Primary revived with sales by Boeing, Sunoco, Air Products; new bonds firm in secondary

By Andrea Heisinger and Cristal Cody

New York, July 28 - A string of post-earnings bond sales emerged on Thursday with Boeing Capital Corp. and Sunoco Logistics Partners Operation LP pricing after reporting second-quarter numbers.

There was also a smaller sale from Air Products and Chemicals Inc. The company priced $350 million of five-year notes in a follow up to reporting fiscal third-quarter earnings on July 22.

Boeing Capital sold $750 million of notes due 2016 and 2018. Each of the notes priced at the lowest end of the guidance range.

The issuer was joined in the market by Sunoco Logistics Partners, which priced $600 million evenly split between 10- and-30-year tranches.

Parent company Sunoco Logistics reported record Q2 earnings on Tuesday of $94 million of net income. This was compared with the $51 million reported in the same quarter a year ago.

Boeing reported second-quarter earnings per share of $1.25 on Wednesday.

Both issuers hadn't tapped the debt market in a while and had some financing needs after emerging from blackout.

They also saw strong demand from investors due to the infrequency of their issues and, in Boeing's case, strong credit ratings.

"People have been looking for good quality [paper], and they jumped on this," a syndicate source said. "Who knows when people are going to be able to issue?"

There was still no resolution of the debt ceiling in Congress, but "everyone's still assuming it's going to happen," the source said.

In the secondary market, the new issues tightened, traders said.

Air Products and Chemicals narrowed 3 bps, Boeing Capital's notes were stronger and Sunoco's long bonds firmed 5 bps, traders said.

Overall trading volume was higher on Thursday, up about 10% to more than $13.5 billion.

In other data, the Markit CDX Series 15 North American investment-grade index ended the day unchanged at a spread of 96 bps, according to Markit Group Ltd.

Treasuries ended the day with modest gains. The benchmark 10-year note yield fell 4 basis points to 2.94%. The 30-year bond yield dropped to 4.25% from 4.28%.

Sunoco sells post-earnings

Sunoco Logistics Partners Operations sold $600 million of senior notes (Baa2/BBB) in two tranches, a source who worked on the trade said.

The deal was a "blowout," and there were "huge books" on it, another source said.

"Everyone came in," he added later.

The company had not sold debt since a $500 million deal of 10- and-30-year notes on Feb. 9, 2010.

The $300 million of 4.65% notes due 2022 was priced at a spread of Treasuries plus 170 bps. The notes were priced at the tight end of guidance in the 175 bps area, plus or minus 5 bps.

A $300 million tranche of 6.1% bonds due 2042 was priced at a spread of 185 bps over Treasuries. The notes sold at the tight end of talk in the 190 bps area, also with a margin of plus or minus 5 bps.

Barclays Capital Inc. and Citigroup Global Markets Inc. were bookrunners.

Proceeds are being used to repay the $220 million outstanding balance under a $395 million revolving credit facility, with any remainder for general corporate purposes, including financing the Texon LP acquisitions and other future acquisitions.

The notes are guaranteed by Sunoco Logistics Partners LP.

In the secondary market, the notes due 2022 were not immediately seen. The long bonds traded tighter at 180 bps bid, 179 bps offered, a trader said.

The crude oil transportation, storage and sales company is based in Philadelphia.

Boeing Capital's tranches

Boeing Capital sold $750 million of senior notes (A2/A) in two parts, said a source away from the offering.

The $500 million of 2.125% five-year notes priced at a spread of Treasuries plus 65 bps. The tranche sold at the lowest end of guidance in the range of 65 bps to 70 bps.

The second tranche was $250 million of 2.9% seven-year notes sold at 75 bps over Treasuries. The notes were priced at the tight end of the guidance range of 75 bps to 80 bps.

Bookrunners for the five-year notes were Bank of America Merrill Lynch, Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC.

Bank of America, Credit Suisse Securities (USA) LLC and RBS Securities Inc. ran the books for the seven-year tranche.

Proceeds are being used for general corporate purposes, including repayment of $750 million of 6.5% notes due 2012, the purchase of equipment for leases and for loans or funding other investments.

Boeing Capital last sold bonds in a $1 billion sale in two parts on Oct. 22, 2009. The $500 million of 3.25% five-year notes from that trade priced at 95 bps over Treasuries.

In trading, the new notes due 2016 were seen modestly better at 64 bps bid, 60 bps offered, a trader said. Another trader saw the notes tightening out the door to 62 bps bid, 58 bps offered.

The notes due 2018 firmed to 71 bps bid, 70 bps offered, one trader said. The notes were quoted at 68 bps offered later in the afternoon.

The commercial financing company for aircraft maker Boeing is based in Renton, Wash.

Air Products' five-years

Air Products and Chemicals priced $350 million of 2% notes (A2/A) at a spread of Treasuries plus 62.5 bps, according to an FWP filing with the Securities and Exchange Commission.

Barclays Capital Inc. and Deutsche Bank Securities Inc. were the bookrunners.

Proceeds are being used for general corporate purposes.

Air Products reported fiscal 2011 Q3 diluted earnings per share of $1.46 the previous week - an increase of 14% from a year ago, according to a press release.

The issuer last sold bonds nearly two years ago in a $400 million sale of paper due 2019 on Aug. 18, 2009, according to Prospect News data.

The notes due 2016 firmed soon after in secondary trading to 59 bps bid, 56 bps offered, a trader said. Closing out the day, the notes were quoted by another trader at 58 bps bid, 55 bps offered.

The maker of specialty gases, coatings and adhesives is based in Allentown, Pa.

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