Oxy Petroleum, Detroit Edison, CubeSmart, Newfield, Delmarva, others price as window opens

By Aleesia Forni and Andrea Heisinger

New York, June 19 - There were several new high-grade bond deals on Tuesday as issuers got into the market ahead of an announcement from a two-day Federal Reserve meeting.

Occidental Petroleum Corp., Detroit Edison Co., Delmarva Power & Light Co., CubeSmart LP, American Honda Finance Corp. and National Bank of Canada sold deals alongside split-rated offerings from Newfield Exploration Co. and real estate investment trust DDR Corp.

Issuers were eager to get in ahead of the end of the Fed's Federal Open Market Committee meeting on Wednesday. Some of them had taken a look at the market on Monday, but the tone wasn't ideal as news out of the euro zone soured investor sentiment.

Occidental priced $1.75 billion of notes with maturities of 2018 and 2023, with both tranches tightening in the secondary.

A two-tranche sale of mortgage bonds was sold by Detroit Edison, totaling $500 million.

Another utility, Delmarva Power & Light, priced $250 million of 30-year first mortgage bonds.

In the crossover space, Newfield Exploration sold an upsized $1 billion of 12-year senior notes at the tight end of guidance. DDR sold an upsized $300 million of 10-year paper.

CubeSmart sold $250 million of 10-year senior notes.

American Honda Finance was said to have priced $250 million of two-year floating-rate notes via Rule 144A and Regulation S. Terms of the deal were not available at press time.

British Telecom was in the U.S. bond market for the first time since 2008 with a $1.25 billion deal of notes in fixed and floating-rate tranches.

National Bank of Canada sold $1 billion of three-year senior notes that are guaranteed by the issuer's New York branch.

The market tone did not see much of a boost from Monday's drop on worries about Spain's debt, but issuers were eager to sell paper while they could.

"There was a window of opportunity before the FOMC tomorrow and people just decided to take it," said a source who worked on a couple of the day's deals.

Investor demand was high enough that many of the sales were seen pricing tighter than price guidance.

"It was a good day to be in the market," a syndicate source said.

There is a decrease in volume expected on Wednesday as the primary awaits an announcement out of the Fed meeting.

"I don't think it's going to be that busy," the syndicate source said.

The Markit CDX Series 18 North American Investment Grade index tightened 4 bps on Tuesday to a spread of 115 bps.

Meanwhile, investment-grade bank and brokerage credit default swaps costs declined on Tuesday, according to a market source.

Bank of America's CDS costs narrowed 13 bps to 265 bps bid, 275 bps offered. Citi's CDS costs also tightened 13 bps to 240 bps bid, 250 bps offered. J.P. Morgan's CDS costs declined 11 bps to 143 bps bid, 148 bps offered.

Brokers also tightened. Merrill Lynch's CDS costs were 15 bps tighter at 278 bps bid, 288 bps offered. Morgan Stanley's CDS costs declined 15 bps to 370 bps bid, 375 bps offered. Goldman Sachs' CDS costs also tightened 11 bps to 277 bps bid, 287 bps offered.

Oxy prices two tranches

Occidental Petroleum sold $1.75 billion of senior notes (A1/A/A) in two maturities, an informed source said.

The $500 million of 1.5% notes due 2018 were priced at a spread of Treasuries plus 80 bps.

A second part was $1.25 billion of 2.7% notes due 2023 priced at 110 bps over Treasuries.

The five-year tranche was seen 6 bps tighter at 74 bps bid, 73 bps offered, according to a market source, while the 10-year tranche traded at 105 bps bid, 103 bps offered.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC and Wells Fargo Securities LLC ran the books.

Proceeds are being used for general corporate purposes.

Occidental was last in the market with a $2.15 billion deal of notes due 2017 and 2042 on Aug. 15, 2011. The 1.75% long five-years were priced at 95 bps over Treasuries while the 3.125% long 30-year bonds priced at 105 bps.

The oil and gas, chemical and midstream company is based in Los Angeles.

British Telecom's $1.25 billion

British Telecommunications sold $1.25 billion of senior notes (Baa2/BBB/BBB) in two tranches, according to an FWP with the Securities and Exchange Commission.

A source who worked on the trade said there was about $5.5 billion in demand on the books.

The $500 million of floating-rate notes due 2013 priced at par to yield Libor plus 112.5 bps. The tranche was sold at the tight end of talk in the Libor plus 125 bps area, plus or minus 12.5 bps.

A second part was $750 million of 2% three-year notes sold at a spread of Treasuries plus 162.5 bps. The notes were priced at the low end of guidance in the 175 bps area, plus or minus 12.5 bps.

Citigroup Global Markets Inc., HSBC Securities (USA) Inc., Lloyds Securities, Inc., Mitsubishi UFJ Securities (USA) Inc. and Mizuho Securities USA Inc. were bookrunners.

British Telecom was last in the market with a $750 million reopening of notes in two tranches on March 19, 2008.

The internet and phone services company is based in London.

Newfield upsizes crossover

Newfield Exploration sold an upsized $1 billion of 5.625% 12-year senior notes at par to yield 5.625%, a source close to the deal said.

The bonds were priced at the tight end of both whispered talk in the high 5% yield area and revised guidance in the 5.625% to 5.75% range. The size of the trade was increased from $750 million.

The notes (Ba1/BBB-/BB+) were priced at a spread of Treasuries plus 400.7 basis points.

Wells Fargo Securities LLC was bookrunner.

Proceeds are being used to purchase up to $550 million of notes due 2016 in a tender offer, to repay a portion of borrowings under credit arrangements used to fund the redemption of 6.625% senior subordinated notes and for general working capital purposes.

The independent energy company is based in The Woodlands, Texas.

Detroit Edison's $500 million

Detroit Edison sold $500 million of general and refunding mortgage bonds, 2012 series A, (A2/A/A) in two parts, a market source said.

The $250 million of 2.65% 10-year notes priced at a spread of Treasuries plus 105 bps.

A $250 million tranche of 3.95% 30-year bonds sold at Treasuries plus 125 bps.

Barclays Capital Inc., J.P. Morgan Securities LLC, RBS Securities Inc. and Scotia Capital (USA) Inc. were bookrunners.

Proceeds are being used to redeem 5.2% notes due on October 15, redeem or repurchase tax-exempt bonds due on Aug. 1, 2024 and Dec. 15, 2032, to repay short-term debt and for general corporate purposes.

The electric utility is based in Detroit.

CubeSmart guaranteed notes

CubeSmart priced $250 million of 4.8% guaranteed 10-year senior notes (Baa3/BBB-/) at a spread of 320 bps over Treasuries, a source close to the deal said.

The bonds were sold tighter than price talk in the 350 bps area.

Bookrunners were Bank of America Merrill Lynch and Wells Fargo Securities LLC.

The deal is guaranteed by CubeSmart.

Proceeds are being used to reduce borrowings under an unsecured revolving credit facility and for general corporate purposes, including acquisitions, investment in joint ventures and to repay or repurchase other debt.

The real estate investment trust of self-storage facilities is based in Wayne, Pa.

DDR upsizes to $300 million

DDR priced an upsized $300 million of 4.625% 10-year senior notes (Baa3/BB+/BB+) to yield 325 bps over Treasuries, a source away from the deal said.

The notes were sold tighter than talk in the 350 bps to 362.5 bps range. The size of the deal was increased from $250 million.

Bookrunners were Deutsche Bank Securities Inc., RBS Securities Inc. and UBS Securities LLC.

Proceeds are being used to redeem outstanding 5.375% notes due 2012 and for general corporate purposes.

The real estate investment trust for shopping centers is based in Beachwood, Ohio.

Delmarva's bonds

Delmarva Power & Light priced $250 million of 4% 30-year first mortgage bonds (Baa1/A-/A) at a spread of 130 bps over Treasuries, a source said.

The bonds were sold at the tight end of guidance in the 135 bps area.

J.P. Morgan Securities LLC was active bookrunner.

Proceeds are being used to repay $216 million of commercial paper issued to temporarily fund capital expenditures and working capital, to fund a $65.7 million redemption of tax-exempt bonds issued by the Delaware Economic Development Authority and a $31 million redemption of tax-exempt bonds issued by DEDA and for general corporate purposes.

Delmarva, an electric and natural gas utility based in Wilmington, Del., was last in the market with a $250 million sale of five-year notes on Nov. 18, 2008.

National Bank of Canada notes

National Bank of Canada priced $1 billion of 1.5% three-year senior notes (Aa2/A/) at a spread of Treasuries plus 120 bps, an informed source said.

The notes were priced tighter than guidance in the 130 bps area. The source said there was about $2.5 billion in demand on the books.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC, National Bank of Canada Financial and Wells Fargo Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes.

The deal is guaranteed by National Bank of Canada's New York branch.

The financial services company is based in Montreal.

Bank of Montreal firms

In the secondary market, the 1.3% notes from Bank of Montreal due 2014 tightened 3 bps to 54 bps bid, according to a market source.

The bank priced $2 billion of notes in October at mid-swaps plus 50 bps.

J.P. Morgan tighter

The secondary also saw the $3 billion 6.3% issue from J.P. Morgan due 2019 tighten 13 bps to 188 bps bid.

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

Nova Scotia tightens

Also in the secondary, Bank of Nova Scotia's 1.85% notes due 2015 tightened 9 bps on Tuesday to 72 bps bid, according to a market source.

The bank priced the $1 billion issue at 147 bps over Treasuries in January.

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