LabCorp, AIG, Domtar, Unum price as deal pace slows; new issues mixed in secondary market

By Aleesia Forni and Andrea Heisinger

New York, Aug. 20 - Issuance was muted on Monday in the high-grade bond market compared to previous weeks, but there were deals from American International Group, Inc. and Laboratory Corp. of America Holdings, among others.

AIG sold $250 million of three-year subordinated notes, while LabCorp priced $1 billion of senior notes due 2017 and 2022.

Montreal-based Domtar Corp. was in the market with a $250 million sale of 30-year senior notes.

Insurance and employee benefits provider Unum Group priced $250 million of 30-year bonds.

JPMorgan Chase & Co. announced a sale of perpetual preferred stock shares with a minimum size of $500 million. A source said late in the day that the size had been increased to $1.1 billion.

The banking giant was joined in that market by WSFS Financial Corp., which was selling $25-par seven-year senior notes.

Issuance for the week is expected to be less than it has been for the past two or three as companies poured into the market following earnings in order to take care of funding needs ahead of any turbulence in Europe.

"Greece is going to mess everything up again," a source said late on Monday.

It was announced that the country, which has largely been out of the headlines in recent weeks - at least for negative news - is working to make billions of euros worth of spending cuts in order to get aid.

Although there was some softness in the secondary side of the market from the news, it didn't have a sizeable impact on the primary or new deals, a syndicate source who worked on one of the day's deals said.

"There was nothing that we could see, but we were in our own little bubble most of the day," the source said.

The flow of deals is set to continue on Tuesday with at least three deals in the pipeline.

"It should be a manageable day," a source said.

The day's new issues were mixed near the end of Monday's session, a trader said.

Domtar's 30-year notes widened 7.5 bps, while LabCorp's new notes traded 9 bps to 11 bps tighter.

The new issues from AIG were unchanged near the day's close.

Meanwhile, the Markit CDX Series 18 North American Investment Grade index was 1 bps tighter from Fridays close at a spread of 98 bps.

LabCorp's $1 billion

LabCorp priced $1 billion of senior notes (Baa2/BBB+/) in two parts, a source away from the deal said.

The $500 million of 2.2% five-year notes priced at a spread of Treasuries plus 145 bps.

The notes tightened 9 bps in secondary trading to 136 bps bid, 132 bps offered, a market source said late in the session.

A $500 million tranche of 3.75% 10-year notes sold at 195 bps over Treasuries.

The 10-year notes also tightened in the secondary market and were quoted at 184 bps bid, 180 bps offered.

Bank of America Merrill Lynch and Credit Suisse Securities (USA) LLC were bookrunners.

Proceeds are being used to repay all or a portion of outstanding borrowings under a revolving credit agreement and for general corporate purposes.

LabCorp was last in the market with a $925 million deal in two maturities on Nov. 16, 2010. A 3.125% note due 2016 from that offering sold at 168 bps over Treasuries, while a 4.625% 10-year note priced at 183 bps over Treasuries.

The independent clinical laboratory company is based in Burlington, N.C.

AIG prices three-years

American International Group sold $250 million of 2.375% three-year subordinated notes (Baa2/BBB+/) to yield Treasuries plus 200 bps, an informed source said.

The deal was priced at the tight end of guidance in the low 200 bps area, the source said.

There was roughly $750 million of demand on the books, making it about three times oversubscribed, the source said.

"It went pretty well, came at the low end of talk," the source added.

Late in the session, the notes traded unchanged at 200 bps bid, 197 bps offered.

Citigroup Global Markets Inc. ran the books.

Proceeds are being used for general corporate purposes.

AIG last tapped the U.S. bond market with a reopening of 4.875% notes due 2022 on June 26 to add $750 million.

The insurance company is based in New York City.

Domtar sells long bonds

Domtar was in the market with a $250 million deal of 6.25% 30-year senior notes (Baa3/BBB-/) priced at 337.5 bps over Treasuries, a market source said.

The notes widened in trading to 345 bps bid, 335 bps offered, a trader said.

Bookrunners were J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and RBC Capital Markets LLC.

Proceeds are being used for general corporate purposes, including capital expenditures and strategic acquisitions.

The deal is guaranteed by U.S.-based wholly owned subsidiaries of Domtar that guarantee debt under the company's credit agreement.

The fiber-based product maker is based in Montreal.

Unum prices $250 million

Unum Group sold $250 million of 5.75% 30-year senior notes (Baa2/BBB-/BBB) to yield 287.5 bps over Treasuries, an informed source said.

Bookrunners were Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Barclays and Deutsche Bank Securities Inc.

Proceeds are being used for general corporate purposes.

Unum was last in the U.S. bond market with a $400 million deal of 5.625% 10-year notes priced at 300 bps over Treasuries on Sept. 8, 2010.

The employee benefits provider is based in Chattanooga, Tenn.

JPMorgan's perpetuals

JPMorgan Chase announced a sale of series O noncumulative preferred stock, according to a filing with the Securities and Exchange Commission.

The preferreds will be issued as depositary shares representing a 1/400th interest in each preferred share.

Price talk is around 5.625%, a trader said. The size is expected to be at least $500 million.

J.P. Morgan Securities LLC is bookrunner.

The bank will apply to list the new series of preferreds on the New York Stock Exchange.

Proceeds will be used for general corporate purposes, including the repayment of debt, investments in or extensions of credit to subsidiaries, redemptions or possible acquisitions.

JPMorgan is a New York-based financial holding company.

WSFS preps $25 pars

WSFS Financial will price an offering of $25-par senior notes due 2019, according to a prospectus filed with the SEC.

The company will apply to list the notes on the Nasdaq Global Select Market.

Sandler O'Neill + Partners, LP I ran the books.

Proceeds will be used for general corporate purposes, including to support anticipated balance sheet growth, which may include loan originations and securities purchases. The company may also use the funds to repurchase or redeem all or a portion of its series A preferred stock, subject to regulatory approval.

WSFS is a Wilmington, Del.-based savings and loan holding company.

Stephanie N. Rotondo contributed to this review

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