Eli Lilly, Texas Instruments, Fairfax price; Biogen, Delta Air on tap; bank paper improves

By Cristal Cody

Tupelo, Miss., April 24 – Eli Lilly & Co. sold $1 billion of 2.25% 30-year senior notes on Friday with the lowest coupon for a 30-year corporate bond on record, a source said.

The session also saw additional supply.

Texas Instruments Inc. priced $750 million of 10-year notes.

Fairfax Financial Holdings Ltd. sold $650 million of 10-year senior notes.

First Financial Bancorp priced $150 million of 10-year fixed-to-floating rate subordinated notes.

The deals bring week to date high-grade corporate issuance to more than $36 billion.

Supply is expected to ramp up next week with syndicate sources forecasting about $40 billion to $50 billion of new issuance.

Biogen Inc. is expected to tap the primary market with a new issue following fixed-income investor calls held Friday.

The company was last in the high-grade primary market on Sept. 10, 2015 when it sold $6 billion of senior notes in four tranches.

In addition, Delta Air Lines, Inc. is expected in the primary market with a $1.5 billion split-rated offering of five-year senior secured first-lien bullet notes (Baa3/BB) talked at the 7% area.

The company held fixed income investor calls on Thursday, a source said.

The Markit CDX North American Investment Grade 33 index headed out modestly softer at a spread of 93.96 basis points on Friday.

High-grade ETFs softened at the start of the session but recovered by the afternoon as stocks ended stronger.

The iShares iBoxx Investment Grade Corporate Bond ETF dipped 0.35% at the start of the day and ended off 0.7% at 129.90.

The PIMCO Investment Grade Corporate Bond Index ETF declined 0.25% early Friday and closed up 0.05% at 110.48.

In the secondary market, new bonds were active, sources said.

Expedia Inc.’s upsized $2.75 billion of senior notes (Baa3/BBB-/) priced in two tranches in a Rule 144A transaction on Thursday saw heavy trading volume, a trader said.

The $2 billion tranche of notes due May 1, 2025 priced at par to yield 6.25% were quoted at 101 bid, 101.5 offered.

Expedia’s $750 million of notes due May 1, 2025 priced at par to yield 7% were quoted Friday at 100.875 bid, 101.375 offered.

New bank paper priced over the week from Bank of America Corp., Bank of Montreal, Wells Fargo & Co. and Morgan Stanley (A3/BBB+/A) also improved about 1 bp to 8 bps in the secondary market, a source said.

Morgan Stanley’s $3 billion of 2.188% global medium-term fixed-to-floating-rate senior notes due April 28, 2026 firmed more than 5 bps. The notes priced Thursday at par to yield a spread of 183 bps over Treasuries.

Meanwhile, inflows to U.S. investment-grade bond funds and ETFs totaled $3.89 billion for the past week ended Wednesday, down from $6.48 billion of inflows in the prior week, according to a BofA Securities, Inc. research note released Friday.

The decline in inflows was driven by weaker inflows to the short-term space to $570 million from $1.95 billion a week earlier, weaker flows to high-grade excluding short-term of $3.32 billion from $4.53 billion in the previous week and weaker inflows to high-grade ETFs of $1.92 billion from $5.69 billion a week ago.

Inflows to high-grade bond funds increased to $1.97 billion from $800 million in the previous week, according to the report.

Eli Lilly sells $1 billion notes

Eli Lilly sold $1 billion of 2.25% 30-year senior notes (A2/A+/A) on Friday at 99.609 to yield 2.268%, or a spread of 110 bps over Treasuries, according to a market source and an FWP filing with the Securities and Exchange Commission.

Initial price talk was in the Treasuries plus 145 bps area with guidance firmed to the 115 bps area, plus or minus 5 bps.

BofA Securities, Inc., Barclays, Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. LLC were the bookrunners.

Eli Lilly is an Indianapolis-based pharmaceutical company.

Texas Instruments prices

Texas Instruments tapped the primary market with $750 million of 1.75% 10-year notes (A1/A+/) at 99.89 to yield 1.762%, or a spread of 115 bps over Treasuries, according to a market source and an FWP filing.

The issue was initially talked to price in the 150 bps spread area.

Citigroup Global Markets Inc., Mizuho Securities USA Inc., Morgan Stanley & Co. LLC, Barclays, BofA Securities, J.P. Morgan Securities LLC and MUFG were the bookrunners.

Texas Instruments is a Dallas-based semiconductor designer and manufacturer.

Fairfax taps dollar market

Fairfax Financial Holdings sold $650 million of 10-year senior notes (Baa3/BBB-/) at par to yield 4.625% in a Rule 144A and Regulation S transaction on Friday, according to a market source and a press release.

BofA Securities, Citigroup, J.P. Morgan, BMO Capital Markets Corp. and RBC Capital Markets, LLC were the bookrunners.

Fairfax held investor calls on Thursday.

Fairfax Financial is a Toronto-based holding company for subsidiaries in the property and casualty insurance business.

First Financial sells notes

First Financial Bancorp also priced $150 million of 10-year fixed-to-floating rate subordinated notes (Kroll: BBB) at par to yield 5.25% on Friday, according to an FWP filing.

The fixed rate will reset on May 15, 2025 to but excluding the maturity to a floating rate of SOFR plus 509 bps.

Keefe, Bruyette & Woods was the bookrunner.

The bank holding company is based in Cincinnati.

Biogen eyes primary

In other activity on Friday, Biogen (Baa1/A-/) held fixed income investor calls for an upcoming bond offering, according to a market source.

BofA Securities, Goldman Sachs and J.P. Morgan are the arrangers.

The biotechnology company is based in Cambridge, Mass.

© 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.