HP prices mega-deal, others tap market amid 'weird' tone; energy, telecom bonds widen

By Andrea Heisinger and Cristal Cody

New York, May 25 - Hewlett-Packard Co. had the largest deal of the day in the high-grade market Wednesday at $5 billion in five tranches.

The information technology company dropped one of the planned tranches of fixed-rate notes from the sale.

Cameron International Corp. priced an upsized $750 million of notes in three parts. The third tranche of three-year floaters was added at the launch, increasing the size of the deal by $250 million.

Financial holding company Markel Corp. priced $250 million of 10-year notes in line with talk.

A $400 million sale of 10-year notes came from home goods company Tupperware Brands Corp. The notes sold at the low end of price talk.

There was a split-rated sale from Duquesne Light Co. The electric utility sold $350 million of notes due 2021 in the Rule 144A market.

The smallest deal of the day came from Gamco Investors, Inc. The investment advisory company priced $100 million of 10-year notes.

A bond sale was announced by First American Financial Corp. The financial services company plans to sell $400 million of 10-year notes under Rule 144A.

The primary market had a "weird" tone, a source said.

"I'm not sure what it was. I think we were just overwhelmed [on Tuesday] and it was just heavy - too much stuff to digest. Today just felt bogged down."

The Hewlett-Packard sale took all day to get done - not pricing until late. Most of the day's offerings weren't upsized with the exception of the three-tranche sale from Cameron International.

"I think investors are tired, too, after the [busy] weeks we've had," a syndicate source said. "A lot of people are probably going to wait until next week."

Overall investment-grade Trace volume edged up to nearly $13 billion, according to a source.

In trading, Cameron's two tranches widened 1 bp on the bid side, while the energy and industrial sector was "more active because of new deals," a trader said. "New issues are generically 2 better on the day but in secondary 3 wider on the energy and industrials space."

Caterpillar Inc.'s bonds priced the previous day firmed. Barrick Gold Corp./Barrick North America Finance LLC's new 10-year notes were busy in trading but stayed wrapped around the issue price.

The telecommunications sector, including AT&T Inc.'s bonds, "got pretty crushed today, anywhere from 4 to 7 wider," a trader said. "Just market weakness."

The Markit CDX Series 14 North American investment-grade index was unchanged at a spread of 91 bps, Markit Group Ltd. said.

Treasuries were mixed late in the day sending yields up on the short and long ends of the bond curve after a strong auction of five-year debt. The 10-year note yield rose 2 bps to 3.13% and the 30-year bond yield rose 3 bps to 4.28%.

HP's mega sale

Hewlett-Packard sold $5 billion of notes (A2/A/A+) in five tranches late in the day, a market source away from the deal said.

Full terms were not available at press time.

There were initially six parts, a source said, but the company opted not to sell a tranche of two-year fixed-rate notes.

The $1.75 billion of two-year floating-rate notes were priced at par to yield three-month Libor plus 28 bps. They sold at the low end of talk in the Libor plus 30 bps area.

There was also a $500 million tranche of three-year floaters priced at par to yield Libor plus 40 bps. It sold at the tight end of guidance in the Libor plus 42 bps area.

A $500 million tranche of three-year notes sold at a spread of Treasuries plus 68 bps. This was tight to talk in the 70 bps area.

The $1 billion of five-year notes priced at a spread of 90 bps over Treasuries which was in line with guidance.

A tranche of $1.25 billion in 10-year notes priced at 120 bps over Treasuries. It sold directly in line with talk.

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

Proceeds are being used to repay $1 billion of 2.25% global notes due in May along with $750 million of floaters due in May, and also for general corporate purposes including repayment of commercial paper.

This was the largest bond sale to date from Hewlett-Packard. The company last sold bonds in a $2 billion deal in two parts on Nov. 29, 2010. The 2.25% five-year notes from that deal priced at 73 bps over Treasuries and the 3.25% 10-year notes priced at 95 bps over Treasuries.

Hewlett-Packard's deal was not yet seen in the secondary markets late afternoon.

"Those are still trading in the grays," a trader said. The 10-year notes were seen in the gray market at 118, 115.

The information technology company is based in Palo Alto, Calif.

Cameron upsizes deal

Cameron International sold an upsized $750 million of senior notes (Baa1/BBB+) in three tranches, said a source away from the deal.

There was a $250 million tranche of three-year floating-rate notes added to the deal at the launch. They priced at par to yield three-month Libor plus 93 bps.

The $250 million of 4.5% 10-year notes were sold at a spread of Treasuries plus 148 bps. They were priced at the low end of guidance in the 150 bps area.

A $250 million tranche of 5.95% 30-year bonds were sold at a 168 bps over Treasuries spread. They sold at the tight end of talk in the 170 bps area.

J.P. Morgan Securities LLC and Morgan Stanley & Co., Inc. were active bookrunners. Passive bookrunners were Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and RBS Securities Inc.

Proceeds are being used to pay for convertible notes purchased through a put option and to fund the purchase or redemption of convertibles remaining following the expiration of the put option. Any remainder will be used for general corporate purposes.

As the market wound down, the notes due 2021 traded at 149 bps bid, 146 bps offered, a trader said. The 30-year bonds were seen at 169 bps bid, 166 bps offered.

The oil and gas pressure control and compression company is based in Houston.

Markel prices at talk

Markel sold $250 million of 5.35% 10-year senior notes (Baa2/BBB/BBB) to yield Treasuries plus 225 bps, a source close to the deal said.

They priced in line with guidance in the low 200 bps area, the source said.

Citigroup Global Markets Inc. and Wells Fargo Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes including acquisitions or repurchase of debt securities.

The diversified financial holding company is based in Glen Allen, Va.

Tupperware sells 10-years

Tupperware Brands sold $400 million of 4.75% 10-year senior notes (Baa3/BBB-) to yield Treasuries plus 175 bps a source close to the sale said.

They were priced at the tight end of guidance in the 180 bps area, plus or minus 5 bps.

Bookrunners were HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

Proceeds are being used to repay amounts outstanding under a senior secured term loan.

In the secondary market, the notes were seen trading wrapped around 175 bps bid, 174 bps offered, a trader said.

The household goods company is based in Orlando, Fla.

Duquesne's split-rated notes

Duquesne Light sold $350 million of split-rated 5.9% notes due 2021 (Ba1/BBB-) to yield Treasuries plus 280 bps, an informed source said.

Bookrunners for the Rule 144A offering were Bank of America Merrill Lynch and J.P. Morgan Securities LLC.

The electric utility is based in Pittsburgh.

Gamco offers $100 million

Gamco Investors sold $100 million of 5.875% 10-year senior notes at par to yield 5.875%, an informed source said.

The notes (Baa3/BBB) were sold at a spread of Treasuries plus 274.5 bps.

The bookrunner was Citigroup Global Markets Inc.

Proceeds are being used for working capital and general corporate purposes, possibly including acquisitions.

The investment advisory services company is based in Rye, N.Y.

First American plans deal

First American Financial is planning $400 million of 10-year senior notes (Baa3//BBB-), a source said on Wednesday.

The deal was announced late on Tuesday and pricing is expected on Thursday.

The notes are being priced under Rule 144A.

Bookrunners are J.P. Morgan Securities LLC, UBS Securities LLC and Wells Fargo Securities LLC. Proceeds are being used to pay off $200 million on a credit line and term debt out at a fixed rate.

The financial services, title insurance and settlement company is based in Santa Ana, Calif.

Commonwealth preps preferreds

CommonWealth REIT intends to offer series E cumulative redeemable perpetual preferred stock, according to a prospectus filed with the Securities and Exchange Commission.

The company is issuing $150 million, or 6 million shares, according to a market source.

The preferreds (Baa3/BB+) have a liquidation preference of $25 per share.

Bank of America Merrill Lynch, Citigroup Capital Markets Inc., UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunners.

Proceeds will be used to pay down the real estate investment trust's revolving credit facility and for general business purposes, including future acquisitions.

CommonWealth REIT is based in Newton, Mass.

Barrick active

Gold mining company Barrick sold $4 billion in four tranches through its subsidiaries on Tuesday, with the most interest in the 10-year notes and that piece held firm in the secondary market, though the notes were little changed, a trader said.

On Wednesday, Barrick Gold and Barrick North America Finance's 4.4% notes due 2021 traded at 130 bps bid, 128 bps offered. Barrick NA Finance priced $1.35 billion of the notes at 130 bps over Treasuries.

The gold mining company is based in Toronto.

Caterpillar firms

Caterpillar's tranches of 10- and 30-year bonds were active on Wednesday after pricing Tuesday, a trader said.

The 3.9% notes due 2021, which sold at 85 bps over Treasuries, traded flat at 84 bps bid, 83 bps offered.

The 5.2% 30-year bonds narrowed to 93 bps bid, 91 bps offered. The bonds priced at Treasuries plus 98 bps.

The heavy machinery maker is based in Peoria, Ill.

AT&T, telecoms wider

AT&T's notes due 2021 moved out 5 bps to 117 bps bid, 114 bps offered, a trader said.

No fresh news contributed to the weakness in the telecom sector, though the "Hewlett-Packard new deal announcement pushed some of the tech space wider."

The telecommunications company is based in Dallas.

Stephanie N. Rotondo contributed to this review

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