DirecTV, Philips, UnitedHealth, covered bonds lead huge day in high-grade; Miss. Power firms

By Andrea Heisinger and Cristal Cody

New York, March 5 - The investment-grade bond market got off to a strong start for the week on Monday with several deals in both the high-grade and crossover spaces.

The largest sale came from DirecTV Holdings LLC and DirecTV Financing Co. Inc., which totaled $4 billion in three parts.

There were a handful that priced in two parts, including UnitedHealth Group Inc., CenturyLink, Inc., Newmont Mining Corp., Koninklijke Philips Electronics NV and Mississippi Power Co.

PNC Funding Corp. priced 10-year guaranteed senior notes, but terms for the deal were not available at press time.

More than $19.4 billion of bonds were priced overall in the high-grade market, not including the split-rated paper sold off the high-yield syndicate desk.

There was a covered bond sale by Toronto-Dominion Bank done under Rule 144A and Regulation S. The Canadian bank sold $3 billion of five-year bonds that are rated triple A.

They were joined in the covered bond market by Commonwealth Bank of Australia, which priced $4 billion total, including $2 billion of covered bonds.

Amsterdam-based Philips Electronics priced $1.5 billion of 10- and 30-year bonds. That combination of maturities would prove popular on the day as Newmont Mining priced $2.5 billion in those maturities and UnitedHealth Group sold $1 billion in tranches due 2022 and 2042.

Split-rated CenturyLink priced $2.05 billion of notes in 10- and 30-year tranches.

Mississippi Power had two deals in the market. The unit of Southern Co. reopened its issue of 2.35% notes due 2016 to add $150 million and also priced $250 million of new 30-year bonds.

Progress Energy sold $450 million of 10-year senior notes.

Toyota Motor Credit Corp. sold $500 million of one-year floating-rate notes.

There also were a handful of deals from split-rated companies that were priced off the high-yield syndicate desk.

Omega Healthcare Investors, Inc. sold $400 million of 12-year notes. They were joined by split-rated Masco Corp. with its $400 million deal of 10-year paper.

Fidelity National Information Services, Inc. did a split-rated deal of 10-year notes.

A high-yield rated deal from Canada's Bombardier was priced off the high-grade syndicate desks and showed interest from investment-grade investors. The company priced $500 million of 10-year notes.

The preferred stock market also was active with deals announced from some investment-grade names.

Public Storage is planning a sale of perpetual $25 par shares. Murray Street Investment Trust I announced the sale of senior trust securities guaranteed by Goldman Sachs Group Inc.

Despite the influx of new issues, bonds were weaker over the day.

The Markit CDX Series 17 North American high-grade index eased 1 basis point to a spread of 95 bps to start the week.

"It's been pretty quiet today, other than the new issues," one trader said.

PNC Funding's notes due 2022 traded late in the day at 138 bps bid, 135 bps offered, a trader said.

The notes were seen going out to 137 bps bid, 134 bps offered and later at 136 bps bid, 133 bps offered, traders at other desks said.

Philips Electronics' bonds traded about 2 bps tighter.

Progress Energy's notes widened 1 bp and Newmont Mining's notes traded 1 bp to 2 bps tighter.

UnitedHealth's bonds and CenturyLink's deal both were flat in the secondary market.

Masco's split-rated notes traded lower.

No trading activity was seen in the afternoon in Mississippi Power's new 30-year bonds, but the utility's short-dated notes have come in more than 60 bps since the debt priced in October, traders said.

Mississippi Power's 2.35% senior notes due 2016 traded at 64 bps bid on Monday. The notes priced in a $150 million offering on Oct. 11 at a spread of 125 bps over Treasuries.

DirecTV Holdings/Financing's tranches were mixed in the secondary market, with the 10-year and 30-year bonds edging 1 bp wider.

The cable and telecom bond sector traded 3 bps to 8 bps wider.

Bank and financial paper widened 10 bps to 15 bps.

Investment-grade bank and brokerage credit default swaps costs rose on Monday, indicating lessened investor confidence in the financial sector.

Banks were on the day. Bank of America's CDS' costs rose 18 bps to 268 bps bid, 278 bps offered. Wells Fargo's CDS costs traded 8 bps higher to 92 bps bid, 97 bps offered.

Brokerage CDS costs widened as much as 25 bps. Merrill Lynch's CDS costs traded 25 bps higher to 320 bps bid, 330 bps offered. Goldman Sachs' CDS costs widened 15 bps to 240 bps bid, 250 bps offered. Merrill Lynch's CDS costs traded up 15 bps to 285 bps bid, 300 bps offered.

Treasuries ended lower on Monday with yields up across the curve. The benchmark 10-year note yield rose 4 bps to 2.01%. The 30-year bond yield closed up 5 bps to 3.15%.

March off to huge start

Including deals sold on the last two days of the previous week, the month of March is off to a productive start.

"We all thought it was going to be busy, but this was crazy," one syndicate source who worked on two of the day's sales said.

"It looked good [from the open] and more came in."

It was the highest volume day so far in 2012, sources said. Companies that haven't recently tapped the market are doing so to take advantage of record-low borrowing rates while others are selling bonds for the second time in a matter of a few months to take care of funding needs.

Tuesday is expected to have several more deals.

"We're definitely going to be busy - especially after today," a source said.

DirecTV's massive deal

DirecTV Holdings and DirecTV Financing sold $4 billion of senior notes (Baa2/BBB/BBB-) in three tranches guaranteed by parent company DirecTV Group Inc., a source away from the trade said.

The $1.25 billion of 2.4% five-year notes priced at a spread of Treasuries plus 155 bps. The tranche sold at the tight end of talk in the 160 bps area.

There was a $1.5 billion tranche of 3.8% 10-year paper sold at a spread of 180 bps over Treasuries. The paper priced at the low end of talk in the 185 bps area.

A third tranche was $1.25 billion of 5.15% 30-year bonds priced a spread of 202 bps over Treasuries. The bonds were priced tighter than talk in the 210 bps area.

Bookrunners were Bank of America Merrill Lynch and RBS Securities Inc.

The units of DirecTV were last in the market with a $4 billion deal in three parts on March 7, 2011. The 3.5% five-year notes from that deal were priced at 135 bps while the 5% 10-year notes sold at 155 bps. The 6.375% 30-year bonds from that deal were priced at 175 bps.

In the secondary market, the notes due 2017 tightened 3 bps to 152 bps bid, 149 bps offered, several traders said. The notes due 2022 widened to 181 bps bid, 178 bps offered. The 30-year bonds traded wider going out at 203 bps bid, 200 bps offered and later were seen at 204 bps bid, 199 bps offered.

The satellite TV company is based in El Segundo, Calif.

UnitedHealth prices $1 billion

UnitedHealth Group priced $1 billion of senior notes (A3/A-/A-) in tranches due 2022 and 2042, a source who worked on the deal said.

The deal was more than three times oversubscribed with about $3.5 billion on the books, the source added.

The $600 million of 2.875% 10-year paper sold at Treasuries plus 95 bps. The notes priced tight to talk in the 100 bps area.

A second part was $400 million of 4.375% 30-year bonds priced at 125 bps over Treasuries. The bonds were sold at the tight end of guidance in the 130 bps area.

Bank of America Merrill Lynch, Barclays Capital Inc., Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC were bookrunners.

The proceeds are being added to the company's general funds and used for general corporate purposes.

UnitedHealth was last in the market with a $1.5 billion deal on Nov. 8, 2011. The 3.375% 10-year notes from that offering priced at 142 bps over Treasuries while a 4.625% 30-year bond sold at 165 bps.

In trading, UnitedHealth's notes due 2022 were flat at 95 bps bid, 93 bps offered, a trader said.

Another trader saw the notes at 95 bps bid, 91 bps offered. The 30-year bonds widened 1 bp to 126 bps bid, 125 bps offered soon after pricing and were seen going out at 125 bps bid, 121 bps offered, traders said.

The diversified health care company is based in Minnetonka, Minn.

Newmont sells two tranches

Newmont Mining priced $2.5 billion of senior notes (Baa1/BBB+/) in two parts, a source close to the trade said.

The $1.5 billion of 3.5% 10-year notes priced at a spread of Treasuries plus 160 bps. The notes priced at a tighter level than talk in the 165 bps area, the source said.

There also was a $1 billion tranche of 4.875% 30-year bonds sold at a spread of 180 bps over Treasuries. The bonds sold at the low end of guidance in the 185 bps area.

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

The proceeds will be used to repay the balance under the company's senior revolving credit facility, settlement of certain forward starting swaps contracts, remaining payments during 2012 in connection with the early purchase option under a sale leaseback agreement relating to the company's ore treatment plant in Nevada and for general corporate purposes.

The deal is guaranteed by Newmont USA Ltd.

Newmont Mining's notes due 2022 traded at 159 bps bid, 156 bps offered on Monday. The 30-year bonds were seen at 178 bps offered and going out at 179 bps bid, 176 bps offered, traders said.

The global gold producer is based in Greenwood Village, Colo.

Philips's $1.5 billion

Koninklijke Philips Electronics sold $1.5 billion of notes (A3/A-/) in two tranches, a source away from the trade said.

The $1 billion of 3.75% 10-year paper priced at Treasuries plus 180 bps.

A second tranche was $500 million of 5% 30-year bonds sold at 200 bps over Treasuries.

Deutsche Bank Securities Inc., HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC were bookrunners.

The proceeds are being used to redeem debt and for general corporate purposes.

Philips Electronics' notes due 2022 tightened in trading to 178 bps bid, 173 bps offered, a trader said. The 30-year tranche firmed 2 bps to 198 bps bid, 194 bps offered.

The holding company for health care, lighting and consumer electronics is based in Amsterdam.

Progress sells $450 million

Progress Energy priced $450 million of 3.15% 10-year senior notes (Baa2/BBB/BBB) to yield Treasuries plus 120 bps, a market source said.

Bookrunners were Barclays Capital Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC.

The proceeds are being used, along with cash on hand, to retire at maturity $450 million of 6.85% notes due April 15.

In the secondary market, Progress Energy's notes due 2022 edged wider to 121 bps bid, 119 bps offered, traders said.

The utility holding company is based in Raleigh, N.C.

CenturyLink's crossover trade

CenturyLink priced $2.05 billion of split-rated senior notes (Baa3/BB/BBB-) in two tranches, an informed source said.

The $1.4 billion of 5.8% 10-year notes sold at a spread of Treasuries plus 380 bps. The paper was priced tighter than talk in the 387.5 bps area, the source said.

There was a second $650 million tranche of 7.65% 30-year bonds priced at a spread of Treasuries plus 450 bps. The bonds were sold at the low end of guidance in the 455 bps area.

Barclays Capital Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and RBC Capital Markets LLC were bookrunners.

The proceeds, along with cash on hand and borrowings from a revolving credit facility, are being used to provide funds required to complete a concurrent tender offer.

CenturyLink was last in the market with a $2 billion deal in three parts on June 10, 2011. The 6.45% 10-year note from that offering priced at 350 bps over Treasuries.

CenturyLink's split-rated notes due 2022 stayed flat in trading at 380 bps bid, 370 bps offered, traders said. The long bonds also were unchanged at 450 bps bid, 440 bps offered.

The broadband and telecommunications company is based in Monroe, La.

TD Bank's covered bonds

Toronto-Dominion Bank sold $3 billion of 1.5% five-year covered bonds to yield mid-swaps plus 45 bps, or 70.6 bps over Treasuries, a market source said.

The bonds (Aaa/AAA/) were priced in line with guidance, the source said. They were sold under Rule 144A and Regulation S.

Barclays Capital Inc., BNP Paribas Securities Corp., RBC Capital Markets LLC and TD Securities (USA) LLC were bookrunners.

The bank and financial services company is based in Toronto.

CBA's two tranches

Commonwealth Bank of Australia sold $4 billion of new paper in two parts, a source away from the trade said.

The deal included $2 billion of five-year covered bonds (Aaa/AAA/) priced at 140.6 bps over Treasuries.

There also was $2 billion of three-year notes (Aa1/AA/AA) priced at Treasuries plus 155 bps.

The deal was done under Rule 144A and Regulation S. Full terms were not available at press time.

Bookrunners were Citigroup Global Markets Inc., Commonwealth Bank of Australia, Goldman Sachs & Co. and J.P. Morgan Securities Inc.

The financial services company is based in Sydney, Australia.

MS Power's two deals

Mississippi Power reopened its issue of 2.35% senior notes due 2016 to add $150 million, according to an FWP filing with the Securities and Exchange Commission.

The reopened notes (A2/A/A+) priced at Treasuries plus 67 bps. Total issuance is $300 million including $150 million priced on Oct. 11, 2011 at 125 bps over Treasuries.

J.P. Morgan Securities LLC and RBS Securities Inc. were bookrunners.

The company also sold $250 million of 4.25% 30-year senior bonds to yield Treasuries plus 115 bps, according to an FWP filing with the SEC.

Bookrunners were J.P. Morgan, RBS, Scotia Capital (USA) Inc. and U.S. Bancorp Investments Inc.

The proceeds for both offerings are being used to repay a bank loan totaling $75 million and for general corporate purposes, including the company's continuous construction program.

The electric utility subsidiary of the Southern Co. is based in Gulfport, Miss.

TMCC offers floaters

Toyota Motor Credit sold $500 million of one-year medium-term floating-rate notes (Aa3/AA-/) at par to yield Libor plus 15 bps, according to an FWP filing with the SEC.

They were priced by agent RBC Capital Markets LLC.

The U.S. funding arm of Toyota Financial Services is based in Torrance, Calif.

Omega's crossover deal

Omega Healthcare Investors priced a $400 million issue of split-rated 12-year senior notes (expected ratings Ba2/BBB-) at par to yield 5.875%, a syndicate source said.

The yield printed at the wide end of the price talk, which was set in the 5.75% area.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc., Jefferies & Co., RBS Securities Inc. and UBS Securities Inc. were bookrunners for the quick-to-market deal.

The company plans to use the proceeds to repurchase its 7% senior notes due 2016 in a tender offer and to pay down its revolver.

The issuer is a Hunt Valley, Md.-based real estate investment trust investing in and providing financing to the long-term care industry.

Masco's 10-year

Masco priced a $400 million issue of 10-year senior notes (Ba2/BBB-) at par to yield 5.95%, market sources said.

The yield printed at the tight end of price talk, which was set in the 6% area, plus or minus 5 bps.

J.P. Morgan Securities LLC, Citigroup Global Markets, Deutsche Bank Securities Inc., Wells Fargo Securities LLC and RBC Capital Markets were bookrunners for the quick-to-market issue.

Masco's split-rated notes (Ba2/BBB-/BB) traded down from pricing at par on Monday to 99.25 bid, 99.75 offered, a trader said. Another trader saw the notes at 99.50, 100.25 in late afternoon, while a trader at another desk saw the notes at 99.50 bid, 100.00 offered.

The Taylor, Mich., building products company plans to use the proceeds for general corporate purposes, including the repayment of a portion of its 5.875% notes due 2012.

FIS sells $700 million

Fidelity National Information Services priced an upsized $700 million issue of 10-year senior notes (Ba2/BB+/BBB-) at par to yield 5%, a syndicate source said.

The yield printed on top of price talk.

Bank of America Merrill Lynch, Citigroup Global Markets, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC were bookrunners for the quick-to-market issue, which was upsized from $500 million.

The provider dedicated to banking and payment technologies plans to use the proceeds to repay debt.

Bombardier's junk deal

Canada's Bombardier priced a $500 million issue of 10-year notes at par to yield 5.75%, a syndicate source said.

The yield printed at the tight end of the 5.75% to 6% yield talk.

Citigroup Global Markets Inc., RBC Capital Markets, LLC and UBS Securities LLC were bookrunners for the quick-to-market issue.

The Valcourt, Quebec, company plans to use the proceeds for general corporate purposes, including paying down its 6.75% notes due 2012.

Bombardier is a designer manufacturer, distributor and marketer of motorized recreational vehicles and power sports engines.

Public Storage's preferreds

Public Storage is selling cumulative preferred shares of beneficial interest, series T, according to a prospectus filed with the Securities and Exchange Commission.

The shares will be issued as depositary shares representing 1/1,000th of an interest in the $25 par preferreds.

A trader said price talk was around 5.75%.

"It's going pretty well," he said. "It seems to be pretty liquid. They'll probably grow it."

The trader added that investors tend to like Public Storage deals, adding that the 5.9% series S cumulative preferreds - a $400 million deal that priced Jan. 5 - was "at a premium on a 5.75% yield" right out of the hopper.

"People can't get enough Public Storage for some reason," he said.

He saw the issue at $24.65 bid in the gray market shortly before the close, noting that he had seen bids as high as $24.80.

At another desk, a source said the deal was "going OK, but not great."

He quoted the paper at $24.75 bid, $24.80 offered at the close.

The Glendale, Calif.-based real estate investment trust will apply to list the shares on the New York Stock Exchange under the symbol "PSAPT."

Bank of America Merrill Lynch, Morgan Stanley & Co. Inc., UBS Securities LLC and Wells Fargo Securities LLC are bookrunners.

The proceeds will be used to make investments in self-storage facilities and in entities that own self-storage facilities, to redeem preferred securities and for other general corporate purposes.

Murray St.'s $1,000 par notes

Murray Street Investment Trust I, a statutory trust, is issuing $1,000 par senior guaranteed trust securities due 2017, according to a filing with the SEC.

The securities will be fully and unconditionally guaranteed by the Goldman Sachs Group Inc.

Goldman Sachs & Co. is bookrunner.

The New York-based trust will use proceeds to purchase notes from Goldman Sachs Capital II. Goldman will use the proceeds to make distributions to the holders of its 5.793% fixed- to floating-rate normal automatic preferred enhanced capital securities and to purchase non-cumulative perpetual preferred stock issued by Murray Street.

The proceeds from the sale of the non-cumulative perpetual preferred stock to Goldman Sachs Capital II will provide additional funds for operations and for other general corporate purposes.

Paul A. Harris and Stephanie N. Rotondo contributed to this review

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