Primary heats up with IBM, Northrop, GATX deals; bonds mixed, credit spreads firm; eBay soft

By Aleesia Forni and Cristal Cody

Virginia Beach, Feb. 3 – The investment-grade bond market hosted a flurry of activity on Tuesday, with International Business Machines Corp., GATX Corp., Manufacturers and Traders Trust Co., Northrop Grumman Corp., Japan Bank for International Cooperation, European Investment Bank and Erste Abwicklungsanstalt pricing bonds.

IBM brought to market the largest new issue of the session, pricing $2 billion of three-year senior notes in fixed- and floating-rate tranches.

In other primary happenings, Northrop Grumman sold $600 million of 30-year bonds around 17 basis points tight of initial guidance. The deal attracted an orderbook that was more than 5 times oversubscribed.

M&T Trust also sold both tranches of its $1.5 billion new issue of bank notes at the tight end of talk.

GATX priced $650 million of notes in three parts, adding a 30-year tranche prior to the deal’s launch.

Meanwhile, Japan Bank for International Cooperation and Erste Abwicklungsanstalt were each in the market with $1 billion offerings, and EIB sold a $3 billion new issue.

“Everything went very well today,” one source said, adding that the overall tone to the session was positive amidst rallying oil prices and equities.

The session also saw International Bank for Reconstruction and Development (World Bank) and Kommunalbanken AS join the forward calendar.

The high-grade primary market has seen more than $19 billion of new issuance in the first two sessions of the week.

Bonds were mixed in secondary trading on Tuesday, while credit spreads tightened, sources said.

The Markit CDX North American Investment Grade index firmed 3 bps to a spread of 66 bps.

In the secondary market, Wal-Mart Stores Inc.'s 3.3% notes due 2024 firmed 1 bp over the day.

General Electric Capital Corp.’s 3.45% notes due 2024 traded unchanged.

eBay Inc.’s 3.45% senior notes due 2024 were quoted 2 bps weaker over the session and nearly 40 bps wider since December.

EIB sells $3 billion

The European Investment Bank priced $3 billion of 1.875% 10-year notes (Aaa/AAA/AAA) at mid-swaps plus 5 bps, according to a market source.

Pricing was in line with talk.

Barclays, Deutsche Bank and J.P. Morgan Securities LLC ran the books.

The lender for the European Union is based in Kirchberg, Luxembourg.

IBM two-parter

Also on Tuesday, International Business Machines sold $2 billion of senior notes (Aa3/AA-/A+) due 2018 in fixed- and floating-rate tranches, according to a market source.

There was $500 million of floating-rate notes priced at par to yield Libor plus 19 bps.

A second tranche was $1.5 billion of 1.125% three-year notes sold at 99.695 to yield 1.229%, or Treasuries plus 40 bps.

The notes sold at the tight end of price talk.

The bookrunners were BofA Merrill Lynch, Citigroup Global Markets Inc., MUFG and Wells Fargo Securities LLC.

Proceeds will be used for general corporate purposes.

The information technology and computer company is based in Armonk, N.Y.

M&T bank notes

Manufacturers and Traders Trust priced $1.5 billion of senior bank notes (A1/A/) in tranches due 2020 and 2025 on Tuesday, according to informed sources.

The company priced $750 million of 2.1% five-year notes at 83 bps over Treasuries.

Pricing was at 99.943 to yield 2.112%.

A second tranche was $750 million of 2.9% 10-year bonds sold at 99.888 to yield 2.913% with a spread of 113 bps over Treasuries.

Both tranches sold at the tight end of talk.

The Buffalo, N.Y.-based bank plans to use proceeds for general corporate purposes.

The bookrunners were Citigroup Global Markets, JPMorgan and Morgan Stanley & Co. LLC.

GATX new issue

The primary also saw GATX price $650 million of senior notes (Baa2/BBB/) on Tuesday in three parts, according to a market source and an FWP filed with the Securities and Exchange Commission.

There was a $100 million tap of the company’s 2.6% senior notes due March 30, 2020 priced at Treasuries plus 115 bps.

Pricing was at 100.838 to yield 2.423%.

The notes sold at the tight end of talk.

The original $250 million of 2.6% senior notes (Baa2/BBB/) due March 30, 2020 priced at Treasuries plus 120 bps on Oct. 28.

There was also $300 million of 3.25% 10-year notes priced at 98.937 to yield 3.374%, or Treasuries plus 160 bps.

The notes sold at the tight end of talk.

Finally, $250 million of 4.5% notes due 2045 priced at 99.728 to yield 4.516%, or Treasuries plus 215 bps.

The 30-year issue was added prior to the deal’s launch.

BofA Merrill Lynch and Citigroup Global Markets were the bookrunners.

Proceeds will be used to repay $100 million outstanding of the company’s 5.7% notes due April 15, 2015, to repay $250 million of 4.75% notes due May 15, 2015 and for general corporate purposes, including working capital and capital expenditures.

The transportation leasing service company is based in Chicago.

Northrop prices tight

Northrop Grumman priced on Tuesday a $600 million issue of 3.85% senior notes (Baa2/BBB/BBB+) due 2045 with a spread of Treasuries plus 148 bps, according to an FWP filed with the SEC.

The notes sold at the tight end of the Treasuries plus 150 bps area talk, which had firmed from guidance set in the 165 bps area over Treasuries.

The bookrunners were Deutsche Bank Securities, JPMorgan, BofA Merrill Lynch, Mizuho Securities and MUFG.

Proceeds will be used for general corporate purposes.

The global security company is based in Falls Church, Va.

JBIC prices tight

Japan Bank for International Cooperation priced $1 billion of 2.125% guaranteed bonds (A1/AA-/) due 2025 at mid-swaps plus 31 bps, or Treasuries plus 44.8 bps, according to a market source and an FWP filed with the SEC.

The bonds sold tight of price guidance set in the high-30 bps area over mid-swaps.

Pricing was at 99.339 to yield 2.199%.

The bonds are guaranteed by Japan.

BNP Paribas Securities Corp., BofA Merrill Lynch, Daiwa Capital Markets Europe and Nomura International plc were the joint bookrunners.

Proceeds will be used for the bank’s financing operations.

The financial institution is based in Tokyo.

EAA new issue

Erste Abwicklungsanstalt sold $1 billion of 1.125% three-year notes on Tuesday at 99.94 with a spread of mid-swaps plus 10 bps, a market source said.

Pricing was in line with talk.

Barclays, BofA Merrill Lynch, HSBC and Goldman Sachs & Co. were the bookrunners.

The public law agency is charged with winding up portfolios transferred to it and is based in Dusseldorf.

World Bank sets talk

In forward calendar news, International Bank for Reconstruction and Development (World Bank) is planning to price a benchmark offering of seven-year notes, according to a market source.

The notes are talked in the mid-swaps plus 2 bps area.

BNP Paribas Securities, BofA Merrill Lynch, Citigroup Global Markets and TD Securities are the bookrunners.

The issuer is based in Washington, D.C.

KBN preps green bond

Kommunalbanken also joined the calendar on Tuesday, setting price talk for a planned $500 million offering of 10-year green bonds (Aaa/AAA/) in the mid-swaps plus high-teens bps area, a market source said.

The sale is being done under Rule 144A and Regulation S.

The bookrunners are BofA Merrill Lynch, HSBC, JPMorgan and Morgan Stanley.

Proceeds will be used to fund climate-friendly projects.

The government-funded lender to municipalities is based in Oslo.

Wal-Mart improves

Wal-Mart’s 3.3% notes due 2024 (Aa2/AA/AA) firmed 1 bp to 71 bps bid, according to a market source.

The company priced a $500 million add-on to the issue on Oct. 7 at a spread of Treasuries plus 73 bps.

Wal-Mart originally sold $1 billion of the notes on April 15, 2014 at Treasuries plus 73 bps.

The discount retailer is based in Bentonville, Ark.

GE Capital unchanged

General Electric Capital’s 3.45% notes due 2024 (A1/AA+/) were seen flat in trading at 89 bps bid, a market source said.

GE Capital sold $1 billion of the notes on May 12, 2014 at a spread of Treasuries plus 85 bps.

The financial products and services subsidiary of General Electric Co. is based in Norwalk, Conn.

eBay weak

In other secondary trading, eBay’s 3.45% notes due 2024 (A2/A/A) eased 2 bps to 186 bps bid, according to a market source.

The notes were quoted on Dec. 9 flat at 149 bps bid.

eBay sold $750 million of the notes on July 23 at Treasuries plus 100 bps.

The global online commerce and payments platform company is based in San Jose, Calif.

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