Lincoln National, US Airways price in stronger primary; Danaher, Best Buy paper tightens

By Andrea Heisinger and Cristal Cody

New York, June 21 - Two companies were in the high-grade bond market on Tuesday as a two-day Federal Reserve Open Market Committee meeting got underway.

Lincoln National Corp. priced a $300 million sale of 10-year notes.

There was also a $388.22 million sale of split-rated class A and B passthrough trust certificates by US Airways.

The market has been inhospitable to most companies other than those with pressing financing needs. Lincoln National was in the market to pay for the redemption of capital securities, and US Airways was looking to finance equipment notes to pay for nine aircraft.

Some worries about the Greek crisis abated as it looked as though aid from the European Union and International Monetary Fund would come through to prevent a default.

"It was stronger today," a source who worked on one of the day's sales said.

"We'll see what happens overnight - with the FOMC tomorrow. We could have a trade tomorrow, but it depends on how things look at the open. It's like it has been for the past two weeks."

Deals that do get done Wednesday will likely have spreads and other pricing details hammered out before the 2 p.m. ET announcement from the Fed, sources said.

"We're not expecting anything earth-shattering," the source said, referring to an announcement from the meeting.

Another source echoed these thoughts and said, "It looked better today, so I'd imagine tomorrow will have a deal or two."

Overall trading volume was much stronger, up 50% at more than $14 billion.

The Markit CDX Series 15 North American Investment Grade index narrowed 4 basis points to a spread of 96 bps, according to Markit Group Ltd.

Danaher Corp.'s fixed-rate notes sold on Monday firmed 7 bps to 9 bps in secondary trading, sources said.

Lincoln National's notes due 2021 also were "trading a little bit better," a trader said.

The market overall had a better tone on the day, with the financials sector and bonds from Goldman Sachs Group Inc. trading as much as 5 bps better, traders said.

Best Buy Co.'s notes also were stronger in the secondary market.

Bonds in the telecommunications sector traded "2 to 3 basis points better," a trader said. "The bid increased for a lot of the longer-dated bonds. That had a lot to do with the Treasury move."

Dallas-based AT&T, Inc.'s debt was one of the more active bonds as more buyers of longer-dated paper stepped up, the trader said. AT&T's 5.35% bonds due 2040 closed up 3 bps better at 147 bps bid, 140 bps offered, the trader said.

Treasuries ended slightly lower as market observers awaited the outcome of a vote of confidence Tuesday night in Greece and the Federal Reserve's interest rate announcement on Wednesday. The benchmark 10-year Treasury note yield rose 3 bps to 2.98%. The 30-year bond yield edged up 1 bp to 4.21%.

Lincoln National's 10-year

Lincoln National priced $300 million of 4.85% 10-year senior notes (Baa2/A-/BBB+) to yield Treasuries plus 190 bps, a source who worked on the trade said.

The bookrunners were Goldman Sachs & Co. and UBS Securities LLC.

Proceeds are being used to redeem $275 million of 6.75% capital securities due in 2066 with any remainder used for general corporate purposes.

In the secondary market, the notes firmed to 187 bps bid, 185 bps offered, a trader said.

The holding company for insurance and retirement subsidiaries is based in Radnor, Penn.

US Airways offers passthroughs

US Airways sold $388.22 million of class A and B passthrough trust certificates, an informed source said.

The $293.94 million of 7.125% class A certificates (Ba2/BBB) priced at par to yield 7.125%. They have a final distribution date of Oct. 22, 2023 and a maturity of April 22, 2025.

The $94.28 million of 9.75% class B certificates (B2/B+) sold at par to yield 9.75%. Their final distribution is on Oct. 22, 2018, and the maturity date is April 22, 2020.

Goldman Sachs was structuring agent and a bookrunner along with Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC.

Proceeds will be held in escrow and used by the trusts to acquire equipment notes. Those notes will be secured by five existing aircraft and four airplanes on order.

The deal is guaranteed by US Airways Group, Inc.

The holding company for the commercial airline is based in Tempe, Ariz.

Danaher tightens

Danaher's senior notes it sold in a $1.8 billion four-tranche deal on Monday tightened in the secondary market, according to traders.

The company sold the notes (A2/A+) in three tranches of fixed-rate notes and one floating-rate note issue.

The tranche of 1.3% notes due 2014 firmed nearly 10 bps to 56 bps bid, 51 bps offered from the issue price of Treasuries plus 65 bps, a trader said.

The tranche of 2.3% notes due 2016 tightened 7 bps to 73 bps bid, 70 bps offered in trading, the trader said. The notes priced at a spread of Treasuries plus 80 bps.

Another trader saw the 2.3% five-year notes at 74 bps bid, 73 bps offered.

The third tranche of fixed-rate notes, the 3.9% notes due 2021, priced at 95 bps over Treasuries and narrowed to 86 bps bid, 83 bps offered, traders saw.

Danaher is a Washington, D.C.-based diversified medical, industrial and commercial products company.

Bank paper firms

Bank and financial paper also traded better with "some credits as good as 5 basis points better on the day," according to a trader.

Goldman Sachs Group's 5.375% notes due 2020 opened Tuesday wider at 190 bps bid, 185 bps offered and were seen closing the day at 183 bps bid, 178 bps offered, the trader said.

Goldman Sachs is a New York-based investment banking and financial services company.

Best Buy up 2 bps

Best Buy's notes were closing the day "2 basis points better," a trader said.

The 5.5% notes due 2021 firmed to 263 bps bid, 253 bps offered.

Best Buy's stock also gained strength after the board said it authorized a new $5 billion share repurchase program and an increase in the quarterly cash dividend.

The electronics and entertainment retailer is based in Richfield, Minn.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.