Teva, Lincoln National, Pall price deals; BP keeps widening; new deals strong in trading

By Andrea Heisinger and Cristal Cody

New York, June 15 - Teva Pharmaceutical Industries Ltd., Lincoln National Corp. and Pall Corp. priced bonds on a Tuesday that saw a slight uptick in issuance.

Teva priced $2.5 billion in three tranches late in the day after the market close. The deal was divided among floating-rate notes due 2011, two-year notes and a five-year tranche, all of which priced at the tight end of guidance.

Lincoln National priced $750 million of notes in two tranches to help repay money it borrowed from the federal government through the Troubled Asset Relief Program. From the proceeds, $250 million will go toward that, along with proceeds from a share offering.

Port Washington, N.Y.-based Pall upsized its sale from $325 million to $375 million of 10-year notes.

Terms were also given in the morning for the $1 billion sale in two tranches from Genzyme Corp. The deal priced late on Monday via Rule 144A and Regulation S.

A source said that spreads have become lower, and may have led to some companies tapping the debt market.

"They're not paying quite as much concession," he said.

A lack of negative headlines has boosted the primary market over the past few days of issuance, leading to a busy end to the previous week and a few deals so far in the current one.

If a day opens without volatility, there are certain to be one or two issuers, a source said.

Meanwhile in the secondary, BP plc's bonds are gapping out by the day, a source said.

In fact, the company's notes due 2015 have widened more than 300 bps since the start of June.

Recent new deals found interest. Notes from Genzyme, Lincoln National and Pall Corp. all were stronger in trading, sources said.

Overall, investment-grade Trace volume jumped 27% to more than $12 billion, according to a source.

The CDX Series 14 North American investment-grade index firmed a second day, a source said. The index was quoted 4 bps stronger at a spread of 119 bps.

Yields on government debt rose as investors moved toward stocks and away from safer Treasuries on good demand for sovereign debt at auctions by Spain, Belgium and Ireland.

Ten-year note yields eased 5 bps to 3.30%. Yields on 30-year debt also weakened, to 4.22% from 4.18% on Monday.

"We are continuing to see strong T-bill demand and 10-year T-note yields remain low," Bill O'Grady, chief market strategist with Confluence Investment Management LLC, said Tuesday in a research note. "Overall, it does appear that some of the fear is dissipating but concerns remain elevated."

Teva prices three-parter late

Teva Pharmaceutical, issuing through Teva Pharmaceutical Finance III LLC and Teva Pharmaceutical Finance II BV, sold $2.5 billion of guaranteed senior unsecured notes (A3/A-) in three tranches after 5 p.m. ET, a source close to the sale said.

"It went great," he added.

Teva Pharmaceutical Finance III priced $500 million of floating-rate notes due 2011 at par to yield three-month Libor plus 40 bps. It also sold $1 billion of 1.5% two-year notes with a spread of Treasuries plus 80 bps.

Teva Pharmaceutical Finance II sold $1 billion of 3% five-year senior notes at Treasuries plus 95 bps.

All of the notes were priced at the tight end of talk, a source said.

The issuers are subsidiaries of Petach Tikva, Israel-based generic pharmaceutical maker Teva Pharmaceutical Industries Ltd., which is also the guarantor.

Credit Suisse Securities, Goldman Sachs & Co. and Morgan Stanley & Co. Inc. were active bookrunners.

Proceeds are being used to repay $800 million of the $1.5 billion outstanding under an unsecured credit facility assumed in connection with the acquisition of Barr Pharmaceuticals, Inc. in 2008. They will also be used to pay a portion of the purchase price for the pending acquisition of Ratiopharm Group and for general corporate purposes.

Lincoln National sells notes to repay TARP

Lincoln National priced $750 million of senior notes (Baa2/A-/BBB) by late afternoon in two tranches, a source close to the sale said.

The deal was announced on Monday.

A $250 million tranche of 4.3% five-year notes sold at a spread of Treasuries plus 225 bps.

The $500 million of 7% 30-year bonds priced to yield Treasuries plus 280 bps.

Bank of America Merrill Lynch, Deutsche Bank Securities and U.S. Bancorp were bookrunners, with J.P. Morgan Securities as global coordinator.

Proceeds are being used to repurchase $950 million of preferred shares issued to the U.S. Treasury under the Capital Purchase Program.

The company is also selling $335 million of stock.

The money management and investment company is based in Radnor, Pa.

Momentum picks up only slightly

There was not a huge influx of new deals expected in the high-grade bond market for the day, and that was the scenario that took place.

The three-tranche deal from Teva Pharmaceutical was the talk for the day, although it priced late. One market source who was not a bookrunner said he was surprised the deal got done in one day.

"I guess it's smaller than the other pharmas that have priced, but I'm kind of surprised it didn't come tomorrow," he said.

All three of the day's sales came in at the tight end of price talk, he added.

One sale that was announced on Monday but priced on Tuesday was the $750 million deal from Lincoln National.

It also priced a common stock offering, so a market source said that may have been the reason the senior note sale was held until Tuesday.

"We had another good day," a market source said at the end of the day. "Not a whole lot changed [from Monday], but that was a good thing."

Pall sells upsized deal

Pall sold a slightly upsized $375 million of 5% 10-year senior unsecured notes (Baa1/BBB) by mid-afternoon to yield Treasuries plus 175 bps, a source away from the sale said.

The size was increased by $50 million from $325 million, the source said.

Bank of America Merrill Lynch and J.P. Morgan Securities were the bookrunners.

Proceeds are going to redeem the company's 6% senior notes due 2012 and for general corporate purposes.

The filtration, separation and purification technologies company is based in Port Washington, N.Y.

Genzyme gives terms on $1 billion

Genzyme priced $1 billion of senior unsecured notes (Baa2/A-) late on Monday, split evenly between two tranches, according to a press release on Tuesday.

The $500 million of 3.625% five-year notes were sold at a 165 bps over Treasuries spread.

A $500 million tranche of 5% 10-year notes priced at a spread of Treasuries plus 185 bps.

The notes were priced under Rule 144A and Regulation S.

Credit Suisse Securities Inc. and Goldman Sachs & Co. were bookrunners.

Proceeds are going to the company's share repurchase plan and for general corporate purposes.

The biotechnology company is based in Cambridge, Mass.

BP widens 300 bps

At the start of June, BP's high-grade debt already had gapped out since the oil-rig explosion in the Gulf of Mexico in April.

But since June 1 BP's notes have moved out more than 300 bps, a trader said.

For example, the 3 7/8% notes due 2015, which were quoted at 225 bps bid, 215 bps offered on June 1, were seen Tuesday at 585 bps bid, 535 bps offered, the trader said.

The notes traded at 30 bps over Treasuries on April 16 before the oilrig explosion in the Gulf on April 20, a source said.

Media reports list the damages BP faces from federal, state and civil costs at more than $10 billion.

On Tuesday, Fitch Ratings lowered the credit ratings on the London-based fuel company by six notches - from AA- to BBB, just two levels above junk status.

The company currently is rated Aa2 by Moody's Investors Service and AA- by Standard & Poor's.

Genzyme firms

Genzyme's $1 billion of senior unsecured notes sold late Monday firmed in trading Tuesday, a source said.

The 3.625% notes due 2015 were quoted in the session trading at 155 bps bid, 153 bps offered, compared to where they priced earlier at 165 bps over Treasuries.

In the second tranche of 5% notes due 2020, the notes were quoted at 172 bps bid, 171 bps offered - tighter than where they priced at a spread of Treasuries plus 185 bps.

Lincoln National stronger

Lincoln National's deal of $750 million it sold in two tranches on Tuesday was stronger in secondary trading, a source said.

The 4.3% notes due 2015 priced at Treasuries plus 225 bps. The notes were seen 1 bp tighter on the bid side later in the day, a trader said.

Lincoln National's second tranche of 7% bonds due 2040 was much stronger, the trader said.

The bonds priced at a spread of Treasuries plus 280 bps and were 10 bps tighter at 270 bps on the offer side.

Pall tighter

Pall Corp.'s new $375 million offering of notes due 2020 the company sold on Tuesday also saw activity in secondary trading.

The 5% notes priced at Treasuries plus 175 bps and traded later in the day at 164 bps bid, according to a trader.

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