Nippon Life hybrids see high demand, Dignity Health sells in two parts; primary 'dull'

By Aleesia Forni and Andrea Heisinger

New York, Oct. 11 - The high-grade bond market was light on corporate deals Thursday but saw Nippon Life Insurance Co. and Dignity Health tap the market.

Nippon Life priced its $2 billion offering of 30-year hybrid subordinated notes, a deal that had been announced a week ago. A market source said there was about $25 billion in demand for the paper.

Dignity Health upsized its sale to $600 million from $500 million and priced it in tranches due 2022 and 2042.

There were two new offerings announced in the preferred stock market.

PrivateBancorp Inc. sold $125 million of $25-par 30-year bonds.

It was joined by Fifth Street Finance Corp. which priced $75 million of $25-par notes due 2024.

The primary was "a little dull" ahead of the night's vice-presidential debate and some continuing worries about Europe.

"I don't know, Nippon Life did pretty well," a source away from that trade said, referring to the massively oversubscribed deal.

Friday is set to be quiet as issuers prepare offerings for the coming week, the source added.

The Markit CDX Series 18 North American Investment Grade index fell 2 basis points to a spread of 97 bps on Thursday.

Nippon Life's hybrids

Nippon Life priced a $2 billion offering of 5% 30-year step-up callable subordinated notes (A2/A-/) at par to yield 5%, a market source said.

Pricing was tighter than guidance in the 5.5% to 6% range.

A trader quoted the notes at 100 bid, 100.5 offered near the close of trading.

There will be a fixed interest rate until Oct. 18, 2022 with a floating rate of Libor plus 424 bps from then until maturity.

The bonds were sold under Rule 144A and Regulation S. The sale was initially announced on Oct. 4 with a roadshow following.

There are both optional and mandatory interest deferral options on the notes.

Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes.

The life insurance company is based in Osaka, Japan.

Dignity Health upsizes

Dignity Health priced $600 million of notes (A3/A/) in two maturities, an informed source said.

The size was increased from $500 million.

There was a $300 million tranche of 3.125%10-year notes sold at a spread of Treasuries plus 150 bps. It priced at the tight end of initial guidance in the 160 bps area and revised talk in the 150 bps to 160 bps range.

A tranche of $300 million in 4.5% 30-year bonds sold at 98.651 to yield 4.583% with a spread of 175 bps over Treasuries. Pricing was at the low end of initial talk in the 185 bps area which was later revised to the 175 bps to 185 bps range.

Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were bookrunners.

The hospital and care facility operator is based in San Francisco.

PrivateBancorp's 30-year notes

PrivateBancorp sold $125 million of 7.125% $25-par subordinated debentures due Oct. 30, 2042, the company said in a press release.

A preferred market source said it was "the new issue of the day," as the paper was trading over par even before pricing.

A trader also noted that the company's 10% trust preferreds (Nasdaq: PVTBP) were selling off, as investors worried that the issue might not qualify for tier I capital anymore and that the paper might therefore be called.

"I don't think that's the issue, though," the trader said.

The TRUPs were down 26 cents to $26.01.

However, the trader also remarked that the "common [stock] is doing well because of this deal."

PrivateBancorp will apply to list the notes on the New York Stock Exchange under the ticker symbol "PVTD."

Joint bookrunners were Morgan Stanley & Co. Inc. and Wells Fargo Securities LLC.

Proceeds will be used to redeem $243.8 million of series B fixed rate cumulative preferreds that were issued to the U.S. Department of the Treasury under the Troubled Asset Relief Program.

PrivateBancorp is a bank holding company based in Chicago.

Fifth Street's $25 pars

Fifth Street Finance priced a $75 million offering of 5.875% $25-par senior notes due Oct. 30, 2024, according to a company press release.

The company has applied to list the notes on the New York Stock Exchange under the symbol "FSCE."

Early in the session, a trader said he hadn't seen any markets in the new issue. After the bell, a source said the paper had finally begun trading late in the day, moving as high as par before settling back in at $24.85.

UBS Securities LLC, Raymond James & Associates Inc., RBC Capital Markets LLC and Stifel Nicolaus & Co. Inc. were bookrunners.

Proceeds will be used to pay down debt facilities held by Wells Fargo and ING Groep, as well as other general corporate purposes, including working capital requirements.

Fifth Street is a New York-based specialty finance company.

Stephanie N. Rotondo contributed to this review

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