U.S. Bank, Toyota Motor Credit, Ingersoll-Rand price; Textron firms; Verizon unchanged

By Aleesia Forni and Cristal Cody

Virginia Beach, Oct. 23 – Issuance in the investment-grade bond market continued on Thursday, with $4.7 billion of supply pricing during the session.

U.S. Bank NA, Textron Inc., Toyota Motor Credit Corp. and Ingersoll-Rand Luxembourg Finance SA made their way to the primary amid a positive market tone.

Ingersoll-Rand upsized its three-part offering on Thursday and garnered an order book that was more than five times oversubscribed.

All three tranches of the new issue sold at the tight end of price talk, which firmed around 15 bps compared to initial guidance.

In other primary happenings, U.S. Bank priced a $2 billion offering of five-year senior bank notes in fixed- and floating-rate tranches at the tight end of talk.

Textron also priced it $350 million offering at the tight end of price talk, while Toyota Motor Credit priced a $1.25 billion issue of five-year floating-rate notes.

Investment-grade new issuance has totaled $26.13 billion this week, topping expectations of $15 billion to $20 billion.

“Definitely a stronger day,” a market source said, adding that issuers “are getting into the market while they can.”

In forward calendar news, Main Street Capital Corp. announced plans to hold a series of conference calls ahead of a possible capital markets transaction.

The Bank of Nova Scotia (Aa2/A+/DBRS: AA) sold C$1.5 billion of 2.4% five-year deposit notes at 99.977 to yield 2.405%, or a spread of 92 bps versus the interpolated Government of Canada bond curve, on Thursday.

Market insiders expect additional Canadian bank issuance in front of the Oct. 31 fiscal year-end.

“Traditionally, banks tend to complete funding before their year-end, and there’s been very little bank funding lately, so some people expect to see more bank issuance before next Friday,” a source said.

Investment-grade credit spreads tightened 2 bps over the day. The Markit CDX North American Investment Grade series 23 index headed out at a spread of 66 bps.

In aftermarket trading, Ingersoll-Rand’s notes traded about 1 bp to 2 bps tighter on the bid side, a trader said.

Textron’s 3.875% notes due 2024 firmed 4 bps in the secondary market, a trader said.

In other secondary activity, Verizon Communications Inc.’s new 3.5% senior notes due 2024 traded mostly unchanged from Wednesday, a trader said.

U.S. Bank two-parter prices

U.S. Bank priced $2 billion of senior bank notes (Aa3/AA-/AA-) due 2019 in fixed- and floating-rate tranches on Thursday, according to a market source.

The bank sold $350 million of five-year floating-rate notes at par to yield Libor plus 48 bps.

There was also $1.65 billion of 2.125% notes due 2019 priced with a spread of Treasuries plus 65 bps. Pricing was at 99.91 to yield 2.144%.

Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and U.S. Bancorp Investments Inc. were the bookrunners.

The financial services company is based in Minneapolis.

Toyota sells floaters

Toyota Motor Credit priced $1.25 billion of floating-rate medium-term notes, series B, (Aa3/AA-/) on Thursday at par to yield Libor flat, according to a FWP filed with the Securities and Exchange Commission.

BofA Merrill Lynch, HSBC Securities (USA) Inc. and Toyota Financial Services Securities USA Corp. were the bookrunners.

The funding arm of auto manufacturer Toyota is based in Torrance, Calif.

Ingersoll-Rand upsizes

Ingersoll-Rand Luxembourg Finance, a wholly owned subsidiary of Ingersoll-Rand plc, sold an upsized $1.1 billion of senior notes (Baa2/BBB/) in three tranches on Thursday, according to a market source and an FWP filed with the SEC.

The company priced $300 million of 2.625% notes due 2020 at Treasuries plus 115 bps. The notes priced at 99.934 to yield 2.638%.

There was also $500 million of 3.55% 10-year notes priced at 99.425 to yield 3.619%, or Treasuries plus 135 bps.

A $300 million tranche of 4.65% notes due 2044 priced at 99.407 to yield 4.687%, or Treasuries plus 165 bps.

All three tranches sold at the tight end of price talk, which firmed 15 bps compared to initial guidance.

The notes will be guaranteed by Ingersoll-Rand plc, Ingersoll-Rand Co. Ltd., Ingersoll-Rand International Holding Ltd., Ingersoll-Rand Co. and Ingersoll-Rand Global Holding Co. Ltd.

Bookrunners are Goldman Sachs & Co., J.P. Morgan Securities LLC, BofA Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse and Deutsche Bank Securities Inc.

Proceeds will be used to fund the redemption of the company’s 5.5% senior notes due 2015 and 4.75% senior notes due 2015, to fund the acquisition of Cameron International Corp.’s Centrifugal Compression division and for general corporate purposes.

In the secondary market, Ingersoll-Rand’s 2.638% notes due 2020 tightened to 111 bps offered, a trader said.

The 3.55% notes due 2024 traded slightly better at 134 bps bid, 132 bps offered.

The company’s 4.65% notes due 2044 firmed to 163 bps bid, 160 bps offered in secondary trading.

The diversified industrial company is based in Swords, Ireland.

Textron new issue

Textron sold a $350 million issue of 3.875% senior notes due 2025 (Baa3/BBB-/) on Thursday with a spread of Treasuries plus 160 bps, according to a market source and an FWP filed with the SEC.

The notes sold at the tight end of price talk.

Pricing was at 99.903 to yield 3.887%.

BofA Merrill Lynch and Morgan Stanley & Co. LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes, which may include the redemption or repayment of debt, including the outstanding principal amount of its existing 6.2% notes due 2015.

Textron’s 3.875% notes due 2024 firmed to 156 bps bid, 154 bps offered in the secondary market, a trader said.

The multi-industry company has units including aircraft, defense and finance. It is based in Providence, R.I.

Main Street Capital on deck

Main Street Capital (/BBB/) has mandated RBC Capital Markets LLC, Goldman Sachs and Keefe, Bruyette & Woods for a series of conference calls with the fixed income investment community, according to a 497AD filed with the SEC.

The conference calls will be held on Monday and Tuesday.

Subject to market conditions, a possible capital markets transaction may follow.

Main Street is a Houston-based internally managed business development company that primarily provides long-term debt and equity capital to lower middle market companies and debt capital to middle market companies.

Verizon stable

Verizon’s 3.5% notes due 2024 (Baa1/BBB+/A-) traded mostly unchanged at 134 bps bid, 132 bps offered late Thursday afternoon, a trader said.

Verizon sold $2.5 billion of the notes on Wednesday at Treasuries plus 135 bps.

The notes were quoted in aftermarket trading at 134 bps bid, 129 bps offered.

The telecommunications company is based in New York City.

Bank/brokerage CDS costs drop

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

Bank of America Corp.’s CDS costs fell 2 bps to 69 bps bid, 73 bps offered. Citigroup Inc.’s CDS costs were also 2 bps lower at 68 bps bid, 72 bps offered. JPMorgan Chase & Co.’s CDS costs were 1 bp lower at 59 bps bid, 61 bps offered. Wells Fargo & Co.’s CDS costs declined 1 bp to 46 bps bid, 49 bps offered.

Merrill Lynch’s CDS costs were 2 bps lower at 72 bps bid, 75 bps offered. Morgan Stanley’s CDS costs ended 1 bp lower at 77 bps bid, 81 bps offered. Goldman Sachs Group, Inc.’s CDS costs were 3 bps lower at 80 bps bid, 84 bps offered.

Paul Deckelman contributed to this review

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