Capital One prices $3 billion notes; deal action thin; Bank of New Zealand eyes roadshow

By Cristal Cody

Tupelo, Miss., Jan. 25 – Capital One Financial Corp. brought a $3 billion three-part offering of senior notes to the primary market on Thursday as the sole reported corporate issuer.

Corporate issuers have priced just under $8 billion of bonds over the week, missing market forecasts of about $20 billion to $25 billion of expected supply.

In other new issuance, Canadian issuers tapped the primary market on Thursday.

The Province of Ontario priced a C$1 billion offering of SEC-registered bonds.

Also, Dollarama Inc. sold C$300 million of three-year floating-rate senior notes.

Deal action is expected to pick back up in the U.S. high-grade market after the bulk of companies exit earnings blackout periods, a source said.

Looking to February’s pipeline, the Bank of New Zealand plans to hold a roadshow for a new debt offering.

Elsewhere on Thursday, the three-month Libor yield hit 1.76%, the highest yield since 2008, a source said.

The Markit CDX North American Investment Grade 29 index was mostly unchanged on the day at a spread of 46 basis points.

Capital One sells notes

Capital One Financial priced $3 billion of senior notes (Baa1/BBB/A-) in three tranches on Thursday, according to a market source.

Capital One sold $350 million of five-year floating-rate notes at Libor plus 72 bps.

The company placed a $1.25 billion tranche of 3.2% five-year fixed-rate notes at a spread of Treasuries plus 80 bps.

In the final tranche, Capital One sold $1.4 billion of 3.8% 10-year notes at a Treasuries plus 120 bps spread.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., Morgan Stanley & Co. LLC and Capital One Securities were the bookrunners.

Proceeds will be used for general corporate purposes, including debt repayment, redemptions and repurchases of common stock or other securities, acquisitions, working capital, capital expenditures and investments in subsidiaries.

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

Ontario brings bonds

Ontario sold C$1 billion of 2.65% bonds due Feb. 5, 2025 on Thursday at 99.759 to yield 2.688%, according to an FWP filing with the Securities and Exchange Commission.

The bonds (Aa2/A+/DBRS: AA) priced at a spread of 53.3 bps over the Government of Canada benchmark.

The lead underwriters were BMO Nesbitt Burns, Inc., HSBC Securities (Canada) Inc., Merrill Lynch Canada Inc., RBC Dominion Securities Inc. and TD Securities Inc.

Proceeds from the deal will be used to allocate funds to eligible products, which include clean transportation, energy efficiency and conservation, clean energy and technology, forestry, agriculture and land management and climate adaptation.

Bank of New Zealand eyes deal

The Bank of New Zealand (A1/AA-/AA-) intends to hold fixed-income investor meetings from Feb. 12 through Feb. 16 for an upcoming new issue, according to a market source.

J.P. Morgan Securities LLC will arrange the roadshow.

The bank is based in Auckland, New Zealand.

IG funds extend gains

Investment-grade corporate funds posted their fourth straight gain for this year so far this week and their 19h consecutive weekly gain following a rare two straight weekly losses back in September, according to a Prospect News analysis of the data.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that the funds saw a net inflow of about $3.48 billion during the reporting week ended Wednesday, versus last week’s $3.92 billion cash gain.

And that advance had been not too far down from the Jan. 10 week’s reported upturn of almost $4.19 billion – the biggest of the year so far and one of the largest weekly inflows ever recorded for the IG funds.

The year had started off with a $965 million advance.

This week’s inflow establishes a year-to-date net inflow figure of $12.55 billion, a third consecutive new peak for the year so far, up from last week’s $9.07 billion.

Last year ended with a $117.35 billion net inflow total for the year, the analysis indicated.

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