eBay does multi-part deal; Morgan Stanley, Macquarie hit market; bank, broker CDS costs rise

By Aleesia Forni and Andrea Heisinger

New York, July 19 - Issuance in the high-grade bond market ramped up on Thursday with a multi-tranche deal from eBay Inc.

There were other trades from Morgan Stanley, Macquarie Bank Ltd., New York Life Global Funding I and Invesco Mortgage Capital Inc., and CommonWealth REIT announced plans for a $25-par offering.

Toyota Motor Credit Corp. sold a total of $1 billion of one-year floating-rate notes in two issues of $500 million each.

eBay priced the largest sale so far this week at $3 billion in four maturities. The notes were priced a day after the e-commerce company announced second-quarter earnings that had increased from the same period a year earlier.

Q2 revenue was reported at $3.4 billion, which was a 23% increase from a year earlier and also beat analyst estimates.

All of eBay's tranches were priced at least 15 basis points tighter than talk.

Morgan Stanley was also in the market with its $2 billion issue of 30-year bonds following an earnings announcement in the morning that showed Q2 profit had dropped by roughly half to $591 million from the $1.19 billion reported in the same quarter of 2011. The financial also announced job cuts.

There was an upsized $600 million trade of three-year notes from New York Life. The private sale was increased in size from $250 million, a source said. The terms of the deal were not available at press time.

Macquarie Bank tapped the market for the second time in July with a $750 million issue of three-year notes priced under Rule 144A and Regulation S.

European Investment Bank priced $3.5 billion of five-year notes.

Issuers saw a window at the open on Thursday, a source said, and jumped in to take advantage of rates and investor demand.

The deal from eBay was particularly successful given the company's A ratings, which investors have been grabbing for, but Morgan Stanley also saw plenty of demand "on the yield," a source said.

The issuance pipeline is likely closed for the week as companies generally shy away from the market on Fridays.

"I think we've hit our quota for the week," a syndicate source said.

The Markit CDX Series 18 North American Investment Grade index tightened 3 bps on Thursday to a spread of 108 bps.

The new three-year notes from New York Life were seen trading at 47 bps bid, 44 bps offered near the end of the session, a market source said.

Investment-grade bank and brokerage credit default swap costs rose on Thursday.

Banks were wider. Bank of America's CDS costs widened 9 bps to 248 bps
bid, 253 bps offered. Citi's CDS costs rose 7 bps to 245 bps bid, 250 bps offered.

Brokers were also wider. Merrill Lynch's CDS costs traded 13 bps wider at 260 bps bid, 270 bps offered. Morgan Stanley's CDS costs rose 28 bps to 355 bps bid, 360 bps offered. Goldman Sachs' CDS costs widened 15 bps to 265 bps bid, 270 bps offered.

eBay's massive deal

The e-commerce platform eBay sold $3 billion of senior notes (A2/A/A) in four tranches following a positive second-quarter earnings announcement the previous day, a source said.

There was roughly $23 billion on the books when the deal closed after earlier reports of about $20 billion in interest.

A $250 million tranche of 0.7% three-year notes priced at a spread of Treasuries plus 40 bps. The tranche sold tighter than guidance in the 55 bps area.

The $1 billion of 1.35% five-year notes sold at 75 bps over Treasuries. The notes priced lower than talk in the range of 95 bps to 100 bps.

There was a $1 billion tranche of 2.6% 10-year notes priced at 110 bps over Treasuries. The tranche sold tighter than talk in the range of 125 bps to 130 bps.

The deal also included $750 million of 4% 30-year bonds priced at a spread of Treasuries plus 145 bps. The bonds priced tighter than talk in the 160 bps to 165 bps range.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC were the bookrunners.

Proceeds are being used for general corporate purposes.

eBay was last in the market with a $1.5 billion deal priced in three parts on Oct. 21, 2010. The 0.875% three-year notes from that offering priced at 42 bps over Treasuries, a 1.625% five-year note sold at 57 bps over Treasuries, and a 3.25% 10-year note priced at 77 bps over Treasuries.

The commerce and payments platform is based in San Jose, Calif.

Morgan Stanley's $2 billion

Morgan Stanley priced $2 billion of 6.375% 30-year bonds (Baa1/A-/A) at a spread of Treasuries plus 387.5 bps, a market source away from the deal said.

The source said the deal was roughly two times oversubscribed with about $4 billion on the books.

Morgan Stanley & Co. LLC ran the books.

The last issue of dollar-denominated bonds from the New York-based financial services company was $2 billion of five-year notes sold on March 19.

Macquarie prices privately

Macquarie Bank sold $750 million of three-year bonds at a spread of Treasuries plus 320 bps, an informed source said.

The deal sold tighter than guidance in the 340 bps area, the source said.

The notes (A2/A/A) were priced under Rule 144A and Regulation S.

The bookrunners were Bank of America Merrill Lynch, Citigroup, HSBC Securities (USA) Inc. and Macquarie.

The banking unit of Macquarie Group Ltd. is based in Sydney, Australia.

Toyota's floaters

Toyota Motor Credit sold $1 billion of one-year medium-term floating-rate notes (Aa3/AA-/) at par to yield Libor plus 8 bps in two separate deals, according to FWP filings with the Securities and Exchange Commission.

The agents for one of the $500 million deals were Deutsche Bank Securities and Williams Capital Group LP, while Toyota Financial Services Securities USA Corp. was on the books for the other $500 million trade.

The funding arm of Toyota is based in Torrance, Calif.

EIB sells $3.5 billion

European Investment Bank sold $3.5 billion of 1.125% five-year notes (Aaa/AAA/AAA) at a spread of Treasuries plus 64.8 bps, a source close to the deal said.

The bookrunners were Barclays Capital Inc., Deutsche Bank and JPMorgan.

The lender to the European Union is based in Kirchberg, Luxembourg.

Invesco prices perpetuals

Invesco Mortgage Capital priced $135 million of 7.75% series A cumulative redeemable perpetual preferreds after the close.

The deal was upsized from $100 million, and pricing was in line with talk.

There is a $20.25 million over-allotment option.

Ahead of pricing, a trader said he had not seen any street markets for the paper.

Morgan Stanley, UBS Securities LLC and Wells Fargo Securities LLC are bookrunners.

The preferreds can be redeemed on or after July 26, 2017 or in the event of a change of control.

Invesco will apply to list the new securities on the New York Stock Exchange under the symbol "IVRPA." Settlement is expected July 26.

Proceeds will be used to purchase agency residential mortgage-backed securities, non-agency RMBS, commercial mortgage-backed securities and certain residential and commercial mortgage loans.

CommonWealth's $25-par bonds

CommonWealth REIT plans to sell $150 million of 30-year $25-par senior bonds, according to a filing with the Securities and Exchange Commission.

Price talk is 5.75% to 5.875%, according to a trader.

The company intends to list the notes on the New York Stock Exchange.

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

Proceeds will be used to repay outstanding amounts under a revolving credit facility and for general corporate purposes, which may include future acquisitions.

After paying down the credit facility, the company intends to use the available borrowings to redeem some or all of its outstanding 7.125% series C cumulative redeemable preferreds.

CommonWealth is a Newton, Mass.-based real estate investment trust.

Merrill Lynch tightens

The secondary saw Merrill Lynch's 6.875% notes due 2018 widen 3 bps to 309 bps bid near the end of New York's session.

On April 22, 2008, the bank priced $5.5 billion of the 10-year notes at 320 bps over Treasuries.

Goldman Sachs firms

Meanwhile, Goldman Sachs Group, Inc.'s bonds due 2018 tightened 10 bps to 304 bps bid on Thursday.

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

Citi firms

In other trading, Citigroup Inc.'s 6.375% notes due 2014 tightened 9 bps to 269 bps bid.

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

Stephanie N. Rotondo contributed to this report

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