Schlumberger, FedEx sell multi-tranche deals; financials price preferreds; FedEx paper firms

By Aleesia Forni and Andrea Heisinger

New York, July 24 - Two sales made their way to the high-grade bond market on Tuesday from FedEx Corp. and two units of oilfield services company Schlumberger Ltd.

FedEx priced $1 billion of notes due 2022 and 2042 in its first deal since 2009 when the company also sold $1 billion in two tranches.

Schlumberger Norge AS and Schlumberger Investment SA sold a combined $2.5 billion in three parts, all of which are guaranteed by the parent company. The deal was done privately under Rule 144A and Regulation S.

There were two issues of preferred stock from financial names for the day.

General Electric Capital Corp. was in the market with a $1.75 billion sale of $100-par fixed-to-floating-rate perpetual preferreds.

BB&T Corp. announced and priced a $1 billion issue of series E noncumulative perpetual preferreds. The size was initially a minimum of $250 million.

The largest sale of the day, from Schlumberger, began with a go, no-go call in the morning. Others like FedEx had already announced plans for deals, and Schlumberger decided to go forward with its plans, a source who worked on that trade said.

"It was really good," she said of the deal, remarking that market conditions were somewhat better than Monday. There was little high-grade activity to start the week due to unease about Spain and other European countries' economic health.

Projections are still for $10 billion to $15 billion of volume for the week, "hopefully, if conditions hold," the source who worked on Schlumberger said, adding that there are "a couple of things on the plate" for later in the week.

The Markit CDX Series 18 North American Investment Grade index widened 3 basis points to a spread of 116 bps on Tuesday after widening 2 bps on Monday.

Both tranches of FedEx's issuance were seen 1 bp tighter in secondary trading, a source said.

Investment-grade bank and brokerage credit default swap costs widened.

Bank of America's CDS costs rose 10 bps to 270 bps
bid, 280 bps offered, while Citi's CDS costs rose 10 bps to 265 bps bid, 270 bps offered. Meanwhile, JPMorgan's CDS costs widened 6 bps to 148 bps bid, 154 bps offered.

Brokers widened. Merrill Lynch's CDS costs rose 10 bps to 285 bps bid, 295 bps offered. Morgan Stanley's CDS costs traded 15 bps wider at 390 bps bid, 400 bps offered.

Schlumberger's three notes

Schlumberger Norge and Schlumberger Investment priced $2.5 billion of notes (A1/A+/) in two tranches, an informed source said.

The deal was initially announced at a minimum size of $1.5 billion, the source said, or $500 million per tranche.

There was roughly $7 billion of demand for the deal, a source said.

Schlumberger Norge priced $1 billion of 1.25% five-year notes at a spread of Treasuries plus 72 bps. The notes were sold tighter than guidance in the 80 bps area, plus or minus 5 bps.

Schlumberger Investment sold $500 million of 1.25% five-year notes at 72 bps over Treasuries. The bonds were also sold tighter than talk in the 80 bps area, plus or minus 5 bps.

This unit also priced $1 billion of 2.4% 10-year notes at Treasuries plus 102 bps. The notes sold tighter than guidance in the 110 bps area, plus or minus 5 bps.

The deal was done under Rule 144A and Regulation S and is guaranteed by parent company Schlumberger Ltd.

Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were the bookrunners.

The two Schlumberger units were last in the U.S. bond market with a $3 billion offering in four tranches on Sept. 7, 2011. Schlumberger Norge priced 1.95% five-year notes at 108 bps, and Schlumberger Investment sold 1.95% five-year notes at 108 bps and 3.3% 10-year notes at 130 bps.

The oilfield services company is based in Houston, Paris and the Hague.

FedEx sells $1 billion

FedEx sold $1 billion of notes (Baa1/BBB/) in two maturities, a market source said.

The $500 million of 2.625% 10-year notes priced at a spread of Treasuries plus 125 bps.

A $500 million tranche of 3.875% 30-year bonds sold at 150 bps over Treasuries.

A trader saw the 10-year notes at 124 bps bid, 122 bps offered later in the session, while the 30-year bonds traded at 149 bps bid, 145 bps offered.

The active bookrunners were Goldman Sachs & Co. and JPMorgan.

Proceeds are being used for working capital and general corporate purposes.

The notes are guaranteed by subsidiaries FedEx Express, FedEx Ground, FedEx Freight Corp., FedEx Freight, FedEx Services, FedEx TechConnect, FedEx Office, Federal Express Europe, Inc., Federal Express Holdings SA and Federal Express International, Inc.

FedEx was last in the market with a $1 billion offering of notes with five-year and 10-year maturities on Jan. 13, 2009.

The package shipping and logistics company is based in Memphis.

GE Capital prices preferreds

GE Capital priced $1.75 billion of 6.25% $100-par series B fixed-to-floating-rate noncumulative perpetual preferred shares, according to a prospectus filed with the Securities and Exchange Commission.

The issue was priced tighter than talk in the 6.5% area, a trader said.

They were quoted as trading at 100.625.

When declared by the board of directors, dividends will be paid semiannually at a fixed rate until Dec. 15, 2022. After that date, the dividend will reset to a floating rate equal to Libor plus 470.4 bps and will be paid quarterly.

The securities will not be listed on any exchange.

Barclays Capital Inc., Bank of America Merrill Lynch, Goldman Sachs, JPMorgan, Morgan Stanley & Co. LLC and UBS Securities LLC were the bookrunners.

Proceeds will be used for general corporate purposes.

GE Capital is a Norwalk, Conn.-based financial services firm.

BB&T's preferreds

BB&T sold $1 billion of 5.625% series E noncumulative perpetual preferred stock, a source said.

The $25-par shares were sold at the tight end of price talk in the 5.625% to 5.75% range, a trader said.

The shares were quoted as trading at $24.90, a source said.

The bookrunners were Bank of America Merrill Lynch, BB&T Capital Markets, Deutsche Bank Securities Inc., Morgan Stanley, UBS and Wells Fargo Securities LLC.

The preferreds have a liquidation preference of $25,000 each. The securities will be issued as $25 depositary shares each representing 1/1,000th of an interest in a preferred.

BB&T will apply to list the new series of preferreds on the New York Stock Exchange under the ticker symbol "BBTPE."

Proceeds will be used for general corporate purposes, which may include the acquisition of other companies, repurchasing common shares, paying down or refinancing maturing debt and extending credit to or funding investments in subsidiaries.

BB&T is a Winston-Salem, N.C.-based financial holding company.

Goldman Sachs firms

In the secondary market, Goldman Sachs Group, Inc.'s bonds due 2018 tightened 26 bps to 334 bps bid on Tuesday.

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 10 bps to 224 bps bid from Monday's levels.

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

JPMorgan widens

The secondary also saw the $3 billion 6.3% issue due 2019 from JPMorgan Chase & Co. widen 4 bps to 155 bps bid.

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

Stephanie N. Rotondo contributed to this review

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