AT&T, Protective Life, Con Edison, Alabama Power price bonds; Walmart mixed; Bayer softens

By Cristal Cody

Tupelo, Miss., June 21 – A few high-grade issuers priced bonds on Thursday, while little market activity is expected on Friday following the strong deal week, sources said.

AT&T Inc. priced $1.5 billion of three-year floating-rate notes at par to yield Libor plus 75 basis points.

Protective Life Global Funding sold $700 million of senior secured notes in two parts.

Other corporate supply during the session included energy deals.

Consolidated Edison Co. of New York, Inc. sold $640 million of three-year floating-rate debentures.

Alabama Power Co. placed $500 million of 30-year senior notes.

Also, DNB Bank ASA subsidiary DNB Boligkreditt AS sold $1 billion of five-year bonds.

The Markit CDX North American Investment Grade 30 index eased about 2 bps to close at a spread of 65 bps.

More than $43 billion of bonds have priced week to date, with $31 billion of volume just from Walmart Inc.’s $16 billion transaction on Wednesday and Bayer AG’s $15 billion deal on Monday.

Walmart’s new senior notes (Aa2/AA/AA) were mixed on Thursday in the secondary market.

The notes that Bayer affiliate Bayer US Finance II LLC (Baa1/BBB/A-) priced on Monday were quoted wider in secondary trading.

New issue supply is expected to subside over the remainder of June due to the upcoming Independence Day holiday and corporate earnings blackout periods, Hans Mikkelsen, an analyst with BofA Merrill Lynch, said in a note released Thursday.

“Then beginning the third week of July volumes accelerate seasonally starting with U.S. banks, that will have just reported results,” he said.

JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. all report their second quarter earnings results on July 13.

Con Edison sells floaters

Consolidated Edison Company of New York sold $640 million of three-year floating-rate debentures (A2/A-/A-) on Thursday at par to yield Libor plus 40 bps, according to a FWP filing with the Securities and Exchange Commission.

Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were the bookrunners.

The electric utility is a subsidiary of New York City-based Consolidated Edison, Inc.

Protective Life brings notes

Protective Life Global Funding priced $700 million of senior secured notes (A1/AA-/) in two tranches on Thursday, a market source said.

The $400 million of three-year floating-rate notes priced at Libor plus 52 bps, while the $300 million of 3.397% notes due 2021 came at a spread of 75 bps over Treasuries.

Barclays, Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC were the bookrunners.

Protective Life Global Funding is a Charlotte, N.C.-based debt financing vehicle for Protective Life Insurance Co.

Alabama Power sells notes

Alabama Power sold $500 million of 4.3% 30-year senior notes at 99.247 to yield 4.345% on Thursday, according to an FWP filed with the SEC.

The notes (A1/A-/A+) priced with a spread of 130 bps over Treasuries.

BNP Paribas Securities Corp., Morgan Stanley, SunTrust Robinson Humphrey Inc., U.S. Bancorp Investments Inc. and Wells Fargo Securities were the bookrunners.

Alabama Power is a Birmingham, Ala.-based power company and subsidiary of Southern Co.

DNB prices $1 billion

DNB Boligkreditt priced $1 billion of 3.25% five-year covered bonds (Aaa/AAA/) on Thursday at a spread of mid-swaps plus 38 bps, or Treasuries plus 52.85 bps, according to a market source.

The bonds were initially talked to price in the mid-swaps plus 41 bps area.

The bookrunners were Barclays, HSBC Securities (USA) Inc., RBC Capital Markets, LLC and TD Securities (USA) LLC.

DNB Bank is an Oslo-based financial services group.

Walmart notes mixed

Walmart’s 3.4% notes due June 26, 2023 traded in the 61 bps area in secondary trading on Thursday, a source said.

The $2.75 billion tranche priced at a 60 bps spread over Treasuries on Wednesday.

Walmart’s $2.75 billion of 3.7% notes due June 26, 2028 were wrapped around issuance in the secondary market, the source said.

The notes priced with a Treasuries plus 80 bps spread.

The discount retailer is based in Bentonville, Ark.

Bayer notes ease

Bayer’s 3.875% notes due Dec. 15, 2023 eased to 121 bps bid in the secondary market, a source said.

The company sold $2.25 billion of the five-year notes on Monday at a spread of 115 bps over Treasuries.

Bayer’s tranche of 4.375% note due Dec. 15, 2028 softened to 160 bps bid.

Bayer sold $3.5 billion of the notes in Monday’s offering at a spread of 155 bps over Treasuries.

The health care and agriculture products company is based in Leverkusen, Germany.

Funds report modest gain

Investment-grade corporate mutual funds saw a moderate inflow of $411 million of cash, according to fund-flow statistics generated by AMG Data Services Inc.

That followed a bigger $2.038 billion inflow the previous week, up sharply from $1.325 billion the previous week and following inflows of $0.849 billion, $2.529 billion, $3.069 billion, $0.804 billion and $0.997 billion in the preceding weeks, according to a Prospect News analysis of the reports by the Arcata, Calif.-based unit of Thomson Reuters Corp’s Lipper analytics division.

The IG funds continue to have seen 10 inflows in the last 10 weeks.

Apart from the Feb. 14 and Feb. 21 weeks, every week so far this year has seen positive flows and in fact before those two weeks in February investment-grade corporates saw a 21-week run of inflows dating back to mid-September, according to a Prospect News analysis of the data.

The latest influx of cash raises the year-to-date inflow for the IG corporates to $50.66 billion from $49.65 billion, yet another new peak for the year so far.

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