BMW US Capital prices $2.7 billion of notes; light holiday supply on tap; bank paper mixed

By Cristal Cody

Tupelo, Miss., April 15 – BMW US Capital, LLC priced a $2.7 billion four-part offering of senior notes on Monday as issuance remained light on the U.S. tax day.

Some high-grade supply is expected on Tuesday, one source said.

Deal volume is expected to be light this week with the markets set to close at 2 p.m. ET on Thursday and remain closed on Friday for the Good Friday holiday.

About $10 billion to $15 billion of supply is predicted by syndicate sources for the week.

High-grade volume last week included about $8.5 billion of issuance.

Supply from bank and financial issuance is being eyed following the release of earnings results, according to market sources.

Citigroup Inc. and Goldman Sachs Group, Inc. released earnings reports on Monday, following the release of first-quarter earnings on Friday from JPMorgan Chase & Co. and Wells Fargo & Co.

Bank of America Corp. reports profit results on Tuesday, and Morgan Stanley will release its first-quarter earnings results on Wednesday.

Investment-grade credit spreads improved over the day, while bank and financial paper traded mostly flat to tighter in the secondary market, sources said.

The Markit CDX North American Investment Grade 32 index firmed nearly 2 basis points to a spread of 54 bps.

Citigroup’s and Goldman’s notes were mostly unchanged.

Barclays plc’s 4.972% fixed-to-floating-rate notes due May 16, 2029 tightened about 14 bps on Monday after going out on Friday 1 bp better in the secondary market.

BMW sells four tranches

BMW US Capital priced $2.7 billion of senior notes (A1/A+/) in four tranches on Monday, according to a market source.

The company sold $300 million of three-year floating-rate notes at Libor plus 53 bps.

A $750 million tranche of 2.95% three-year fixed-rate notes priced with a spread of Treasuries plus 60 bps.

BMW sold $1 billion of 3.15% five-year notes at a spread of 80 bps over Treasuries.

The company priced $650 million of 3.625% 10-year notes at a spread of 110 bps over Treasuries.

BofA Merrill Lynch, J.P. Morgan Securities LLC, MUFG, RBC Capital Markets LLC and Wells Fargo Securities LLC were the bookrunners.

Woodcliff Lake, N.J.-based BMW US Capital is the U.S. financing arm for the BMW German auto manufacturer.

Barclays tightens

Barclays’ 4.972% fixed-to-floating notes due May 16, 2029 (A2/A/A) traded on Monday at 178 bps bid, about 14 bps tighter on the day, a market source said.

The paper firmed 1 bp in the secondary market. on Friday.

Barclays sold $1.75 billion of the notes on May 9, 2018 at par to yield a Treasuries plus 197 bps spread. The rate will reset to a floating rate of Libor plus 190.2 bps on May 16, 2028 to but excluding the maturity date.

The financial services company is based in London.

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