Third Point eyes 10-year bond offering; supply tops $42 billion; Merck bonds trade tighter

By Aleesia Forni

Virginia Beach, Feb. 6 – Third Point Re (USA) Holdings Inc. announced plans to price a 10-year offering of bonds on Friday, closing out an active week for the investment-grade market that topped expectations.

The high-grade primary saw more than $42 billion of new issuance price this week, besting what was predicted to be $25 billion to $30 billion of supply.

Meanwhile, cash continued to pour into high-grade bond funds.

Lipper reported inflows of $4.376 billion into corporate investment-grade bond funds for the week ended Feb. 2, the second-largest inflow on record for the asset class.

The total was up from last week’s inflows of $2.87 billion, bringing the year-to-date total inflows to $12.846 billion.

In the secondary market, investment-grade bond spreads traded better.

The Markit CDX North American Investment Grade index was 3 basis points tighter to a spread of 66 bps.

Merck & Co., Inc.’s recently priced $8 billion of bonds traded better in the secondary market on Friday.

Third Point eyes 10-years

Third Point Re (USA) Holdings, a wholly owned subsidiary of Third Point Reinsurance Ltd., plans to price an offering of senior notes due 2025, according to a 424B5 filed with the Securities and Exchange Commission.

Proceeds will be used to partially finance the capitalization of wholly owned subsidiary Third Point Reinsurance (USA) Ltd.

Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC are the bookrunners.

The notes will be fully and unconditionally guaranteed by Third Point Reinsurance Ltd.

Third Point is a Bermuda-based provider of specialty property and casualty reinsurance products.

Merck bonds firm

The fixed-rate tranches of Merck’s $8 billion bond sale traded better in the secondary market on Friday, according to a market source.

The company’s $1.25 billion of 1.85% five-year notes traded 2 bps better on the day at 48 bps bid, 46 bps offered.

The notes were quoted at 50 bps bid, 47 bps offered earlier during the session, and priced at a spread of Treasuries plus 55 bps on Thursday.

The $1.25 billion tranche of 2.35% seven-year notes, which sold at Treasuries plus 75 bps, was quoted at 68 bps bid, 65 bps offered.

The $2.5 billion of 2.75% notes due 2025 was quoted at 85 bps bid. Pricing on Thursday was at 95 bps over Treasuries.

Merck’s $2 billion of 3.7% notes due 2045, which sold at 130 bps over Treasuries, traded around 4 bps better on the day at 118 bps bid, 116 bps offered.

The notes were quoted at 122 bps bid, 120 bps offered earlier during the session.

The sale also included $300 million of floating-rate notes due 2017 priced at par to yield Libor plus 12.5 bps and $700 million of floating-rate notes due 2020 priced at par to yield Libor plus 37.5 bps.

Bookrunners were J.P. Morgan Securities LLC, Deutsche Bank Securities and Credit Suisse Securities.

Proceeds will be used to repay commercial paper issued to finance most of the company’s acquisition of Cubist Pharmaceuticals, Inc., which closed on Jan. 21.

The health-care company is based in Whitehouse Station, N.J.

Cades oversubscribed

The orderbook for Caisse d'Amortissement de la Dette Sociale’s $3.5 billion offering, which sold on Thursday, reached $4.4 billion, according to a company release.

Asian investor picked up 48%, the United Kingdom 19%, America 14%, other Eurozone countries 14% and other countries 4%.

Central banks and official institutions subscribed to 44% of the issue, banks 30%, fund managers 18% and other institutions 8%.

The $3.5 billion of 1.875% seven-year notes priced at mid-swaps plus 21 bps, or Treasuries plus 31.05 bps.

Pricing was at 99.72.

The notes sold in line with talk.

Barclays, BNP Paribas Securities Corp., Morgan Stanley & Co. LLC and RBS Securities Inc. are bookrunners.

The French debt agency is based in Paris.

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