New month sees burst of new deals; Express, Caterpillar price tight; TJX firms; PPL eases

By Aleesia Forni and Cristal Cody

Virginia Beach, June 2 - The new month kicked off with a packed primary session on Monday, with more than $5 billion of new deals pricing in the investment-grade market.

Express Scripts Holding Co. sold the day's largest trade, bringing $2.5 billion of senior notes in tranches due 2017, 2019 and 2024, a market source said.

In other market action, Caterpillar Financial Services Corp. priced $1 billion of senior notes in five- and 10-year maturities on Monday.

Both tranches of the sale sold tighter than talk, which was set at the 60 bps area for the five-year tranche and the 90 bps area for the 10-years.

An upsized deal from TJX Cos., Inc. also priced on Monday.

The $750 million seven-year deal was increased from $500 million and priced tight of initial guidance.

A handful of smaller sized deals from Everest Reinsurance Holdings Inc., Delmarva Power & Light Co., PPL Electric Utilities Corp. and Southwestern Public Service Co. also priced on Monday.

The session also saw NetApp Inc. price a new issue, though details of the sale were not available at press time.

Sources continue to predict around $20 billion of new issuance for the week, with the bulk of supply pricing during the beginning of the week.

"Expecting a very busy month [of June]," one source said late Monday.

Bond spreads were flat to modestly wider on the day, according to market sources.

The Markit CDX North American Investment Grade series 22 index was unchanged at a spread of 62 basis points.

In aftermarket trading, Southwestern Public's 3.3% notes due 2024 headed out wrapped around issuance, a trader said.

TJX's 2.75% notes due 2021 tightened 3 bps in the secondary market, according to a trader.

Delmarva's 3.5% notes due 2023 firmed 2 bps, a trader said.

PPL Electric's 4.125% bonds due 2044 traded 4 bps wider on the bid side, a trader said.

Everest Reinsurance's 4.868% notes due 2044 launched late in the afternoon and were not seen in late-day trading, according to a trader.

Express Scripts' new tranches of five-year notes and 10-year notes were active in the secondary market, a trader said.

Express brings $2.5 billion

A $2.5 billion deal from Express Scripts Holding was the highlight of the first trading session of the new month.

All three tranches of the company's deal sold at the tight end of talk, which had firmed around 10 bps from initial guidance.

The company priced $500 million of 1.25% three-year notes at 99.963 to yield 1.263%, or Treasuries plus 45 bps and $1 billion of 2.25% five-year notes priced at 99.759 to yield 2.301%, or Treasuries plus 70 bps.

Finally, $1 billion of 3.5% 10-year notes sold at 99.272 to yield 3.587%.

The notes priced at Treasuries plus 105 bps.

The source noted that the deal was more than three times oversubscribed.

Express Scripts' notes due 2019 were seen at 67 bps offered in secondary trading, a trader said.

The company's tranche of notes due 2024 were quoted at 106 bps bid, 103 bps offered.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and RBS Securities Inc. were the joint bookrunners.

Proceeds will be used to repay the company's 2.75% senior notes due 2014, to redeem its 3.5% senior notes due 2016 and for general corporate purposes.

Express Scripts is a St. Louis-based pharmacy benefit management provider.

Caterpillar's two-parter

Caterpillar Financial Services was in the market with $1 billion of senior notes (A2/A/A) in two parts, according to a market source and two separate FWP filings with the Securities and Exchange Commission.

The company priced $750 million of 2.1% five-year notes at par to yield Treasuries plus 50 bps and $250 million of 3.3% 10-year bonds priced at 80 bps over Treasuries.

The notes due 2024 sold at 99.713 to yield 3.334%.

Both tranches of the deal sold tighter than talk, which was set at the 60 bps area and the 90 bps, area respectively.

Goldman Sachs & Co. and BofA Merrill Lynch were the joint bookrunners for the sale.

Caterpillar was last in the market with $250 million of floating-rate medium-term notes, series H, due 2016. The notes sold at par to yield Libor plus 10 bps on May 22.

The funding arm of heavy equipment maker Caterpillar is based in Nashville, Tenn.

TJX upsizes

TJX Cos. Came to market with an upsized $750 million of 2.75% senior notes due June 15, 2021 priced at Treasuries plus 65 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes (A3/A+/) priced at 99.93 to yield 2.761%.

Pricing was tighter than guidance, which was set in the low-80 bps area over Treasuries.

TJX's 2.75% notes due 2021 traded better in the secondary market at 62 bps bid, 59 bps offered, a trader said.

BofA Merrill Lynch, HSBC Securities (USA) Inc., Deutsche Bank Securities Inc. and Wells Fargo Securities LLC were the bookrunners.

Proceeds will be used to redeem the company's $400 million of 4.2% notes due August 15, 2015 and for working capital and other general corporate purposes

The retailer of off-price apparel and home fashions is based in Framingham, Mass.

Everest new issue

The new issue market also saw Everest Reinsurance Holdings price $400 million of 4.868% senior notes due 2044 at par to yield 150 bps over Treasuries, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes (Baa1/A-/) sold in line with talk, which was set in the mid-100 bps area over Treasuries.

Wells Fargo Securities LLC, Citigroup Global Markets Inc. and HSBC Securities (USA) Inc. were the joint bookrunners.

Proceeds will be used for general corporate purposes, including the retirement of the Bermuda-based company's outstanding 5.4% senior notes due 2014.

PPL prices tight

PPL Electric Utilities sold its $300 million issue of 4.125% first mortgage bonds due 2044 at the tight end of talk during the session with a spread of 82 bps over Treasuries, according to a market source and a FWP filed with the Securities and Exchange Commission.

The deal's talk of Treasuries plus 85 bps had tightened from earlier guidance, which was set in the area of Treasuries plus 90 bps.

PPL Electric's 4.125% bonds due 2044 headed out wider at 86 bps bid, 82 bps offered, a trader said.

Citigroup Global Markets Inc., RBC Capital Markets LLC, RBS Securities Inc. and UBS Securities LLC were the joint bookrunners.

Proceeds will be used to fund capital expenditures, to repay short-term debt and for other general corporate purposes

The electric company is based in Allentown, Pa.

Delmarva adds on

The primary also saw Delmarva Power & Light sell a $200 million add-on to its existing 3.5% first mortgage bonds (A2/A/A) due Nov. 15, 2023 at Treasuries plus 70 bps, according to a market source and a FWP filed with the Securities and Exchange Commission.

Pricing was at 102.132 to yield 3.23%.

Delmarva's 3.5% notes due 2023 firmed to 68 bps bid, 66 bps offered, a trader said.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, SunTrust Robinson Humphrey Inc. and Scotia Capital (USA) Inc. were the joint bookrunners.

Proceeds will be used to repay outstanding commercial paper and for general corporate purposes.

Delmarva, an electric and natural gas utility based in Wilmington, Del., priced the original $300 million of 3.5% first mortgage bonds due with a spread of Treasuries plus 90 bps on Nov. 7.

Southwestern mortgage bonds

Rounding out the day's new deals, Southwestern Public Service priced a $150 million issue of 3.3% first mortgage bonds due 2024 in line with talk at Treasuries plus 80 bps, according to an informed source and a FWP filing with the Securities and Exchange Commission.

Pricing was at 99.67 to yield 3.339%.

Southwestern Public's 3.3% notes due 2024 traded wrapped around issuance at 80 bps bid, a trader said.

RBS Securities Inc. and Credit Suisse Securities (USA) LLC were the joint bookrunners.

Proceeds will be used to repay short-term borrowings incurred to fund the company's daily operational needs

The Amarillo, Texas-based electric utility was last in the U.S. bond market with a $100 million tap of its 4.5% first mortgage bonds due 2041 sold with a spread of 98 bps over Treasuries on Aug. 13.

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