ArcelorMittal, Juniper, BB&T sell as primary bounces back; ArcelorMittal short bonds widen

By Andrea Heisinger and Cristal Cody

New York, Feb. 28 - ArcelorMittal, Juniper Networks, Inc., BB&T Corp., John Deere Capital Corp. and the Bank of England all sold bonds in the high-grade market on Monday as volume returned.

One of the largest sales of the day came from Juniper Networks with its $1 billion of notes in three parts. All of the maturities sold at the tight end of initial guidance.

The most sizeable trade came from steel maker ArcelorMittal. It was massively oversubscribed and totaled $3 billion with maturities of 2016, 2021 and 2041.

BB&T sold an upsized $1 billion of five-year notes. The size was doubled from what was originally announced.

John Deere Capital, which also increased the size of its offering considerably, followed with a $750 million deal, up from $350 million.

There was a sovereign sale from the Bank of England. The central bank of the United Kingdom priced $2 billion of three-year bonds under Rule 144A and tight to guidance in the mid-swaps.

In the secondary market, the new deals mostly traded tighter in line with the overall market tone, according to sources.

The Markit CDX Series 14 North American investment-grade index firmed 1 basis point to a spread of 82 bps, according to Markit Group Ltd.

In trading, ArcelorMittal's new five-year notes widened 2 bps, while its long bonds were stronger, a trader said.

Overall investment-grade Trace volume rose 6.5% to about $11.5 billion.

Treasuries traded flat on a quiet trading day Monday. Yields were little changed on the long end of the curve. The 10-year note yield rose 1 bp to 3.42%. The 30-year bond yield fell 1 bp to 4.49%.

"It's very quiet - a 3 basis point range in 10-year yields, which is remarkably light for a month-end Monday," said John Briggs, strategist at RBS Securities Inc. "We certainly had a strong run in the market over the last week."

Treasuries rallied the previous week as oil prices rose on uprisings in the Middle East.

Deal flow to continue

The market tone looked good from the outset of the day, sources said, and there were already deals queued up from the end of the previous week.

"We had some people hold off," one syndicate source said. "They thought things might clear over the weekend."

Issuance in the previous week was light due to factors that included tensions in countries overseas that have since lessened.

The next two days - especially Tuesday - already have deals on tap.

"We had a number of calls today and have a similar calendar [tomorrow] as today," a source said late in the afternoon.

"Everybody's gearing up. We have two to three trades on deck."

ArcelorMittal $3 billion deal

ArcelorMittal priced $3 billion of notes (Baa3/BBB-/BBB) in three tranches late in the day, said a source close to the trade.

There was about $13.5 billion in total on the books, the source said, with about 390 investors. Most interest was directed to the 10-year tranche, which had nearly $5.5 billion.

The $500 million tranche of 3.75% five-year notes priced at a spread of Treasuries plus 170 bps. It sold at the tight end of guidance in the 175 bps area, with a margin of plus or minus 5 bps.

A $1.5 billion tranche of 5.5% 10-year notes sold at 215 bps over Treasuries. The notes also sold at the tight end of talk in the 220 bps area, plus or minus 5 bps.

The final tranche was $1 billion of 6.75% 30-year bonds sold at a spread of Treasuries plus 230 bps. Price talk was in the 235 bps area, plus or minus 5 bps, and the notes priced at the tight end of that.

Bookrunners were Bank of America Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.

Proceeds are going towards general corporate purposes and to refinance existing debt.

ArcelorMittal's notes were mixed in the secondary, a trader said. The notes due 2016 widened 2 bps to 168 bps, while the notes due 2021 traded tighter at 212 bps.

The tranche of bonds due 2041 was 4 bps stronger at 226 bps in trading, the source said.

The steel producer is based in Luxembourg.

Juniper prices first bonds

Juniper Networks priced $1 billion of senior notes (Baa2/BBB) in three parts in its first trip to the debt market, an informed source said.

Despite the lack of familiarity with investors, there was $15.5 billion total on the books.

"It was limited to $1 billion, with a no-grow [provision]," the informed source said. "I think everyone jumped on board once they saw that."

The $300 million of 3.1% five-year notes priced at a spread of Treasuries plus 100 bps. The notes sold at the tight end of talk in the 105 bps area, plus or minus 5 bps, a source said.

A $300 million tranche of 4.6% 10-year notes sold at 120 bps over Treasuries. It also priced at the tight end of guidance in the 125 bps area.

The third tranche was $400 million of 5.95% 30-year bonds sold at a spread of Treasuries plus 145 bps. The securities sold at the tight end of talk in the 150 bps area.

This was the company's first debt offering, and that affected how long the deal took to price without any outstanding bonds for guidance, a source said.

"It took a while to get going, but went pretty smoothly," the source said.

Barclays Capital Inc., Citigroup Global Markets Inc. and Morgan Stanley & Co. Inc. ran the books.

Proceeds are being used for general corporate purposes, including working capital, capital expenditures, share repurchases and acquisitions of products, technology or businesses.

The tranches were seen active in the gray market.

The notes due 2016, launched at 100 bps, were seen at 88 bps, a trader said. The notes due 2021 were quoted in the gray market at 110 bps, while the bonds due 2041 were quoted at 141 bps.

The network designer and developer is based in Sunnyvale, Calif.

BB&T doubles deal size

Virginia-based BB&T sold an upsized $1 billion of 3.2% five-year notes (A2/A/A+) priced at a spread of 110 bps over Treasuries, a market source said.

The size of the deal was doubled from $500 million as demand increased, the source said.

BB&T Capital Markets Corp. and Deutsche Bank Securities Inc. were bookrunners.

Proceeds are being used for general corporate purposes, including acquisitions of other companies, common stock share repurchase, the repayment of maturing obligations and debt refinancing.

In the secondary market, BB&T's tranche of notes due 2016 firmed 5 bps on the offer side to 105 bps, a trader said.

The financial services company is based in Richmond, Va.

John Deere unit adds floaters

John Deere Capital sold an upsized $750 million of notes (A2/A) ahead of the close in two tranches, according to a market source away from the deal.

The size was increased from $350 million when a tranche of floating-rate notes was added to the deal.

That $250 million tranche of three-year floaters priced at par to yield Libor plus 22 bps.

A second tranche of $500 million of 1.6% three-year notes priced a spread of Treasuries plus 47 bps. This was at the tight end of guidance in the 50 bps area.

Bank of America Merrill Lynch, Barclays Capital Inc. and J.P. Morgan Securities Inc. were bookrunners.

Proceeds are being used for general corporate purposes.

John Deere's fixed-rate notes due 2014 traded 1 bp tighter late afternoon in the secondary market at 46 bps bid, a trader said.

The financing arm of heavy equipment maker Deere & Co. is based in Reno, Nev.

Bank of England $2 billion

The Bank of England priced $2 billion of 1.375% three-year notes (Aaa/AAA) early in the day at a spread of Treasuries plus 25.8 bps, or mid-swaps minus 1 bp, an informed source said.

Price talk was in the mid-swaps flat area, a source said.

They were sold under Rule 144A.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc., HSBC Securities and J.P. Morgan Securities LLC were bookrunners.

The central bank for the United Kingdom is based in London.

Equity Lifestyle preferreds

Equity Lifestyle Properties, Inc. announced a $100 million sale of 8.034% perpetual series A cumulative preferred stock, according to a 424B3 filing with the Securities and Exchange Commission and a market source.

A launch is expected in the morning, the source said, with pricing soon after.

Bank of America Merrill Lynch, Morgan Stanley & Co. Inc. and Wells Fargo Securities LLC are bookrunners.

The real estate investment trust for lifestyle properties is based in Chicago.

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