Lowe’s, RBC, Fannie Mae open week; Occidental Petroleum, ConocoPhillips tightens

By Aleesia Forni and Cristal Cody

New York, April 11 – Lowe’s Cos. Inc., Royal Bank of Canada and Fannie Mae took advantage of supportive market conditions to bring new deals to market on Monday.

Lowe’s offered $3.3 billion of notes in four parts to help fund its planned acquisition of RONA Inc., a Canadian distributor and retailer of hardware, home improvement and gardening products.

The acquisition is valued at $2.3 billion.

Other proceeds from the sale will be used to repay debt and for general corporate purposes.

Elsewhere in the primary, Royal Bank of Canada offered $1.75 billion of three-year notes in fixed- and floating-rate tranches.

And Fannie Mae announced it auctioned a $1 billion reopening of its existing three-year notes on Monday.

Looking ahead, sources are anticipating around $15 billion of supply this week as earnings season gets underway.

Investment-grade energy bonds traded mostly better on Monday.

Occidental Petroleum Corp.’s 3.4% senior notes due 2026 firmed 6 bps over the day.

ConocoPhillips Co.’s 4.95% notes due 2026 headed out 8 bps better in the secondary market.

Exxon Mobil Corp.’s 3.043% notes due 2026 tightened 2 bps during the session.

Duke Energy Carolinas LLC’s 2.5% first and refunding mortgage bonds due 2023 were unchanged on Monday.

The Markit CDX North American Investment Grade index ended 1 bp tighter at a spread of 81 bps.

Lowe’s offer

Lowe’s priced $3.3 billion of senior notes (A3/A-) in four parts on Monday, according to a market source.

The offering included $350 million of 1.15% three-year notes sold at 99.892 to yield 1.187%, or Treasuries plus 35 basis points.

A $250 million three-year floater sold at Libor plus 24 bps.

The issuer priced $1.35 billion of 2.5% 10-year bonds with a spread of Treasuries plus 82 bps. Pricing was at 99.544 to yield 2.552%.

And $1.35 billion of 3.7% 30-year bonds priced with a spread of Treasuries plus 117 bps, or 99.444 to yield 3.731%.

Wells Fargo Securities LLC, Goldman Sachs & Co. and U.S. Bancorp Investments Inc. are the bookrunners.

Proceeds will be used to fund the acquisition of RONA, for the repayment of $475 million of 2.125% notes due April 15, 2016, for the repayment of $550 million of 5.4% notes due Oct. 15, 2016 and for other general corporate purposes, which may include repurchases of shares of common stock, capital expenditures, financing of future acquisitions or strategic investments and working capital needs.

The home improvement company is based in Mooresville, N.C.

RBC two-parter

Royal Bank of Canada priced $1.75 billion of three-year senior notes (Aa3/AA-/AA) in fixed- and floating-rate tranches on Monday, according to two separate FWP filings with the Securities and Exchange Commission.

There was $1.35 billion of 1.625% notes priced at 99.945 to yield 1.644%, or Treasuries plus 82 bps.

A $400 million three-year floater sold at par to yield Libor plus 71 bps.

Bookrunners were RBC Capital Markets, LLC, J.P. Morgan Securities LLC and BofA Merrill Lynch.

Royal Bank of Canada is a Toronto-based financial services company.

Fannie Mae reopening

Fannie Mae announced on Monday that it auctioned a $1 billion reopening of its existing 1% Benchmark Notes due Feb. 26, 2019.

The notes priced at 100.265 to yield 0.906%.

The original $3 billion issue sold at 99.764 to yield 1.08%, or Treasuries plus 16.5 basis points, on Feb. 19.

Fannie Mae will apply to list the securities on the EuroMTF market of the Luxembourg Stock Exchange.

The mortgage credit provider is based in Washington, D.C.

Occidental Petroleum stronger

Occidental Petroleum’s 3.4% notes due 2026 headed out 6 bps tighter at 150 bps bid, a market source said.

The company sold $1.15 billion of the notes (A3/A/A) on March 28 at a spread of Treasuries plus 155 bps.

The oil and gas, chemical and midstream company is based in Los Angeles.

ConocoPhillips tightens

ConocoPhillips’ 4.95% notes due 2026 traded 8 bps better on Monday at 258 bps bid, according to a market source.

ConocoPhillips sold $1.25 billion of the bonds (Baa2/ A/A-) on March 3 at a spread of 312.5 bps plus Treasuries.

The energy company is based in Houston.

Exxon Mobil improves

Exxon Mobil’s 3.043% notes due 2026 firmed 2 bps in secondary trading to 86 bps bid, a market source said.

The company sold $2.5 billion of the notes (Aaa/AAA) on Feb. 29 at 130 bps over Treasuries.

Exxon Mobil is an energy company based in Irving, Texas.

Duke Energy flat

Duke Energy’s 2.5% bonds due 2023 were unchanged on the day at 72 bps bid, a market source said.

The company sold $500 million of the bonds (Aa2/A/AA-) on March 8 at a spread of Treasuries plus 87 bps.

The Charlotte, N.C.-based company generates, transmits, distributes and sells electricity and is a wholly owned subsidiary of Duke Energy Corp.

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