Praxair, Digital Realty, Harley-Davidson bring deals; short financial paper firms in trading

By Andrea Heisinger and Cristal Cody

New York, March 1 - Praxair, Inc., Digital Realty Trust, LP, Harley-Davidson Financial Services Inc. and Compagnie de Financement Foncier SA sold notes as volume in the investment-grade bond market remained steady on Tuesday.

Digital Realty Trust upsized its offering of 10-year notes to $400 million. The size was increased from $250 million, and the paper priced at the tight end of guidance.

The financing arm of motorcycle maker Harley-Davidson Inc., Harley-Davidson Financial Services, upped the size of its sale of notes due 2016 to $450 million. They were priced under Rule 144A.

One deal that was not upsized came from Praxair. The company sold $500 million of 10-year notes at the tight end of guidance and is using the money to repay debt and fund shares repurchases.

France's Compagnie de Financement priced $1.5 billion of three-year covered bonds under Rule 144A. They sold in line with initial talk, a source said.

There was a flurry of activity in the preferred stock market. Equity Lifestyle Properties, Inc. priced $200 million of perpetual preferreds in a deal that had been announced on Monday. The size was increased from the initial $100 million, as it was expected to, a market source away from the deal said.

RGA Capital Trust I remarketed $158.24 million of preferred stock due 2011.

There was also an upcoming sale of perpetual preferred stock announced by DuPont Fabros Technology, Inc. The sale is expected to price on Wednesday.

Overall investment-grade Trace volume climbed nearly 20% to more than $13 billion, a market source said.

In secondary trading, Harley-Davidson's notes were stronger, while Praxair's notes firmed on the bid side.

Financials were stronger on the short end of the curve on Tuesday, a source said. Bank of America Corp.'s 6.5% notes due 2016 firmed to 188 basis points from 191 bps. Goldman Sachs Group Inc.'s 7.5% notes due 2019 were seen 1 bp wider at 156 bps in trading.

In other activity, the Markit CDX Series 14 North American investment-grade index was weaker on Tuesday, easing 3 bps to a spread of 85 bps, according to Markit Group Ltd.

Treasuries rallied after Federal Reserve chairman Ben Bernanke's testimony and on rising oil prices and a drop in equities, sending the 10-year note yield down 3 bps.

The 10-year note yield had climbed 9 bps earlier in the day before settling down to 3.39%. The 30-year bond yield fell 1 bp to 4.48%.

Stocks fell on the jump in crude oil prices, sending the Dow Jones Industrial Average down 1.38% to 12,058.02.

In the semiannual monetary policy report to Congress, Bernanke said the Federal Reserve continues to monitor the asset buyback program, which has shown signs of improving the economy, but mentioned no plans of ending the program early.

The Federal Reserve on Tuesday purchased $1.89 billion of Treasuries due 2028 through 2041 as part of the $600 billion quantitative easing program. More than $400 billion of bonds have been purchased since the program started in August.

Tone stays up

Volume in the high-grade primary remained strong for the second day in a row as most of Tuesday's sales were upsized after receiving good demand from investors.

"We were rocking and rolling," a source said of the flow into the market. "We had good response from yesterday, so people already had things set to go."

Monday had several successful deals including a debut blowout from Juniper Networks, Inc. and heavy interest in ArcelorMittal's three-tranche deal.

The number of new issues may slow slightly on Wednesday as supply dwindles.

"I've heard away that other desks have a few things on backlog," a syndicate source said. "Nothing definite, but it's been a good week."

Digital Realty upsizes

Digital Realty Trust priced an upsized $400 million of 5.25% 10-year senior notes (Baa2/BBB/BBB) at a spread of Treasuries plus 185 bps, an informed source said in mid-afternoon.

This was at the low end of guidance in the 187.5 bps area. The deal size was increased from $250 million.

Morgan Stanley & Co., Inc., Citigroup Global Markets Inc., Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. were the bookrunners.

Proceeds are going to temporarily repay borrowings under a revolving credit facility, to acquire additional properties, to fund development and redevelopment opportunities and for general working capital purposes. Those may include the potential repurchase, redevelopment or retirement of outstanding debt.

The deal is guaranteed by Digital Realty Trust, Inc.

The technology property real estate investment trust is based in San Francisco.

Praxair prices $500 million

Industrial gases company Praxair sold $500 million of 4.05% 10-year notes (A2/A/A) at a spread of Treasuries plus 67 bps, an informed source said.

They sold at the tight end of guidance in the 70 bps area, a source said.

Bookrunners were Bank of America Merrill Lynch, Citigroup, Deutsche Bank and HSBC Securities (USA) LLC.

Proceeds are being used to repay short-term debt, to repurchase stock and for general corporate purposes.

Praxair's notes were stronger on the offer side, though no bids were seen in the secondary market, a trader said. The notes were seen at 64 bps offered.

The issuer is based in Danbury, Conn.

Harley-Davidson upsizes

Harley-Davidson Financial Services priced an upsized $450 million of 3.875% five-year notes ahead of the close to yield Treasuries plus 175 bps, a source close to the trade said.

The size was increased by $100 million from $350 million.

The notes (Baa1/BBB/BBB+) were priced under Rule 144A.

Citigroup, Deutsche Bank and J.P. Morgan Securities LLC were bookrunners.

Proceeds are being used to pay down debt, including commercial paper.

The sale is guaranteed by Harley-Davidson Credit Corp.

Harley-Davidson's notes traded stronger in the secondary market, a trader said. The notes firmed to 172 bps bid, 170 bps offered.

The funding arm of motorcycle maker Harley-Davidson is based in Milwaukee.

CFF's covered bonds

Compagnie de Financement Foncier priced a benchmark $1.5 billion of 2.25% three-year covered bonds to yield 85 bps over mid-swaps, or Treasuries plus 111.2 bps, a source said.

They were talked in the mid-swaps plus 85 bps area and priced in line with that level.

The notes (Aaa/AAA/AAA) were priced under Rule 144A.

Bookrunners were Barclays Capital Inc., BNP Paribas Securities Corp., Citigroup, JPMorgan and Natixis.

The company provides real estate financing and credit to developers and is based in Paris.

Equity Lifestyle upsizes

Equity Lifestyle Properties priced an upsized $200 million (8 million shares) of 8.034% perpetual series A cumulative preferred stock early in the day at $24.75 per share, according to a market source and a press release.

The offering was announced on Monday in a 424B3 filing with the Securities and Exchange Commission. A source said that the minimum size was $100 million but that it was expected to grow.

The preferreds have a liquidation preference of $25.00 each.

Bank of America Merrill Lynch, Morgan Stanley and Wells Fargo Securities LLC were bookrunners.

The company will not receive any proceeds from the sale. Prior to the closing of the offering, the selling stockholders will exchange an aggregate of $200 million liquidation preference of existing preferred units of MHC Operating LP, the company's operating partnership subsidiary, for $200 million aggregate liquidation preference of series A preferreds. The selling stockholders will receive all of the net proceeds from the sale of the series A preferreds in the offering.

The REIT for lifestyle properties is based in Chicago.

RGA remarkets preferreds

RGA Capital Trust I remarketed $158.24 million (4,464,902 shares) of 2.375% preferreds due 2011 (Baa2/BBB) at $35.44 per share, according to an FWP filing with the SEC.

The total outstanding after the remarketing is 4,499,800 shares.

The remarketing agent was Barclays Capital.

Proceeds are being paid to selling holders.

The sale is guaranteed by parent company Reinsurance Group of America, Inc.

The insurance holding company for life reinsurance subsidiaries is based in Chesterfield, Mo.

DuPont Fabros preps preferreds

DuPont Fabros Technology announced a sale of perpetual series B cumulative redeemable preferreds at $25.00 each, according to a 424B4 filing with the SEC.

A source close to the deal said it's Wednesday's business and there was no size set yet.

Barclays Capital, Raymond James, RBC Capital Markets Corp., Jefferies & Co. and Stifel Nicolaus Weisel & Co. Inc. are bookrunners.

The proceeds are being used, along with the borrowings under a $100 million revolving credit facility, to develop the second phase of the CH1 data center in Elk Grove Village, Ill.

The REIT for data center facilities is based in Washington, D.C.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.