PepsiCo sells $4 billion of bonds; Michael Kors, Fannie Mae price; credit spreads firm

By Cristal Cody

Tupelo, Miss., Oct. 5 – PepsiCo Inc. led deal action in the high-grade market on Thursday with a $4 billion three-tranche offering of notes.

The $1.5 billion of floating-rate notes due Oct. 15, 2018 priced at par and a coupon of Libor plus 0 bps.

PepsiCo priced $1 billion of 2% senior notes due April 15, 2021 at 99.98 to yield 2.006%, or a spread of Treasuries plus 38 bps.

The company also sold $1.5 billion of 3% senior notes due Oct. 15, 2027 at 99.717 to yield 3.033%. The notes priced with a Treasuries plus 68 bps spread.

Also, Michael Kors (USA), Inc. tapped the primary market with a $450 million offering of seven-year guaranteed senior notes.

The 4% senior notes (Baa3/BBB-/BBB-) priced at 99.508 and on the tight side of guidance at a spread of Treasuries plus 190 bps, according to a market source and a press release.

In other issuance on Thursday, Fannie Mae priced a $2 billion offering of five-year notes.

The Markit CDX North American Investment Grade 29 index firmed more than 1 basis point to end at a spread of 53 bps.

In the secondary market on Thursday, PepsiCo’s existing notes were mixed with the longer-dated notes about 3 bps to 4 bps softer, a source said.

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