High-grade supply surges; Comcast, Lowe’s, MasterCard, Citi, Baxter, Kimberly-Clark price

By Cristal Cody

Tupelo, Miss., March 24 – High-grade issuers priced nearly $20 billion of new paper over Tuesday’s session as the market tone improved despite the coronavirus-related volatility.

Comcast Corp. priced $4 billion of senior notes in four tranches.

Lowe's Cos., Inc. sold $4 billion of notes in four tranches.

MasterCard Inc. priced $4 billion of notes in three tranches.

Citigroup Inc. priced $4 billion of 11-year fixed-to-floating-rate senior notes.

Baxter International Inc. sold $1.25 billion of senior notes in two parts.

Florida Power & Light Co. brought $1.1 billion of five-year first mortgage bonds.

Kimberly-Clark Corp. priced $750 million of 10-year senior notes.

Chevron Phillips Chemical Co. LLC came with $650 million of five-year senior notes.

Also, the Kingdom of Sweden priced $2 billion of two-year bonds.

Final pricing was fixed at 40 basis points above the U.S. benchmark.

“Managing to execute this planned transaction amid the market turbulence sparked by the coronavirus shows strength,” Anna Sjulander, head of funding at the Swedish National Debt Office, said in a release.

Credit ratings downgrades continued on Tuesday at a deluge and included Delta Air Lines Inc. (Baa3/BB/BBB-), which was downgraded to junk by S&P Global Ratings on expected lower revenue.

Chevron Phillips Chemical was downgraded on Wednesday to BBB+ from A- from S&P.

In other market activity on Tuesday, Raymond James Financial, Inc. (Baa1/BBB+/) held fixed income investor calls for a possible senior note offering, a source said.

BofA Securities, Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Raymond James &

Associates are the arrangers.

High-grade deal volume totals more than $38 billion week to date, following more than $19 billion of volume on Monday.

Up to $70 billion of supply is anticipated this week after issuers priced more than $61 billion of high-grade bonds last week, according to market sources.

Market tone was improved following Monday’s steps by the Federal Reserve to shore up the economy, including new credit facilities to purchase corporate bonds, sources said.

The Markit CDX North American Investment Grade 33 index tightened to a spread of 107.83 bps from a 125.86 bps reading on Monday.

Stocks recovered some losses over the session with the S&P 500 ending up 9.38% and the Dow Jones industrial average up 11.37%.

Treasuries softened. The benchmark 10-year note yield rose 5.2 bps to 0.816%.

Bonds improve

New issues priced on Monday mostly tightened in the secondary market with paper improving about 2 bps to more than 20 bps, a source said.

General Dynamics Corp.’s $4 billion of guaranteed senior notes (A2/A/A) priced in five tranches on Monday tightened about 15 bps to 27 bps from issuance.

The company’s 3.625% notes due April 1, 2030 firmed to the 282 bps bid area.

General Dynamics sold $1 billion of the 10-year notes at 98.947 to yield 3.752% and a Treasuries plus 300 bps spread.

The 10-year tranche was initially talked to price in the Treasuries plus 320 bps to 325 bps area.

In other secondary trading, Walt Disney Co.’s 4.7% medium-term notes due March 23, 2050 (A2/A/A) that priced as part of a $6 billion five-tranche offering on Thursday continued to climb on Tuesday, a market source said.

The notes rose more than 6 points in trading on Monday to 113.69 and headed out on Tuesday over 4 points better at 117.78.

The notes traded at 107.49 on Friday.

Walt Disney sold $1.75 billion of the 30-year notes on Thursday at 99.316 to yield 4.743% and a Treasuries plus 285 bps spread.

Comcast prices $4 billion

Comcast priced $4 billing of senior notes (A3/A-/A-) in four tranches in the deal on Tuesday, according to a market source and an FWP filing with the Securities and Exchange Commission.

The company sold $800 million of 3.1% five-year notes at 99.949 to yield 3.111% and a spread of 260 bps over Treasuries, tighter than talk in the 310 bps area.

An $800 million tranche of 3.3% seven-year notes priced at 99.733 to yield 3.343%, or a Treasuries plus 260 bps spread. The notes were talked at the 300 bps area.

Comcast sold $1.6 billion of 3.4% 10-year notes at 99.823 to yield 3.421% and a spread of 260 bps over Treasuries, tighter than initial talk in the 300 bps area.

In the final tranche, $800 million of 3.75% 20-year notes priced at 99.456 to yield 3.789% and with a 240 bps over Treasuries spread. Initial price talk was at the 290 bps over Treasuries area.

BofA Securities, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC were the bookrunners.

Comcast is a media and technology company based in Philadelphia.

Lowe's sells four tranches

Lowe's priced $4 billion of notes (Baa1/BBB+/) in four tranches on Tuesday, according to a market source and an FWP filing.

The company sold $750 million of five-year notes at 99.771 to yield 4.05%, or a spread of 355 bps over Treasuries.

Initial price talk was in the 380 bps spread area.

A $1.25 billion tranche of 4.5% 10-year notes priced at 99.518 to yield 4.56% and a spread of Treasuries plus 375 bps., compared to talk in the 400 bps area.

The company sold $750 million of 5% 20-year bonds at 99.533 to yield 5.037%. The notes priced with a spread of Treasuries plus 360 bps. Price guidance was in the Treasuries plus 400 bps area.

Finally, $1.25 billion of 30-year notes priced at 99.814 to yield 5.137%. The notes priced at a spread of 370 bps over Treasuries.

The bonds were talked to print in the 410 bps spread area.

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

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

MasterCard prices $4 billion

MasterCard priced $4 billion of notes (A1/A+/) in three tranches on Tuesday, according to a market source.

The company sold $1 billion of 3.3% seven-year notes at a spread of 260 bps plus Treasuries. Initial talk was in the Treasuries plus 300 bps area.

A $1.5 billion tranche of 3.35% 10-year notes priced at a Treasuries plus 255 bps spread. The notes were initially talked to price in the Treasuries plus 300 bps area.

Also, $1.5 billion of 3.85% 30-year notes priced with a spread of 250 bps over Treasuries, tighter than talk in the 300 bps area.

Citigroup, Barclays, BofA Securities, Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc. and MUFG were the bookrunners.

MasterCard is a Purchase, N.Y.-based global payment solutions company.

Citigroup brings fixed/floaters

Citigroup priced $4 billion of 4.412% fixed-to-floating-rate senior notes due March 31, 2031 (A3/BBB+/A) on Tuesday at a spread of Treasuries plus 360 bps, according to a market source.

Initial talk was in the Treasuries plus 375 bps area.

The notes will reset to a floating rate after the initial fixed-rate period.

Citigroup Global Markets was the bookrunner.

The financial services company is based in New York.

Baxter sells notes

Baxter International sold $1.25 billion of senior notes (Baa1/A-/A-) in two tranches on Tuesday, according to a market source.

The company priced $750 million of 3.75% notes due Oct. 1, 2025 at a spread of 325 bps over Treasuries.

Initial price talk was in the 365 bps area.

Baxter sold $500 million of 3.95% 10-year notes at a 315 bps spread over Treasuries, tighter than talk in the 365 bps area.

Citigroup, Goldman Sachs and J.P. Morgan were the active bookrunners. BofA Securities, Inc. was passive.

Baxter is a medical products and health care company based in Deerfield, Ill.

Florida Power prices $1.1 billion

Florida Power & Light priced $1.1 billion of 2.85% five-year first mortgage bonds (Aa2/A+/AA-) on Tuesday at a spread of 237.5 bps over Treasuries, tighter than talk in the 287.5 bps area, according to a market source and an FWP filing.

The notes priced at 99.898 to yield 2.872%.

Mizuho Securities USA Inc., SMBC Nikko Securities America Inc., U.S. Bancorp Investments Inc., Wells Fargo, BNP Paribas Securities Corp., CIBC World Markets Corp., Credit Agricole Securities (USA) Inc., Fifth Third Securities Inc., KeyBanc Capital Markets Inc., Scotia Capital (USA) Inc. and TD Securities (USA) LLC were the bookrunners.

Florida Power & Light is a Juno Beach, Fla.-based electric utility.

Kimberly-Clark raises $750 million

Kimberly-Clark priced $750 million of 3.1% 10-year senior notes (A2/A/) on Tuesday at a spread of Treasuries plus 225 bps, according to a market source and an FWP filing.

Initial price talk was in the Treasuries plus 275 bps spread area with guidance tightened to the 230 bps area.

The notes were sold at 99.923 to yield 3.109%,

Citigroup, J.P. Morgan and Morgan Stanley were the active bookrunners. BBVA Securities Inc., RBC Capital Markets and U.S. Bancorp were passive bookrunners.

The consumer paper products company is based in Irving, Texas.

Chevron Phillips prints $650 million

Chevron Phillips Chemical priced $650 million of 5.125% five-year senior notes (A2/BBB+/) on Tuesday at a spread of Treasuries plus 462.5 bps, according to a market source.

The notes priced on top of talk.

BofA Securities, MUFG and Mizuho Securities USA Inc. were the active bookrunners. J.P. Morgan was passive.

The Woodlands, Texas-based Chevron Phillips Chemical Co. LLC is a petrochemical company owned by Chevron Corp. and Phillips 66.

Sweden prices $2 billion

Sweden (Aaa/AAA/AAA) priced $2 billion of 0.75% bonds due March 30, 2022 on Tuesday at mid-swaps plus 23 bps, or a spread of Treasuries plus 40 bps, according to a market source and a news release from the Swedish National Debt Office.

Initial price talk was in the Treasuries plus 45 bps area.

The issue priced at 99.994 to yield 0.753%.

BMO Capital Markets Corp., Citigroup Global Markets Ltd., Goldman Sachs International and HSBC Bank plc were bookrunners of the Rule 144A and Regulation transaction.

Bid volume totaled $4.15 billion with 70 investors participating.

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