Ingredion, Nordea Bank price as holiday quiets primary; Torchmark firms as spreads close wider

By Aleesia Forni and Andrea Heisinger

New York, Sept. 17 - There was a quieter start to the week than in recent memory with a couple of small deals pricing in the high-grade bond market on Monday.

Ingredion Inc. was one of a couple of corporate names selling notes. The maker of starches and sweeteners priced $300 million of five-year notes.

That company was joined by Torchmark Corp., which sold 10-year senior notes in a deal with a do-not-grow clause on it.

Nordea Bank AB priced $1 billion of 10-year notes and the Development Bank of Japan announced a sale of seven-year paper.

There were two deals announced in the preferred stock space.

Texas Capital Bancshares Inc. announced plans for a sale of $25-par 30-year subordinated notes. The company was joined by Torchmark, which was selling 40-year subordinated notes in a separate deal from the senior note offering.

The day's sales were somewhat lackluster owing mostly to the Rosh Hashanah holiday that some were off work celebrating.

"Europe was a little shaky this morning, too, but nothing major," a source said. "I think it was mostly that people opted not to price because of Rosh Hashanah."

Issuance is expected to pick up slightly on Tuesday as syndicate desks reported they had several deals in the works.

"I know we're working on a couple and I'm hearing of a few things away," the source said.

A syndicate source at a large desk said they had "a couple of financials" in the works for Tuesday.

After a relatively flat start to the day, spreads in the secondary market were seen "generally a bit wider" on Monday, a trader said.

The Markit CDX Series 18 North American Investment Grade index was 2 basis points wider from midday levels at a spread of 85 bps.

Torchmark's new issue tightened 5 bps, while the recent issuance from Duke Realty LP firmed 9 bps.

Investment-grade bank and brokerage credit default swaps costs rose on Monday.

Bank of America's CDS costs widened 6 bps to 147 bps bid, 152 bps offered. Citi's CDS costs were 7 bps wider at 149 bps bid, 154 bps offered. J.P. Morgan's CDS costs widened 4 bps to 104 bps bid, 109 bps offered. Wells Fargo's CDS costs rose 5 bps to 70 bps bid, 75 bps offered.

Merrill Lynch's CDS costs were 5 bps wider at 145 bps bid, 155 bps offered. Morgan Stanley's CDS costs widened 7 bps to 215 bps bid, 225 bps offered. Goldman Sachs' CDS costs rose 5 bps to 158 bps bid, 163 bps offered.

Torchmark prices tight

Torchmark sold $300 million of 3.8% 10-year senior notes (Baa1/A/) to yield Treasuries plus 200 bps, a market source said.

A trader quoted the notes at 195 bps bid later in the session.

The deal was sold at the tight end of guidance in the 212.5 bps area, plus or minus 12.5 bps.

Bookrunners were Bank of America Merrill Lynch, U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC.

Proceeds are being used to fund $200 million of the purchase price for the proposed acquisition of Family Heritage Life Insurance Co. of America, with the remainder used for general corporate purposes, including the repurchase or repayment of $94.1 million of outstanding 7.375% notes due 2013.

The insurance and financial services holding company is based in McKinney, Texas.

Ingredion's five-years

Ingredion priced $300 million of 1.8% five-year senior notes (Baa2/BBB/BBB) at 120 bps over Treasuries, a market source said.

There was guidance in the 150 bps area, with the bonds selling tighter than that level.

Bank of America Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were bookrunners.

Proceeds are being used to repay $200 million of debt under a revolving credit facility and for general corporate purposes.

The maker of starches and sweeteners is based in Westchester, Ill.

Nordea Bank's $1 billion

Nordea Bank priced a $1 billion deal of 4.25% 10-year Tier 2 subordinated notes (Aa3/AA-/) via Rule 144A and Regulation S to yield Treasuries plus 250 bps, a source close to the deal said.

Bookrunners were Bank of America Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC.

The financial services company is based in Stockholm.

Torchmark 40-year debentures

Torchmark brought a $125 million sale of 5.875% $25-par junior subordinated debentures due 2052, a market source said on Monday.

The deal came in line with talk.

Ahead of pricing, a trader had seen the issue at $24.70 bid. After pricing, a market source pegged the notes at $24.88 bid, $24.95 offered, which he said was "better than I would have thought.

"Clearly, they didn't push the pricing," he said.

The company will apply to list the notes on the New York Stock Exchange under the ticker symbol "TMKPB."

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

Proceeds will be used, together with cash on hand, to redeem in whole or in part the $120 million of outstanding 7.1% trust originated preferred securities due 2046 issued by Torchmark Capital Trust III.

Torchmark is a McKinney, Texas-based insurance holding company.

Development Bank of Japan

The Development Bank of Japan is planning to sell seven-year notes in a benchmark-sized deal, a market source said.

The notes (Aa3/AA-/) are being talked in the mid-swaps plus 45 basis points to 49 bps range. The sale will be at least $500 million in size and is being done under Rule 144A and Regulation S. Pricing is expected on Tuesday.

Bookrunners are Bank of America Merrill Lynch, Barclays and J.P. Morgan Securities LLC.

The lender to domestic and international clients is based in Tokyo.

Texas Capital's $25-par notes

Texas Capital Bancshares is planning a sale of $25-par subordinated notes due Sept. 1, 2042, the company said in a prospectus filed with the Securities and Exchange Commission. The deal is expected to price midday on Tuesday.

A trader remarked that he was "not seeing too many markets," though he said that retail investors were snapping it up. The underlying bank, he said, was "pretty strong."

Price talk is between 6.5% and 6.625%.

The company intends to list the new notes on the Nasdaq Global Select Market under the ticker symbol "TCBIL."

Deutsche Bank Securities Inc., U.S. Bancorp and Macquarie Capital Inc. are bookrunners.

Proceeds will be used for general corporate purposes, including providing capital support for growth to Texas Capital Bank.

Texas Capital Bancshares is the parent company of Dallas-based Texas Capital Bank.

Duke firms

In the secondary market, Duke Realty $300 million of 10-year senior notes were seen 9 bps tighter on Monday at 196 bps bid.

The 3.875% notes priced at a spread of Treasuries plus 205 basis points on Friday.

Duke, based in Indianapolis, is a self-managed real estate investment trust.

Stephanie N. Rotondo contributed to this review

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