Brown-Forman, Simon Property price; Autodesk sells first bond; spreads firm from earlier marks

By Aleesia Forni and Andrea Heisinger

New York, Dec. 10 - A crop of new bond sales hit the investment-grade bond market on Monday despite a drop in tone at the open.

Spirits maker Brown-Forman Corp. sold $750 million of bonds with maturities of 2018, 2023 and 2043. The spreads on the tranches came in significantly from initial price guidance, sources said. The proceeds are being used to help pay a special common stock dividend.

Simon Property Group, LP priced $1.25 billion of notes with five-year and 10-year maturities. The real estate investment trust added a tranche of five-year bonds to the original planned notes due 2023.

Design software and services company Autodesk, Inc. priced $750 million of paper with maturities of 2017 and 2022 to help repay amounts under a revolving credit facility.

Ecolab Inc. sold $500 million of 1.45% five-year notes at the tight end of price guidance for the merger with Houston-based Champion.

Equifax Inc. did a similar $500 million sale of 10-year senior notes to help pay the $1 billion cash portion of the CSC Credit Services, Inc. acquisition.

In the sovereign side of the market, North American Development Bank priced a $180 million offering of 10-year notes. Terms of the sale, managed by Bank of America Merrill Lynch and BNP Paribas Securities Corp., were not available at press time.

There was a widening of spreads at the open, partly in reaction to the news over the weekend that Italy's prime minister Mario Monti would resign later this month.

"Spreads were out a little bit on that and the fiscal cliff stuff," a market source said in early afternoon.

However, the Markit CDX Series 18 North American Investment Grade index was 1 bp tighter at a spread of 96 bps after the day's close.

In the secondary market, AT&T's recent bonds due 2022 and 2015 were among the day's most actively traded deals.

The notes due 2022 topped the list of active issues, tightening 3 bps. The notes due 2015 firmed 7 bps.

Bank paper from Bank of Nova Scotia and Citigroup weakened on the Monday.

Citi's 6.375% notes due 2014 widened 2 bps, while Bank of Nova Scotia's 2.55% notes due 2017 ended the day 1 bps wider.

Tuesday will see the start of a two-day Federal Reserve Federal Open Market Committee meeting, which means some issuers could hold back until after any announcement on Wednesday.

"I know we'll see at least a couple tomorrow beforehand," a market source said after the close. "People are going to keep cramming things in."

Brown-Forman special dividend

Brown-Forman priced $750 million of notes (A1/A-/A+) in three parts, a source who worked on the trade said.

There was about $8 billion of investor demand for the tranches, including $2.75 billion for the five-year notes, $2.5 billion for the 10-year tranche and $2.75 billion for the 30-year maturity.

The sale included a $250 million tranche of 1% notes due 2018 priced at a spread of Treasuries plus 45 bps. The tranche sold tighter than initial talk in the 65 bps area.

A $250 million tranche of 2.25% notes due 2023 were sold at a spread of 70 bps over Treasuries. The tranche priced lower than guidance in the 92.5 bps area, plus or minus 2.5 bps.

Finally, there was $250 million of 3.75% bonds due 2043 with a price of Treasuries plus 95 bps. The bonds also sold lower than talk in the 112.5 bps area, plus or minus 2.5 bps.

The active bookrunners were Bank of America Merrill Lynch, Barclays and Citigroup Global Markets Inc.

Proceeds are being used to fund a previously announced special dividend of $4 per share on class A and class B common stock, and for general corporate purposes.

Brown-Forman last tapped the market with a $250 million sale of 2.5% five-year notes sold at 75 bps over Treasuries on Dec. 13, 2010.

The global spirits maker is based in Louisville, Ky.

Autodesk sells in two parts

Autodesk was in the market with a $750 million sale of notes (Baa2/BBB/) in two tranches, a market source said.

This was the company's first bond sale, the source said.

The five-year tranche had roughly $3 billion in demand, while the 10-year notes saw about $2.7 billion in investor interest.

Comparables used for price guidance came from Adobe Systems Inc. and Symantec Corp., the source also said.

There was $400 million of 1.95% five-year notes priced at a spread of Treasuries plus 155 bps. Pricing was at the tight end of guidance in the 160 bps area, plus or minus 5 bps.

A $350 million tranche of 3.6% 10-year bonds sold at a spread of Treasuries plus 200 bps. The notes sold at the lowest end of guidance in the 205 bps area, plus or minus 5 bps.

There was a do-not-grow provision on the deal size.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were bookrunners.

Proceeds are being used to repay $80 million under a revolving credit facility and for general corporate purposes.

The design software and services company is based in San Rafael, Calif.

Simon prices $1.25 billion

Simon Property Group sold $1.25 billion of notes (A3/A-/A-) in two tranches, an informed source told Prospect News.

A $750 million tranche of 1.5% five-year notes sold at a spread of Treasuries plus 95 bps.

The tranche was priced under Rule 144A and Regulation S.

There was $500 million of 2.75% 10-year notes priced at a spread of 120 bps over Treasuries.

Active bookrunners were Barclays, Citigroup Global Markets Inc. and UBS Securities LLC.

Proceeds are being used for general corporate purposes and partnership purposes.

Simon Property last tapped the market with a $1.75 billion sale in three parts on March 8. That offering included a 3.375% 10-year note sold at 140 basis points over Treasuries.

The real estate investment trust for retail properties is based in Indianapolis.

Equifax offers $500 million

Equifax has priced $500 million of 3.3% 10-year senior notes (Baa1/BBB+/) to yield Treasuries plus 170 bps, a market source said Monday.

Price talk was in the 170 bps to 180 bps range.

J.P. Morgan Securities LLC and Wells Fargo Securities LLC were active bookrunners. Passives were Bank of America Merrill Lynch and SunTrust Robinson Humphrey Inc.

Proceeds are being used, along with borrowings under a commercial paper program and available cash, for the acquisition of CSC Credit Services, Inc. for $1 billion in cash.

There is a mandatory call at 101 if the acquisition's not done by June 30, 2013.

Equifax last sold bonds in a $275 million sale of five-year notes on Nov. 4, 2009.

The information services provider is based in Atlanta.

Ecolab prices five-years

Ecolab priced $500 million of 1.45% five-year notes (Baa1/BBB+) at a spread of Treasuries plus 85 bps, an informed source said.

The bonds were priced at the tight end of guidance in the 85 bps to 95 bps range.

Full terms of the sale were not available at press time.

Bank of America Merrill Lynch and RBS Securities Inc. were bookrunners.

Proceeds are being used to finance a portion of the cash consideration for the merger with Houston-based Champion totaling $2.16 billion. If the merger does not go through, proceeds will be used for an optional note redemption.

There is a mandatory redemption at 101 if the merger is not done by May 3, 2013.

Ecolab was last in the market with a $500 million sale of three-year notes on Aug. 6.

The cleaning and sanitizing company is based in St. Paul, Minn.

AT&T's 2022s, 2015s active

Two tranches of AT&T's $4 billion three-part trade were particularly active on Monday, according to a market source.

A trader saw the $1 billion of 0.8% three-year notes at 47 basis points bid, 44 bps offered.

The notes were sold at a spread of Treasuries plus 50 bps on Thursday.

The $1.5 billion tranche of 2.625% 10-year notes also saw activity on Monday and was quoted at 98 bps bid, 94 bps offered.

AT&T sold the notes with a spread of Treasuries plus 105 bps.

The telecommunications company is based in Dallas.

Citi widens

In other trading, Citigroup's 6.375% notes due 2014 widened 2 bps to 109 bps bid during Monday's session.

The bank priced $2.5 billion five-year notes at Treasuries plus 380 bps on Aug. 5, 2009.

Bank Nova weakens

Meanwhile, Bank of Nova Scotia's 2.55% notes due 2017 were seen 1 bp wider at 53 bps bid near the day's close.

The notes sold with a spread of 172 bps over Treasuries on Jan. 5.

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