JPMorgan, Vodafone, Franklin Resources keep deal flow alive; Church & Dwight, Novartis firm

By Aleesia Forni and Andrea Heisinger

New York, Sept. 19 - There were a number of small deals in the high-grade bond market on Wednesday and larger ones from JPMorgan Chase & Co. and Vodafone Group plc.

JPMorgan sold $3 billion of 10-year global notes at the tight end of talk.

The Vodafone offering totaled $2 billion in tranches due 2017 and 2022. Each was sold tighter than guidance.

Franklin Resources, Inc. priced an upsized $600 million of notes in five- and 10-year maturities. The size was originally $500 million.

Digital Realty Trust, LP sold $300 million of 10-year notes, and Church & Dwight Co., Inc. priced $400 million of 10-year notes.

Energy companies continued to be a presence in the primary. Sempra Energy sold $500 million of 10-year notes after the size was increased from $400 million. Tampa Electric Co. sold $250 million of 10-year notes tighter than talk.

System Energy Resources, Inc. announced a sale of $250 million of first mortgage bonds due 2023. Pricing is expected Thursday morning, a source said.

San Francisco-based Digital Realty Trust, LP priced $300 million of 10-year notes.

Sovereign names popped up in the market. Bank Nederlandse Gemeenten announced plans for a sale of five-year notes, and the Province of Ontario is offering seven-year bonds. Both sales are expected to price on Thursday.

A sale of class A and class B passthrough certificates totaling $843.89 million was done by Continental Airlines, Inc.

Two more deals were announced in the preferred stock market. AG Mortgage Investment Trust Inc. is planning a deal of perpetual preferred shares, and a $250 million sale of 40-year $25-par notes was announced by Aflac Inc.

The massive influx of corporate deals in the first part of the week has totaled more than $20 billion. The pace is set to slow on Thursday, sources said.

"We're looking pretty clean here," a syndicate source at a large desk said.

A market source commented that supply is "more limited" for the final two days of the week, but the market definitely won't be empty as at least three deals are going overnight from Wednesday.

"Investors still want in," the market source added.

The Markit CDX Series 18 North American Investment Grade index was unchanged from Tuesday's levels at a spread of 85 basis points.

The secondary market saw the new notes from Church & Dwight firm 3 bps.

Meanwhile, Tuesday's new notes from Novartis Capital Corp. were active in trading, with both tranches tightening in the secondary.

Goldman Sachs Group, Inc.'s bonds due 2037 were also among the day's most actively traded deals.

Investment-grade bank and brokerage credit default swap costs rose on Wednesday.

Bank of America's CDS costs widened 9 bps to 159 bps bid, 164 bps offered. Citi's CDS costs were 9 bps wider at 160 bps bid, 165 bps offered. JPMorgan's CDS costs widened 3 bps to 113 bps bid, 118 bps offered. Wells Fargo's CDS costs rose 3 bps to 78 bps bid, 83 bps offered.

Merrill Lynch's CDS costs were 9 bps wider at 159 bps bid, 169 bps offered. Morgan Stanley's CDS costs widened 10 bps to 226 bps bid, 236 bps offered. Goldman Sachs' CDS costs rose 11 bps to 175 bps bid, 185 bps offered.

JPMorgan prices tight

JPMorgan Chase was in the market with a $3 billion offering of 3.25% global 10-year notes priced at Treasuries plus 155 bps, a market source said.

The notes (A2/A/) were priced tighter than talk in the 160 bps area.

J.P. Morgan Securities LLC was the bookrunner.

The financial services company is based in New York.

Vodafone's $2 billion deal

Vodafone Group priced a $2 billion deal of notes (A3/A-/A-) in two tranches, an informed source said.

The trade included $1 billion of 1.25% five-year notes sold at a spread of 62.5 bps over Treasuries. The notes were priced tighter than talk in the 72.5 bps area, plus or minus 2.5 bps.

There was also $1 billion of 2.5% 10-year notes priced at 87.5 bps over Treasuries. The 10-year notes also sold tighter than guidance in the 100 bps area.

The bookrunners were Barclays, Goldman Sachs & Co. and Morgan Stanley & Co. LLC.

Vodafone was last in the U.S. bond market with a $1 billion sale of 1.625% five-year notes priced at 80 bps over Treasuries on March 13.

The telecommunications company is based in London.

Franklin Resources upsizes

Franklin Resources priced an upsized $600 million of notes (A1/AA-/) in two tranches, a market source said.

The original deal size was $500 million.

A $300 million tranche of 1.375% five-year notes priced at a spread of Treasuries plus 80 bps. The notes were priced tighter than talk in the 100 bps area.

There was also $300 million of 2.8% 10-year notes sold at 105 bps over Treasuries. The deal was priced much lower than talk in the 125 bps area.

Bank of America Merrill Lynch and Morgan Stanley were the bookrunners.

Proceeds are being used to redeem $305 million of outstanding 2% notes due May 20, 2013, and another $183 million is going toward financing the acquisition of a majority stake in K2 Advisors Holdings LLC. Any remainder will be used for general corporate purposes.

Franklin Resources was last in the market with a $900 million offering in three tranches on May 17, 2010. That deal included 3.125% five-year notes priced at 95 bps over Treasuries and 4.725% 10-year notes sold at 115 bps over Treasuries.

The holding company for investment manager Franklin Templeton Investments is based in San Mateo, Calif.

Sempra offers $500 million

Sempra Energy priced an upsized $500 million of 2.875% 10-year notes (Baa1/BBB+/BBB+) at a spread of Treasuries plus 110 bps, a markets source said.

The original issue size was $400 million.

Goldman Sachs, RBC Capital Markets LLC and UBS Securities LLC were the bookrunners.

Sempra plans to use the proceeds for general corporate purposes.

The holding company for utility subsidiaries is based in San Diego.

Church & Dwight funds purchase

Church & Dwight sold $400 million of 2.875% 10-year senior notes (Baa2/BBB/) at a spread of 110 bps over Treasuries, a market source said.

One trader quoted the notes at 107 bps bid.

The sale featured a do-not-grow provision.

Bank of America Merrill Lynch and Deutsche Bank Securities Inc. were the bookrunners.

Proceeds are being used to fund the acquisition of Avid Health, Inc. There is a mandatory call at 101 if the acquisition is not completed by March 31, 2013.

The maker of personal care, household and specialty products is based in Princeton, N.J.

Tampa Electric prices

Tampa Electric priced $250 million of 2.6% 10-year notes (A3/BBB+/A-) to yield 83 bps over Treasuries, a syndicate source said.

The notes were sold tighter than initial guidance in the 90 bps to 92 bps range.

Citigroup Global Markets Inc., JPMorgan and Morgan Stanley were the bookrunners.

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

The company is a Tampa, Fla.-based subsidiary of TECO Energy, Inc., an energy-related holding company.

Digital Realty's $300 million

Digital Realty Trust priced $300 million of 3.625% 10-year senior notes (Baa2/BBB/BBB) at a spread of 200 bps over Treasuries, a syndicate source said.

There was initial price guidance in the low 200 bps area, the source said, and the notes came at the tight end of revised talk in the 200 bps to 205 bps range.

There was roughly $1.25 billion of demand on the books for the trade, the source added.

The bookrunners were Citigroup, Credit Suisse Securities (USA) LLC, Goldman Sachs, JPMorgan and Morgan Stanley.

Proceeds are being used temporarily to repay borrowings under a revolving credit facility, to acquire additional properties, to fund development and redevelopment opportunities and for working capital.

The offering is guaranteed by Digital Realty Trust, Inc.

The manager and owner of technology-related real estate is based in San Francisco.

System Energy talks

System Energy Resources will price a $250 million offering of first mortgage bonds due 2023 (Baa1/BBB+/), an informed source said.

Pricing of the notes is expected Thursday morning, the source said. The deal is being talked in the Treasuries plus 210 bps to 250 bps range.

The bookrunners are Barclays, KeyBanc Capital Markets Inc., RBS Securities Inc. and Scotia Capital (USA) Inc.

Proceeds are being used to repay $70 million of outstanding 6.2% mortgage bonds due Oct. 1, 2012, to repay prior to maturity $50 million of Claiborne County, Miss., 6.2% pollution control revenue refunding bonds due Feb. 1, 2026, to repay $102.975 million of Mississippi Business Finance Corp. 5.9% pollution control bonds due May 1, 2022 and for general corporate purposes.

System Energy Resources generates and sells nuclear power and is based in Jackson, Miss.

Bank Nederlandse's deal

Bank Nederlandse Gemeenten is planning a sale of five-year notes (Aaa/AAA/) for Thursday, a market source said.

The notes are being talked in the mid-swaps plus 60 bps to 64 bps range. They are being sold under Rule 144A and Regulation S.

The bookrunners are Credit Suisse, HSBC Securities (USA) Inc., JPMorgan and Nomura Securities.

The bank was last in the U.S. bond market with a $2.5 billion sale of three-year notes on March 14.

The issuer provides financing for publicly owned organizations and is based in the Hague, the Netherlands.

Ontario preps seven-year deal

The Province of Ontario is planning to do a benchmark-sized issue of seven-year global notes on Thursday, a source away from the trade said.

The notes (Aa2/AA-/) are being talked in the range of mid-swaps plus 40 bps to 44 bps.

"It has guidance of mid-swaps plus low to mid 40s area, which is 15 to 17 basis points more expensive than where they could do a domestic deal," one source said.

The offering is considered a "smart deal to do," the source said. "It's always good to diversify your investor base and diversify your funding sources. It was very prudent of Ontario to have done this deal."

The bookrunners are Bank of America Merrill Lynch, Credit Suisse, HSBC and Scotia Capital USA.

Ontario was last in the U.S. bond market with a $1 billion sale of 10-year notes on June 22.

Proceeds will be used for general provincial purposes.

Continental's passthroughs

Continental Airlines priced $843.89 million of class A and class B passthrough certificates, according to a FWP filing with the Securities and Exchange Commission.

The deal included $711.62 million of 4.4% class A certificates (Baa2/A-/) priced at par to yield 4.4% The certificates have a final distribution of Oct. 29, 2024 and final maturity of April 29, 2026. There is an initial average life of 9.2 years.

The sale also included $132.27 million of 5.5% class B certificates (Baa2/BBB-/BBB-) priced at par to yield 5.5%. The certificates feature a final distribution on Oct. 29, 2020 and final maturity of April 29, 2022. There is an initial average life of six years.

Credit Suisse and Morgan Stanley were the joint structuring agents and lead bookrunners.

Citigroup, Deutsche Bank, Goldman Sachs and Jefferies & Co. were the bookrunners. Natixis Securities Americas LLC was manager.

Proceeds will be held in escrow and then used to acquire equipment notes that will be issued and secured by 21 new Boeing aircraft.

The commercial airline is based in Houston.

AG Mortgage's preferreds

AG Mortgage Investment Trust will issue series B cumulative redeemable perpetual preferreds, according to a press release.

The New York-based real estate investment trust will apply to list the new securities on the New York Stock Exchange.

Proceeds will be used to enhance liquidity, to acquire additional credit investments and for general corporate purposes.

Stifel Nicolaus & Co. Inc., RBC, Barclays and Deutsche Bank are the bookrunners.

Aflac pricing $25-par notes

Aflac is planning a sale of at least $250 million of $25-par subordinated debentures due 2052.

Price talk is around 5.5%, according to a trader.

Aflac will apply to list the notes on the New York Stock Exchange, the company said in a prospectus filed with the SEC.

Morgan Stanley, Goldman Sachs, JPMorgan and Wells Fargo Securities LLC are the bookrunners.

Proceeds will be used for general corporate purposes.

Aflac is a Columbus, Ga.-based provider of supplemental health and life insurance.

Goldman Sachs firms

Goldman Sachs' 30-year bond due 2037 saw a flurry of activity on Wednesday and closed the session at 309 bps bid, 13 bps tighter than levels seen last week.

Goldman priced the $2.5 billion of 6.75% bonds at 190 bps over Treasuries in September 2007.

Novartis firms

Both tranches of Novartis's recent issuance were among the day's most actively traded deals.

The $1.5 billion 10-year notes from Novartis traded at 62 bps bid, 60 bps offered at midday. The notes priced at a spread of Treasuries plus 68 bps.

The $500 million of 30-year bonds traded at 71 bps bid, 70 bps offered after pricing at Treasuries plus 80 bps.

The issuer is a holding company for pharmaceuticals and health-care subsidiaries and is based in New York.

Stephanie N. Rotondo and Cristal Cody contributed to this review

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