Microsoft, Aetna, Verizon Communications, Praxair among deluge of deals; TransAlta notes widen

By Aleesia Forni and Andrea Heisinger

New York, Nov. 2 - Issuers descended on the investment-grade bond market for the second day in a row on Friday in a scramble to price amid low borrowing rates and ahead of the coming presidential election.

There were large sales from Microsoft Corp., Aetna, Inc. and Verizon Communications Inc.

Verizon led the way with a $4.5 billion offering in four parts to fund the retirement of outstanding debt among other uses.

Terms of the trade were not available at press time.

Microsoft priced $2.25 billion in three tranches in its first deal since early 2011.

Aetna priced $2 billion in three maturities in order to help finance the merger with Coventry Health Care Inc.

Two Canadian issuers tapped the U.S. bond market.

TransAlta Corp. priced $400 million of 10-year senior notes. National Bank of Canada sold $750 million of five-year bonds. Terms of that deal were unavailable at press time.

Praxair, Inc. sold $700 million of paper with maturities of 2017 and 2042.

Oklahoma-based Magellan Midstream Partners, LP priced $250 million of 30-year senior bonds.

Kennametal Inc. sold $400 million of seven-year senior notes.

Atlanta-based Post Apartment Homes, LP tapped the market for $250 million of 10-year notes.

Jobs numbers for October were released Friday morning and showed a decrease in unemployment and jobs added. This may have helped nudge some issuers into the market, sources said.

"Some of them would have gone anyway, but it helped set the tone," a source who worked on Microsoft said.

The start of the coming week is expected to be busy, especially on Monday and Tuesday prior to election results. Issuance after that is "up in the air," a syndicate source said.

"Most of us should be back to full staff and back to the office by then," she said.

The Markit CDX Series 18 North American Investment Grade index increased 3 bps to a spread of 98 bps on Friday.

A market source said TransAlta's notes were roughly 5 bps wider late in the session.

In recent deals, Bank of Montreal's notes due 2015 were seen tighter late in the session, while all three tranches of General Dynamics Corp.'s offering firmed in trading.

The secondary market saw bonds from Bank of America due 2014 and J.P. Morgan tighten in trading.

Meanwhile, Goldman Sachs' bond due 2018 widened 10 bps from Thursday's levels.

Aetna's $2 billion trade

Aetna sold $2 billion of senior notes (Baa1/A-/A-) in three tranches, according to a market source and an FWP with the Securities and Exchange Commission.

There was a $500 million tranche of 1.5% five-year notes sold at a spread of Treasuries plus 88 bps.

A $1 billion tranche of 2.75% 10-year notes priced at a spread of 123 bps over Treasuries.

The $500 million of 4.125% 30-year bonds priced at a spread of 133 bps over Treasuries.

All of the tranches priced at the tight end of price talk that was talked 2 bps higher than the level they came at.

Active bookrunners were Goldman Sachs & Co. and UBS Securities LLC.

Proceeds are being used to finance a part of the cash portion of the purchase price of a merger with Coventry Health Care Inc. for $7.3 billion.

There is a mandatory call at 101 if the merger isn't completed by Nov. 19, 2013.

Aetna was last in the market with a $750 million sale of notes in two parts on May 1.

The diversified health care benefits company is based in Hartford, Conn.

Microsoft's three tranches

Microsoft sold $2.25 billion of senior notes (Aaa/AAA/AA+) in three tranches, a source away from the trade said.

A $600 million tranche of five-year notes sold at a spread of Treasuries plus 27 bps. The notes were sold at the tight end of talk in the 30 bps area.

There was $750 million of 10-year notes priced at a spread of 47 bps over Treasuries. The tranche priced at the low end of guidance in the 50 bps area.

Finally, a $900 million tranche of 30-year bonds priced at a spread of Treasuries plus 67 bps. The bonds were sold at the tight end of talk in the 70 bps area.

Full terms of the deal weren't available at press time.

Barclays, J.P. Morgan Securities LLC and UBS Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes.

Microsoft was last in the market with a $2.25 billion offering of bonds in three parts on Feb. 3, 2011. That deal included a 2.5% five-year note sold at 38 basis points over Treasuries, a 4% 10-year note priced at 48 bps over Treasuries and a 5.3% 30-year bond priced at 68 bps over Treasuries.

The software products and services company is based in Redmond, Wash.

Praxair prices two tranches

Praxair sold $700 million of notes (A2/A/) in two maturities, according to a filing with the SEC.

The $400 million of 1.05% five-year notes sold at a spread of Treasuries plus 33 bps.

There was also $300 million of 3.55% 30-year bonds priced at a spread of 68 bps over Treasuries.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and RBS Securities Inc. were bookrunners.

Proceeds are being used to repay short-term debt, fund share repurchases and for general corporate purposes.

Praxair, an industrial gas producer based in Danbury, Conn., last priced notes in a $500 million sale of 2.2% 10-year notes at 72 bps over Treasuries on July 30.

TransAlta's 10-years

TransAlta sold $400 million of 4.5%10-year senior notes (Baa3/BBB-/) to yield Treasuries plus 300 bps, according to an FWP filing with the SEC.

"They priced at 300 [bps] and initial indications is that it's actually wider by 5 basis points," a source said.

Bookrunners were Bank of America Merrill Lynch, Citigroup Global Markets Inc. and HSBC Securities (USA) Inc.

Proceeds are being used to repay borrowings under an existing credit facility and for general corporate purposes.

TransAlta last tapped the U.S. bond market with a $300 million sale of 6.5% 30-year bonds at 190 basis points over Treasuries on March 9, 2010.

The electricity generation company is based in Calgary, Alta.

Magellan prices $250 million

Magellan Midstream Partners priced $250 million of 4.2% 30-year senior notes (Baa2/BBB/) at a spread of Treasuries plus 135 bps, according to a market source and a filing with the SEC.

Barclays, Deutsche Bank Securities Inc., SunTrust Robinson Humphrey Inc. and Wells Fargo Securities LLC were bookrunners.

Proceeds are being used for general partnership purposes, including capital expenditures and investments in interest bearing securities or accounts.

The energy transportation, storage and distribution company is based in Tulsa, Okla.

Post Apartment's 10-years

Post Apartment Homes priced a $250 million offering of 3.375%10-year senior notes (Baa3/BBB-/) at a spread of Treasuries plus 165 bps, according to an FWP filing with the SEC.

Active bookrunner was Wells Fargo Securities LLC.

Proceeds are being used to redeem about $130.1 million of 6.3% senior notes due June 1, 2013 and to pay related premiums and expenses of about $4.1 million and for general corporate purposes including property acquisitions.

Post was last in the market with a $150 million sale of 4.75% seven-year notes on Oct. 13, 2010.

The developer and operator of multifamily communities is based in Atlanta.

Kennametal sells seven-years

Kennametal priced $400 million of 2.65% seven-year senior notes (Baa2/BBB/BBB) at a spread of Treasuries plus 150 bps, a market source said.

Bookrunners were Bank of America Merrill Lynch, J.P. Morgan Securities LLC and RBS Securities Inc.

Proceeds are being used to repay outstanding debt under a credit facility and an uncommitted line of credit.

Kennametal was last in the market with a $300 million sale of 3.875% 10-year notes priced at 187.5 basis points over Treasuries on Feb. 9.

The supplier of tooling, engineered components, and materials used in production processes is based in Latrobe, Pa.

Bank of Montreal improves

Bank of Montreal's new U.S. dollar notes traded slightly better on the day, a bond source said.

The bank's 0.8% senior notes due 2015, which priced in a $1 billion offering at a spread of 45 bps plus Treasuries, firmed to 43 bps bid, 40 bps offered.

The tranche of 2.55% senior notes due 2022 came in 1 bp to 84 bps bid, 80 bps offered.

The bank sold $1 billion of the notes at a spread of 85 bps over Treasuries.

Bank of Montreal is a financial services company based in Toronto and Montreal.

General Dynamics tightens

The new bonds from General Dynamics Corp. firmed 2 bps to 3 bps in early trading on Friday, a market source said.

The company's 1% notes due 2017 were quoted at 38 bps bid following Thursday's pricing of $900 million of the notes at a spread of 40 bps over Treasuries.

The notes due 2022 tightened 3 bps to 62 bps bid. The $1 billion 2.25% notes priced at a spread of Treasuries plus 65 bps.

Meanwhile, the $500 million 30-year bond was quoted at 72 bps bid, firming 3 bps from Thursday.

Based in Falls Church, Va., General Dynamics is an aerospace and defense company.

Bank of America better

Friday's secondary market saw Bank of America's 7.375% notes due 2014 firm 1 basis point to 95 bps bid.

The bank priced $3 billion notes due 2014 at Treasuries plus 537.5 bps on May 8, 2009.

J.P. Morgan firms

In other trading, the $3 billion 6.3% issue from J.P. Morgan due 2019 tightened 11 bps to 68 bps bid, according to a market source.

J.P. Morgan priced the 10-year bonds on April 16, 2009 at 305 bps over Treasuries.

Goldman Sachs widens

Meanwhile, Goldman Sachs' bond due 2018 widened 11 bps to 208 bps bid during the session.

The bank priced $1.5 billion 6.15% 10-year bonds in April 2008 at Treasuries plus 237.5 bps.

Cristal Cody contributed to this review

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