Primary surge continues; Gilead does $10 billion deal; Intel, Wal-Mart tighten

By Aleesia Forni and Cristal Cody

Virginia Beach, Sept. 9 – The investment-grade primary was again on fire during Wednesday’s session.

Issuers raced to market to price $21.05 billion during the trading day, pushing the week’s total reported deals to $33.76 billion in only two sessions.

The session was led by Gilead Sciences Inc., which was in the market with a $10 billion megadeal for debt repayment, working capital, dividends and share repurchases.

The offering launched between 15 basis points to 20 bps tighter than initial price thoughts, though details of the ultimate sale were unavailable at press time.

Marriott International Inc., Marsh & McLennan Cos., Inc. and Kilroy Realty, LP were each in the market with upsized new issues.

Also on Wednesday, Lowe’s Cos., Inc. sold $1.75 billion of bonds in three parts after dropping a planned three-year fixed-rate tranche, opting to issue a lone floating-rate note due 2018.

Pentair Finance SA was in the market with $1.15 billion of notes in three parts, with both the three- and five-year tranches pricing in line with guidance, which was unchanged from initial price thoughts.

The session also hosted new deals from Tyco International Finance SA, Nordea Bank, BB&T Corp., Southwestern Public Service Co., American Express Credit Corp. and Piedmont Natural Gas Co. Inc.

Investment-grade bonds traded mostly better, while credit spreads weakened on Wednesday.

Intel Corp.’s 4.9% senior notes due 2045 tightened 5 bps in secondary trading over the afternoon.

Apple Inc.’s bonds (Aa1/AA+/) were mixed.

Home Depot Inc.’s bonds (A2/A/A) headed out mostly unchanged to tighter.

Wal-Mart Stores Inc.’s bonds (Aa2/AA/AA) traded about 4 bps to 10 bps tighter on Wednesday.

The Markit CDX North American Investment Grade index eased 2 bps over the day to a spread of 81 bps.

Gilead launches

Gilead Sciences launched on Wednesday $10 billion of senior notes (A3/A-) in six tranches, according a source away from the trade.

A $1 billion tranche of three-year notes launched at Treasuries plus 80 bps.

Price guidance was set in the Treasuries plus 85 bps area following initial talk in the Treasuries plus 105 bps area.

Also, $2 billion of five-year notes launched at Treasuries plus 105 bps, at the tight end of guidance set in the Treasuries plus 110 bps area.

Initially, the notes were talked in the Treasuries plus 125 bps area.

A $1 billion seven-year note launched at Treasuries plus 135 bps.

Guidance was set in the Treasuries plus 140 bps area following talk in the Treasuries plus 155 bps area.

There was a $2.75 billion long 10-year note launched with a 150 bps spread over Treasuries.

Launch came at the tight end of guidance set in the Treasuries plus 155 bps area, tightened from the Treasuries plus 170 bps area.

Also launched was $1 billion of 20-year bonds at Treasuries plus 165 bps.

The notes were guided in the Treasuries plus 170 bps area and initially talked in the Treasuries plus 190 bps area.

Finally, $2.25 billion of long 30-year bonds launched at Treasuries plus 180 bps, at the tight end of guidance in the Treasuries plus 185 bps area, which had tightened from the Treasuries plus 205 bps area.

BofA Merrill Lynch and J.P. Morgan Securities LLC are the joint bookrunners.

Proceeds will be used for general corporate purposes.

The biopharmaceutical company is based in Foster City, Calif.

AmEx sells $2 billion

American Express Credit priced $2 billion of five-year senior medium-term notes, series F, (A2/A-/A+) on Wednesday in fixed- and floating-rate tranches, according to FWP filings with the Securities and Exchange Commission.

A $500 million floating-rate note sold at par to yield Libor plus 105 bps.

There was also a $1.5 billion 2.6% fixed-rate note sold at 99.921 to yield 2.617%, or Treasuries plus 110 bps.

Bookrunners were Barclays, Citigroup Global Markets Inc., HSBC Securities (USA) Inc. and RBC Capital Markets, LLC.

American Express Credit is a New York-based subsidiary of credit card issuer and travel-related services provider American Express Co.

Lowe’s three-parter

Also on Wednesday, Lowe’s sold $1.75 billion of senior notes in three tranches, according to an FWP filing with the SEC.

Included in the three-part issue (A3/A-) was $250 million of floating-rate notes due 2018 priced at par to yield Libor plus 60 bps.

A $750 million 3.375% note due 2025 sold with a spread of 125 bps over Treasuries. Pricing was at 99.421 to yield 3.444%.

Finally, $750 million of 4.375% bonds due 2045 sold at 97.632 to yield 4.52%, or Treasuries plus 155 bps.

A planned tranche of fixed-rate notes due 2018 was dropped prior to the deal’s launch.

Joint bookrunners are JPMorgan, BofA Merrill Lynch and SunTrust Robinson Humphrey Inc.

Proceeds will be used for general corporate purposes.

The home improvement company is based in Mooresville, N.C.

Tyco senior notes

Tyco International Finance, meanwhile, sold $1.5 billion of senior notes (A3/BBB+/A-) on Wednesday in 10.5-year and 30-year tranches, according to a market source.

A $750 million 3.9% note due Feb. 14, 2026 was issued at a price of 99.284 to yield 3.985%.

The tranche sold at Treasuries plus 180 bps, at the tight end of guidance set in the Treasuries plus 185 bps area after having tightened from the Treasuries plus 200 bps area talk.

Also, $750 million of 5.125% notes due Sept. 14, 2045 priced at 99.469 to yield 5.16%, or Treasuries plus 220 bps.

The notes sold at the tight end of the Treasuries plus 225 bps area guidance and were initially talked in the Treasuries plus 240 bps area.

Bookrunners are Deutsche Bank Securities Inc., Goldman Sachs & Co. and Morgan Stanley & Co. LLC.

The company intends to use the net proceeds from the sale to fund the redemption price of the $364.3 million outstanding 8.5% notes due 2019 that were previously called for redemption and for general corporate purposes

Tyco International is a Cork, Ireland-based security systems company.

Pentair Finance three-parter

Pentair Finance priced $1.15 billion of senior notes (Baa3/BBB) in three parts on Wednesday, according to an informed source.

The company sold $500 million of 2.9% three-year notes at 187.5 bps over Treasuries, in line with guidance, which was unchanged from initial talk.

Pricing was at 99.94 to yield 2.921%.

A $400 million 3.625% five-year note sold at 99.891 to yield 3.649%, or Treasuries plus 212.5 bps.

The notes also sold in line with guidance and price talk.

Finally, $250 million of 4.65% 10-year notes priced with a spread of 250 bps over Treasuries. The notes priced at 99.69 to yield 4.69%.

Price guidance was set in the Treasuries plus 262.5 bps area, unchanged from initial talk.

BofA Merrill Lynch, Citigroup, JPMorgan, MUFG and U.S. Bancorp Investments Inc. ran the books.

Proceeds will be used primarily to finance the acquisition of Erico Global Co., as well as to repay outstanding commercial paper and for general corporate purposes.

The unit of the industrial manufacturing company Pentair Ltd. has its U.S. headquarters in Golden Valley, Minn., and global headquarters in Schaffausen, Switzerland.

Marriott prices tight

Marriott International sold an upsized $800 million offering of senior notes (Baa2/BBB) on Wednesday in two parts, according to an informed source and an FWP filing with the SEC.

The issuer sold $450 million of 2.875% notes due March 1, 2021 at 99.755 to yield 2.924%, or Treasuries plus 140 bps.

The notes sold at the tight end of guidance set in the 145 bps area over Treasuries.

Also, $350 million of 3.75% notes due Oct. 1, 2025 priced at 98.876 to yield 3.886%.

The notes sold with a spread of Treasuries plus 170 bps.

Guidance was set in the 175 bps area over Treasuries.

Bookrunners are JPMorgan, U.S. Bancorp and Wells Fargo Securities LLC.

Proceeds will be used for general corporate purposes, which may include working capital, capital expenditures, acquisitions, stock repurchases or repayment of outstanding commercial paper borrowings.

The lodging company is based in Bethesda, Md.

Marsh & McLennan upsizes

In other primary happenings, Marsh & McLennan sold an upsized $600 million of 3.75% senior notes (Baa1/A-) due March 14, 2026 on Wednesday at Treasuries plus 158 bps, according to an informed source and an FWP filing with the SEC.

Pricing was at 99.923 to yield 3.759%.

The issue sold at the tight end of price guidance set in the 160 bps area over Treasuries.

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

Proceeds will be used for general corporate purposes.

The professional services firm is based in New York City.

Kilroy 10-years

Kilroy Realty also sold an upsized new issue on Wednesday, pricing $400 million of 4.375% senior notes (Baa2/BBB) due Oct. 1, 2025 at Treasuries plus 225 bps, according to a market source and an FWP filing with the SEC.

Pricing was at the tight end of guidance set in the 230 bps area over Treasuries, and the notes were issued at a price of 99.444 to yield 4.444%.

The deal was upsized from $325 million.

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

Kilroy plans to use the proceeds from the offering to refinance the operating partnership’s 5% senior notes due 2015 and for general corporate purposes, which may include acquiring land and properties, funding development projects and repaying other outstanding debt.

The notes will be guaranteed by Kilroy Realty Corp.

Kilroy is a Los Angeles-based real estate investment trust.

Utility sells add-on

Southwestern Public Service sold a $200 million add-on to its existing 3.3% first mortgage bonds (A2/A/A-) due June 15, 2024 at Treasuries plus 105 bps on Wednesday, according to an informed source and a 424B5 filed with the SEC.

The offering sold at the tight end of price talk.

Pricing was at 100.298 to yield 3.258%.

KeyBanc Capital Markets, Scotia Capital (USA) Inc. and Wells Fargo were the joint bookrunners.

Proceeds will be used to repay short-term borrowings incurred to fund the company’s daily operational needs.

The original $150 million issue sold at Treasuries plus 80 bps on June 2, 2014.

The electric utility is based in Amarillo, Texas.

Piedmont new issue

Also, Piedmont Natural Gas priced $150 million of 3.6% 10-year senior notes (A2/A) on Wednesday at Treasuries plus 137.5 bps, according to a market source and an FWP filed with the SEC.

The issue priced at 99.935 to yield 3.608% and sold at the tight end of guidance set in the 140 bps area over Treasuries.

The bookrunners are U.S. Bancorp and BB&T Capital Markets.

Proceeds will be used to finance capital expenditures, to repay outstanding short-term unsecured notes under the company’s commercial paper program and for general corporate purposes.

The natural gas distributor is based in Charlotte, N.C.

Intel firms

Intel’s 4.9% bonds due 2045 firmed 5 bps on Wednesday to 164 bps bid, according to a market source.

The bonds traded unchanged to 1 bp tighter at 162 bps offered earlier in the day.

The company priced $2 billion of the bonds (A1/A+/ A+) on July 22 at Treasuries plus 185 bps.

Intel is a semiconductor chip maker based in Santa Clara, Calif.

Apple mixed

Apple’s 3.2% notes due 2025 firmed 3 bps to 96 bps bid in secondary trading, a market source said.

The company sold $2 billion of the notes on May 6 at a spread of Treasuries plus 100 bps.

Apple’s 4.375% notes due 2045 eased 2 bps during the session to 146 bps bid.

The company sold $2 billion of the bonds in the May 6 offering at 140 bps over Treasuries.

The computer and mobile communications device company is based in Cupertino, Calif.

Home Depot flat to tighter

Home Depot’s 4.25% notes due 2046 traded unchanged on Wednesday afternoon at 136 bps bid, a market source said.

The company sold $1.25 billion of the bonds on May 28 at 135 bps over Treasuries.

Home Depot’s new 3.35% notes due 2025 were seen about 7 bps better than issuance earlier in the day at 110 bps offered.

Home Depot sold $1 billion of the notes at a spread of Treasuries plus 117 bps on Tuesday.

The home improvement retailer is based in Atlanta.

Wal-Mart stronger

Wal-Mart’s 3.3% notes due 2024 were quoted at 86 bps bid, better than where the notes traded late Tuesday at 94 bps bid, a market source said.

The company priced a $500 million add-on to the notes on Oct. 7, 2014 at Treasuries plus 68 bps.

Wal-Mart originally sold $1 billion of the notes on April 15, 2014 at 73 bps over Treasuries.

The company’s 4.3% bonds due 2044 firmed 4 bps to 119 bps bid in secondary trading.

Wal-Mart sold $1 billion of the bonds in the April 15, 2014 offering at 90 bps over Treasuries.

The discount retailer is based in Bentonville, Ark.

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