

The session also hosted smaller-sized deals from Ralph Lauren Corp., Kansas City Power & Light Co., Interstate Power & Light Co. and Ares Finance Co. LLC.

Burlington Northern’s two-part offering of debentures tightened modestly in aftermarket trading, though in light activity.

“Not seeing much on them,” a trader said.

In other secondary trading, Time Warner Inc.’s notes (Baa2/BBB) traded 1 bp better on the short end to 5 bps wider on the long end.

Bonds from Time Warner Cable Inc., which is being acquired by Charter Communications, Inc., headed out weaker.

Charter Communications’ 4.908% notes due 2025 were seen about 1 bp softer earlier in the day.

The Markit CDX North American Investment Grade index ended unchanged at a spread of 76 bps.

State Street sells $3 billion

State Street priced $3 billion of senior notes (A2/A+/AA-) in three parts on Thursday, according to a market source.

A $1.2 billion 2.55% five-year note was sold at 99.772 to yield 2.599%.

The notes sold at 103 bps over Treasuries, near the tight end of the 105 bps area over Treasuries guidance.

Also, $500 million of five-year floating-rate notes sold at par to yield Libor plus 90 bps.

Guidance was set in the 92 bps area over Libor.

Finally, $1.3 billion 3.55% 10-year notes sold at 99.866 to yield 3.566% with a spread of 138 bps over Treasuries.

The notes priced near the tight end of the Treasuries plus 140 bps area guidance.

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

The company plans to use the proceeds from the offering for general corporate purposes.

State Street is a Boston-based financial holding company.

McGraw acquisition financing

Meantime, McGraw Hill sold $2 billion of senior notes (Baa1/BBB+) on Thursday in three tranches, according to an informed source.

Priced were $400 million of 2.5% three-year notes at 99.883 to yield 2.541%, or Treasuries plus 150 bps.

Also, $700 million of 3.3% five-year notes sold at 99.882 to yield 3.326% with a spread of 175 bps over Treasuries.

Finally, $900 million of 4.4% long 10-year notes sold at Treasuries plus 225 bps. Pricing was at 99.651 to yield 4.442%.

All tranches sold at the tight end of price guidance.

The notes are guaranteed by McGraw Hill Financial’s subsidiary, Standard & Poor’s Financial Services LLC.

Proceeds will be used to finance the previously announced acquisition of SNL Financial LC.

Bookrunners for the Rule 144A and Regulation S deal are Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs, JPMorgan and Morgan Stanley.

New York-based McGraw Hill Financial provides information to the capital, commodities and commercial markets.

Capital One bank notes

Capital One priced $1.5 billion of senior bank notes (Baa1/BBB+) on Thursday in two parts, according to a source away from the trade.

A $1.2 billion tranche of 2.35% three-year notes sold with a 135 bps spread over Treasuries following guidance in the Treasuries plus 140 bps area, tightened from the Treasuries plus 150 bps area.

A $300 million floating-rate note priced to yield Libor plus 115 bps.

The notes were talked at the Libor equivalent to the three-year fixed-rate notes.

Bookrunners were BofA Merrill Lynch, Goldman Sachs, Morgan Stanley, Wells Fargo Securities LLC and Capital One.

Capital One is a McLean, Va.-based financial services company.

Burlington Northern upsizes

Burlington Northern Santa Fe was in the market on Thursday with an upsized $1 billion offering of debentures (A3/BBB+) sold in two tranches, according to a market source and an FWP filed with the Securities and Exchange Commission.

There was $350 million of 3.65% 10-year notes priced at 99.782 to yield 3.676%, or Treasuries plus 148 bps.

The notes sold at the tight end of guidance set in the Treasuries plus 150 bps area, tightened from the Treasuries plus 160 bps area.

Also, $650 million of 4.7% 30-year bonds priced at 99.425 to yield 4.736%.

The notes sold at Treasuries plus 185 bps, at the tight end of the Treasuries plus 190 bps area guidance following initial talk set in the Treasuries plus 195 bps area.

BofA Merrill Lynch, Citigroup and Morgan Stanley are the joint bookrunners.

Proceeds will be used for general corporate purposes, which may include working capital, capital expenditures, repayment of outstanding debt and distributions.

Burlington Northern’s 3.65% debentures due 2025 firmed to 146 bps offered in the secondary market, a trader said.

The company’s tranche of 4.7% bonds due 2045 traded better at 184 bps bid, 182 bps offered in aftermarket trading.

The holding company for railroad transportation subsidiaries is based in Fort Worth, Texas.

FMS floaters

The session also hosted FMS Wertmanagement, which priced $500 million of four-year floating-rate notes at par to yield Libor plus 3 bps on Thursday, a market source said.

Bookrunners are BofA Merrill Lynch, Barclays and Deutsche Bank Securities.

The financial services company is based in Munich.

Kansas City Power offering

Kansas City Power & Light sold $350 million of 3.65% 10-year notes (Baa1/BBB+) on Thursday at Treasuries plus 150 bps, according to a market source and an FWP filing with the SEC.

The issue priced at 99.644 to yield 3.693%.

Price guidance was in the Treasuries plus 155 bps area following initial talk in the Treasuries plus 160 bps area.

BofA Merrill Lynch, JPMorgan, MUFG and Wells Fargo are the joint bookrunners.

Proceeds will be used to repay outstanding commercial paper, to purchase two series of certain tax-exempt bonds and for general corporate purposes.

The electric utility is based in Kansas City, Mo.

Ralph Lauren taps market

Also on Thursday, Ralph Lauren sold $300 million of 2.625% five-year senior notes (A2/A) at Treasuries plus 110 bps, according to a market source and a 424B5 filing with the SEC.

Pricing was at 99.795 to yield 2.669%.

The notes sold at the wide end of guidance set in the 105 bps to 110 bps area over Treasuries following initial talk in the 110 bps area.

Joint bookrunners are Goldman Sachs and JPMorgan.

The issuer plans to use the proceeds for general corporate purposes.

Ralph Lauren is a New York-based company engaged in the design, marketing and distribution of lifestyle products.

Interstate Power prices

Interstate Power & Light sold $250 million of 3.4% 10-year senior debentures (A3/A-) on Thursday at Treasuries plus 125 bps, according to an FWP filed with the SEC.

Pricing was at 99.74 to yield 3.431%.

The notes sold at the tight end of talk set in the 130 bps area over Treasuries. Initial talk was set in the 130 bps to 135 bps range over Treasuries.

MUFG, Mizuho Securities and Wells Fargo are the bookrunners.

The company plans to use the proceeds to reduce commercial paper, to reduce outstanding capital under its receivables purchase and sale program and for general corporate purposes.

Interstate Power & Light is a Cedar Rapids, Iowa-based public utility.

Time Warner mixed

Time Warner’s 3.6% notes due 2025 firmed 1 bp on Thursday to 188 bps bid, a market source said.

The company sold $1.5 billion of the notes on May 28 at Treasuries plus 150 bps.

Time Warner’s 4.85% debentures due 2045 widened 5 bps to 220 bps bid during the session.

The company sold $600 million of the debentures in the May 28 offering at Treasuries plus 195 bps.

Time Warner is a media company based in New York.

Time Warner Cable wider

Time Warner Cable’s 4.125% notes due 2021 headed out on Thursday afternoon at 224 bps bid, wider than where the notes traded at 214 bps bid in the previous session, a market source said.

Time Warner Cable (Baa2/BBB/BBB) sold $700 million of the notes in 2010 at 155 bps over Treasuries.

The broadband communications company is based in New York City.

Charter eases

Charter Communications’ 4.908% notes due 2025 were seen earlier in the session about 1 bp weaker at 278 bps offered, a market source said.

The company sold $4.5 billion of the notes on July 9 at a spread of Treasuries plus 260 bps.

The provider of cable, internet and phone services is based in Stamford, Conn.

© 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.