Total, TransCanada, Sumitomo continue foreign issuance trend; Comcast firms; Ford issue weaker

By Aleesia Forni and Andrea Heisinger

New York, Jan. 10 - Two Canadian issuers tapped the high-grade bond market on Thursday along with an entertainment company and a Japanese bank.

Total Capital Canada Ltd. and Total Capital International priced $3.25 billion of bonds in four parts, and TransCanada Pipelines Ltd. sold $750 million of three-year notes.

DirecTV Holdings LLC and DirecTV Financing Co. tapped the market for $750 million of five-year notes.

A $2 billion sale in three tranches came from Japanese financial services company Sumitomo Mitsui Banking Corp. The sale was heavily oversubscribed, a source said.

"There was about $13 billion total," she said. "It was pretty much a bell curve - most interest in the fives, then 10s, and threes came in third."

A $325 million issue of perpetual preferred stock was priced by KKR Financial Holdings LLC.

Issuance for the week has already met expectations of $20 billion to $30 billion, so Friday is said to be quiet.

"We were pretty top heavy, but today was strong," a market source said after the close. "Tomorrow should be dead. At least I hope so anyway."

The Markit CDX Series 18 North American Investment Grade index tightened 1 basis point to a spread of 86 bps on Thursday.

In the secondary market, Tuesday's issuances from Comcast Corp. were active on Thursday, with all three tranches trading better during the session.

Meanwhile, Ford Motor Credit Co. LLC's recent notes were wider compared to levels seen Wednesday.

Investment-grade bank and brokerage credit default swap costs declined on the day.

Bank of America's CDS costs firmed 2 bps to 110 bps bid, 114 bps offered. Citi's CDS costs were also 2 bps tighter at 109 bps bid, 113 bps offered. JPMorgan's CDS costs declined 1 bp to 79 bps bid, 81 bps offered. Wells Fargo's CDS costs were also 1 bp tighter at 71 bps bid, 73 bps offered.

Merrill Lynch's CDS costs were 2 bps tighter at 110 bps bid, 115 bps offered. Morgan Stanley's CDS costs declined 5 bps to 152 bps bid, 157 bps offered. Goldman Sachs' CDS costs were 4 bps tighter at 133 bps bid, 137 bps offered.

SMBC sells $2 billion

Sumitomo Mitsui Banking priced $2 billion of notes (Aa3/A+/) in three maturities, a market source said.

A $750 million tranche of 0.9% three-year notes was sold at a spread of Treasuries plus 58 bps. Initial price talk in Asia was in the 70 bps area, the source said, with revised talk in the 65 bps area.

There was $750 million of 1.5% five-year notes priced at a spread of 77 bps over Treasuries. Price talk early in Asia was in the 90 bps area, with revised guidance in the 85 bps area.

Finally, a $500 million tranche of 3% 10-year notes was sold at Treasuries plus 117 bps. Initial talk in Asia was in the low 130 bps area, a source said, with revised talk in the range of 125 bps to 130 bps.

Barclays, Citigroup Global Markets Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC and SMBC Nikko Capital Markets Ltd. were the bookrunners.

The financial services company is based in Tokyo.

Total's four-tranche sale

Total Capital Canada and Total Capital International priced $3.25 billion of notes (Aa1/AA-/) in four parts including a reopening of notes, an informed source said.

The sale included $1 billion of three-year floating-rate notes priced at par to yield Libor plus 38 bps.

A $1 billion tranche of 1.45% five-year notes was sold at a spread of 68 bps over Treasuries. Pricing was tight to talk in the 70 bps area, the source said.

The third part was $1 billion of 2.75% notes due 2023 priced at a spread of Treasuries plus 88 bps. The notes sold at the low end of guidance in the 90 bps area.

An added tranche came from Total Capital International, which reopened an issue of 0.75% notes due Jan. 25, 2016 to add $250 million. Pricing was at a spread of Treasuries plus 48 bps. Total issuance is $750 million including $500 million priced at Treasuries plus 43 bps on Sept. 18.

Barclays, Bank of America Merrill Lynch and Morgan Stanley & Co. LLC were active bookrunners.

Proceeds are being used for general corporate purposes.

The offering is guaranteed by parent company Total SA, which is based in Courbevoie, France.

The unit of the oil and gas company is based in Calgary, Alta.

DirecTV offers five-year

DirecTV Holdings and DirecTV Financing were in the market with a $750 million sale of 1.75% five-year senior notes (Baa2/BBB/BBB-) priced to yield 115 bps over Treasuries, a market source said.

Goldman Sachs, JPMorgan, Morgan Stanley and RBC Capital Markets LLC were the bookrunners.

Proceeds are being used for general corporate purposes, possibly including distribution to parent company DirecTV for a share repurchase plan and other corporate purposes.

The notes are guaranteed by DirecTV, DirecTV LLC, DirecTV Customer Services, Inc., DirecTV Merchandising, Inc., DirecTV Enterprises, LLC, LABC Productions, LLC and DirecTV Home Services, LLC.

The digital entertainment company, based in El Segundo, Calif., last sold bonds in the U.S. market in a $4 billion offering of senior notes in three tranches on March 5, 2012.

TransCanada's short bond

TransCanada Pipelines sold $750 million of 0.75% three-year senior notes (A3/A-/) at a spread of Treasuries plus 45 bps, according to an FWP filing with the Securities and Exchange Commission.

The bookrunners were Citigroup and HSBC Securities USA Inc.

Proceeds are being used for general corporate purposes and to reduce short-term debt of the corporation and its affiliates.

TransCanada was last in the U.S. bond market with a $1 billion offering of 10-year notes on July 30.

The natural gas and oil pipeline and storage company is based in Calgary, Alta.

KKR does preferreds

KKR Financial Holdings priced $325 million of 7.375% series A LLC perpetual preferred shares, a market source said.

Price talk was revised down to 7.375% from 7.625%, a trader said.

"So they tweaked it down quite a bit," a trader said at midday.

Before the price revision, paper was trading at "par or above" in the gray market, the trader noted. Though he had not seen any markets post-revision, he assumed the price could come in a little.

"Originally it was really strong, then it faded," another market source said after the bell and post-pricing. He saw a $24.85 bid shortly before the market closed.

Citigroup, Morgan Stanley, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers.

The preferred shares become redeemable in January 2018 at par plus accrued dividends. If a change of control occurs before that date, the company has the option to redeem the securities in whole.

If a change of control happens before the first redemption date and KKR fails to give notice prior to the 31st day following said event, the dividend will increase to 12.375%.

KKR intends to list the new securities on the New York Stock Exchange under the ticker symbol "KFP."

KKR's other issues were trading down a good bit, likely due to investors getting out of one piece to get into the new issue.

The 7.5% senior notes due 2042 (NYSE: KFI) fell 66 cents, or 2.39%, to $26.99, while the 8.375% senior notes due 2041 (NYSE: KFH) fell 41 cents, or 1.44%, to $28.09.

The San Francisco-based specialty finance company will use proceeds from the sale for general corporate purposes, including payments made in connection with the repurchase, redemption or conversion of senior debt.

Ford notes weaken

Ford Motor Credit's $1.25 billion 2.375% five-year notes were quoted 4 bps wider from levels seen Wednesday, a market source said.

The notes were trading at 167 bps bid, 163 bps offered during the session.

The Dearborn, Mich.-based financing arm of automaker Ford Motor Co. sold the notes to yield Treasuries plus 168 bps on Tuesday.

Comcast trades tighter

Also in the secondary market, all three tranches of Comcast's $2.95 billion deal were trading better compared to Wednesday's levels.

A trader quoted the $750 million tranche of 2.85% 10-year notes 1 bp tighter at 103 bps bid, 100 bps offered. The notes priced at a spread of Treasuries plus 100 bps on Tuesday.

The $1.7 billion of 4.25% 20-year notes firmed 2 bps to 127 bps bid, 124 bps offered following Tuesday's sale at a spread of 125 bps over Treasuries.

Meanwhile, the $500 million tranche of 4.5% 30-year bonds was 4 bps tighter at 142 bps bid, 139 bps offered. The bonds were sold at Treasuries plus 145 bps.

The telecommunications company is based in Philadelphia.

Stephanie N. Rotondo contributed to this review

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