Medtronic prices $1 billion of notes in two tranches; bond market weaker; bank paper widens

By Sheri Kasprzak and Cristal Cody

New York, March 10 - Primary action was more subdued on Thursday, with Medtronic Inc. leading the light activity.

Medtronic sold $1 billion of senior notes (A1/AA-/) in two tranches: $500 million of 2016 notes and $500 million of 2021 notes.

The 2016 notes have a 2.625% coupon priced at 99.549 to yield 2.722%. The spread came in at 65 basis points over Treasuries, and the notes feature a make-whole call at Treasuries plus 10 bps.

The 2021 notes have a 4.125% coupon priced at 99.457 to yield 4.192%. The spread came in at Treasuries plus 80 bps, and those notes feature a make-whole call at Treasuries plus 15 bps.

The joint bookrunners for the sale were Bank of America Merrill Lynch, Citigroup Global Markets Inc. and RBS Securities Inc.

Proceeds will be used for working capital and general corporate purposes.

Medtronic's five-year notes traded flat in the secondary market, while the 10-year tranche was tighter on the offer side at 73 bps, a trader said.

Medtronic is a medical technology company based in Minneapolis.

Bank, financial paper widens

Elsewhere in the market, bank and financial paper have widened in trading over the week, sources said.

Goldman Sachs Group, Inc.'s 6% notes due 2020 moved out to 186 bps from 153 bps on Tuesday, a source said.

Another source said Bank of America Corp.'s 6.5% notes due 2016 widened to 205 bps from 197 bps on Wednesday.

The Markit CDX Series 15 North American investment-grade index also was weaker and eased 2 bps to a spread of 87 bps, according to Markit Group Ltd.

Overall investment-grade Trace volume was mostly flat at about $12.9 billion, a market source said.

Treasuries rallied on Middle East unrest and foreign debt concerns and after a strong 30-year bond auction on Thursday, sending yields down 10 bps on the mid to longer end of the curve.

The 10-year note yield fell 11 bps to 3.36%, while the 30-year bond yield dropped 10 bps to 4.5%.

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