High-grade issuance rolls on as TransCanada, Origin Energy price; Health Care REIT firms

By Aleesia Forni and Cristal Cody

Virginia Beach, Oct. 2 - The high-grade bond market continued to see activity on Wednesday despite the shutdown of the U.S. government.

TransCanada Pipelines Ltd. came to market with $1.25 billion of senior notes in two tranches, with both parts pricing tight of talk.

The company sold $625 million of 3.75% notes due 2023 sold at Treasuries plus 120 basis points and $625 million of 5% notes due 2043 at Treasuries plus 130 bps.

Meanwhile, Origin Energy Ltd. sold an upsized issue of $800 million of 4.5% notes due 2018 at 215 bps over Treasuries.

Pricing was tight of talk.

Health Care REIT Inc. also sold an upsized issue of notes, selling $400 million of 4.5% notes due 2024 with a spread of 200 bps over Treasuries.

A $265 million issue of senior notes was priced by Navigators Group Inc. during the session.

The company sold the 5.75% senior notes due 2023 at Treasuries plus 315.5 bps.

The day's deals raised the week's total to roughly $4.9 billion so far.

Though the primary is expected to see some issuers hit the market on Thursday, the week's total is unlikely to reach original estimates of up to $20 billion.

Secondary market activity picked up on Wednesday, while bonds ended flat to slightly tighter, according to market sources.

The Markit CDX North American Investment Grade series 21 index closed unchanged on the day at a spread of 80 bps.

In the secondary market, "nada" was seen in Navigators Group's 5.75% senior notes due 2023, a trader said.

Health Care REIT's new 4.5% notes tightened 3 bps in secondary trading as the session headed toward the close, according to a trader.

In other secondary action, TransCanada Pipelines' two tranches of notes traded wrapped around the issue price, a source said.

TransCanada's $1.25 billion

The day's largest deal came from TransCanada Pipelines, which priced $1.25 billion of senior notes (A3/A-/A) in two tranches on Wednesday, according to an informed source and a filing with the Securities and Exchange Commission.

Both tranches priced tight of talk.

There was $625 million of 3.75% notes due 2023 sold at 99.371 to yield 3.826%, or Treasuries plus 120 bps.

A $625 million issue of 5% notes due 2043 was priced with a spread of Treasuries plus 130 bps.

Pricing was at 99.291 to yield 5.046%.

In the secondary market, TransCanada Pipelines' 3.75% notes traded flat at 120 bps bid, 118 bps offered, a trader said.

The company's 5% notes traded mostly unchanged at 130 bps bid, 127 bps offered.

Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes and to repay short-term debt.

The natural gas and oil pipeline and storage company is based in Calgary, Alta.

Origin Energy upsizes

In other primary news, Origin Energy priced an upsized $800 million of notes due 2018 with a spread of Treasuries plus 215 bps, according to a market source.

The notes priced at 99.818 to yield 3.54%.

Pricing was tight of talk.

Proceeds will be used to repay debt and for general corporate purposes.

BofA Merrill Lynch, Goldman Sachs & Co., JPMorgan and UBS Securities LLC were the joint bookrunners for the Rule 144A and Regulation S deal.

The coal-seam gas producer is based in Sydney.

Health Care REIT prices tight

Health Care REIT priced an upsized $400 million of 4.5% notes (Baa2/BBB/) due 2024 with a spread of Treasuries plus 200 bps, according to an informed source.

The notes priced tight of talk.

Health Care REIT's 4.5% notes tightened Wednesday afternoon to 197 bps bid, 194 bps offered, a trader said.

BofA Merrill Lynch, JPMorgan, UBS Investment Bank, Citigroup Global Markets Inc. and Deutsche Bank Securities were the joint bookrunners.

The company plans to use proceeds to repay advances under its unsecured lines of credit and for general corporate purposes.

The real estate investment trust for senior and health care real estate is based in Toledo, Ohio

Navigators prices $265 million

Rounding out the day's new issues, Navigators Group priced $265 million of 5.75% senior notes due 2023 at par with a spread of Treasuries plus 315.5 bps, according to an FWP filing with the SEC.

Navigators Group's 5.75% notes were not immediately seen in aftermarket activity, a trader said Wednesday afternoon.

Goldman Sachs and Keefe, Bruyette & Woods were the joint bookrunners.

Proceeds will be used to redeem the company's 7% senior notes due 2016 and for general corporate purposes.

Navigators is an insurance holding company based in Stamford, Conn.

Bank/brokerage CDS costs firm

Investment-grade bank and brokerage CDS costs firmed over the day, according to a market source.

Bank of America Corp.'s CDS costs tightened 2 bps to 99 bps bid, 104 bps offered. Citigroup Inc.'s CDS costs firmed 2 bps to 92 bps bid, 96 bps offered. JPMorgan Chase & Co.'s CDS costs ended flat at 87 bps bid, 92 bps offered. Wells Fargo & Co.'s CDS costs declined 1 bp to 59 bps bid, 64 bps offered.

Merrill Lynch's CDS costs firmed 2 bps to 94 bps bid, 100 bps offered. Morgan Stanley's CDS costs declined 2 bps to 131 bps bid, 135 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 1 bp to 123 bps bid, 126 bps offered.

Paul Deckelman contributed to this review

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