Eastman sells in three parts; Whirlpool, Danone add to day's volume; banks, brokers tighten

By Aleesia Forni and Andrea Heisinger

New York, May 29 - Fears about the debts of Greece and Spain were subdued over the long Memorial Day holiday weekend enough for a handful of investment-grade bond issuers to tap the market on Tuesday.

Eastman Chemical Co. had the largest deal of the day. It totaled $2.4 billion in three tranches and will be used to help pay for a merger with Solutia, Inc.

The company was joined in the market by Whirlpool Corp., which sold $300 million of 10-year notes in an upsized offering, and Danone SA, which priced $850 million of 10-year bonds under Rule 144A and Regulation S.

An offering of cumulative perpetual preferred stock was announced by Charles Schwab Corp.

Elections in Greece in June could bring a new government, which is against the terms of the bailout agreement with the European Union. This goes along with fears in recent weeks that Greece could leave the euro zone. Spain also is on the market's and potential issuers' radar as the country's largest bank struggles under losses from mortgage lending.

Still, Eastman Chemical needed to access the market to pay for an upcoming merger, and other issuers like Danone came to price bonds amid low yields after a prolonged absence.

The week could see a fair amount of volume from companies that couldn't price bonds last week.

"I know we have some interest for tomorrow - a couple of calls," one syndicate source said.

Another market source said it was hard to tell what the issuance total for the week would be with the threat of more headlines out of the euro zone hanging over the market.

"It's the same as always, looking at the open," the market source said. "I know there are some looking at the bond yields though. Today helped with Eastman seeing some demand."

In the secondary market, Whirlpool's notes traded 2 basis points tighter, a bond source said.

Investment-grade bank and broker credit default swap costs declined on Tuesday.

Banks were tighter. Bank of America's CDS costs firmed 4 bps to 282 bps bid, 287 bps offered. Citi's CDS costs tightened 7 bps to 249 bps bid, 254 bps offered.

Brokers firmed. Merrill Lynch's CDS costs traded 4 bps tighter at 303 bps bid, 318 bps offered. Morgan Stanley's costs tightened 10 bps to 415 bps bid, 425 bps offered. Goldman Sachs' CDS costs traded 15 bps better at 310 bpd bid, 320 bps offered.

Eastman prices tight

Eastman Chemical sold $2.4 billion of notes (Baa2/BBB/BBB) in three tranches to help pay for a merger, an informed source said.

The deal size was slightly larger than the $2.3 billion needed to contribute toward that merger.

The $1 billion of 2.4% five-year bonds priced at a spread of Treasuries plus 170 bps. The tranche was sold at the low end of price guidance in the 175 bps area plus or minus 5 bps.

A $900 million tranche of 3.6% 10-year notes sold at 195 bps over Treasuries. The notes priced at the low end of talk in the 200 bps area plus or minus 5 bps.

There was also $500 million of 4.8% 30-year bonds priced at Treasuries plus 200 bps. The bonds were sold at the tight end of guidance in the 210 bps area plus or minus 10 bps.

Barclays Capital Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC ran the books.

Proceeds are being used to pay a portion of the $4.7 billion acquisition and merger with Solutia and Eagle Merger Sub Corp.

Eastman is a chemical company based in Kingsport, Tenn.

Danone's private 10-year sale

Danone priced $850 million of 3% 10-year notes (A3/A-/) to yield 130 bps over Treasuries, a source close to the trade said.

The deal was done under Rule 144A and Regulation S.

Citigroup and JPMorgan were the active bookrunners.

Proceeds are being used for general corporate purposes.

Danone last priced dollar-denominated bonds in 2004, a source said.

The maker and distributor of yogurt and bottled water is based in Paris.

Whirlpool upsizes

Appliance maker Whirlpool priced an upsized $300 million of 4.7% 10-year notes (Baa3/BBB-/BBB) at a spread of Treasuries plus 300 bps, a market source said.

The size of the deal was increased from $250 million, a source said.

JPMorgan and RBS Securities Inc. were the active bookrunners.

Proceeds are being used for general corporate purposes including debt repayment under a long-term revolving credit facility.

Whirlpool's new notes traded tighter in the secondary market, a market source said. The notes traded at 298 bps bid, 293 bps offered.

The Benton Harbor, Mich.-based company last priced $300 million of 4.85% 10-year notes at 183 bps over Treasuries.

Schwab announces preferreds

Charles Schwab intends to sell at least $200 million of series B noncumulative perpetual preferreds, according to a prospectus filed with the Securities and Exchange Commission.

Price talk on the preferreds (expected Baa2/BBB+/BB+) is 6% to 6.125%, according to a trader. Another source said pricing was expected Wednesday morning.

"It seems to have a pretty good retail buzz on it," the first trader said, seeing paper at $24.75 in the gray market around midday.

The second source quoted the preferreds at $24.70 bid, $24.75 offered.

The San Francisco-based investment company has applied to list the new preferreds on the New York Stock Exchange under the symbol "SCHWPB."

Bank of America Merrill Lynch, Citigroup, UBS Securities LLC and Wells Fargo Securities LLC are the bookrunners.

Proceeds will be used for general corporate purposes, which may include extending credit to or funding investments in subsidiaries and the possible refinancing of outstanding debt obligations.

Stephanie N. Rotondo contributed to this review

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