Altria Group, Colgate, Italy's Intesa hit market with new deals; new Flowserve notes firm

By Cristal Cody and Aleesia Forni

Virginia Beach, Oct. 28 - Issuers raced to the high-grade primary market on Monday, continuing to take advantage of a positive market tone.

The primary's main focus was on the new $3.2 billion two-part sale of senior notes from Altria Group Inc.

The deal's order book was more than three times oversubscribed, according to a market source.

Altria brought to market a $1.4 billion tranche of 4% notes due 2024 sold at Treasuries plus 155 basis points and a $1.8 billion tranche of 5.375% notes due 2044 priced at Treasuries plus 175 bps.

The session also saw Intesa Sanpaolo SpA price a $1.25 billion issue of 3.875% notes due 2019, which priced at Treasuries plus 260 bps.

Northern Trust Corp. sold $750 million of 12-year subordinated notes during the session, according to a market source.

The notes priced with a spread of Treasuries plus 145 bps.

Colgate-Palmolive Co. was also in Monday's market with a $300 million sale of 1.5% five-year notes.

Meanwhile, Flowserve Corp. sold $300 million of 4% 10-year senior notes on Monday priced at 155 bps over Treasuries.

There was also a deal announcement from Altera Corp., but details were not available at press time.

A busy week ahead is expected for the high-grade market, with players predicting a $15 billion to $20 billion week.

"FOMC this week, but [the primary] should still see action," a market source said.

Investment-grade bonds were mostly flat over the session, while investment-grade bank and brokerage CDS prices tightened on Monday, according to market sources.

The Markit CDX North American Investment Grade series 21 index was unchanged at a spread of 72 bps.

New issues from Altria Group, Altera and Colgate-Palmolive priced late in the day and were not seen in secondary trading as the session headed toward the close, according to market sources.

"Too early," one trader said.

Flowserve's 4% notes due 2023 tightened about 4 bps in aftermarket trading.

Altria prices tight

Monday's largest sale came from Altria Group, which sold a $3.2 billion two-part issue of senior notes (Baa1/BBB/BBB+), according to an informed source.

The deal included $1.4 billion of 4% senior notes due 2024 priced at Treasuries plus 155 bps.

The notes were sold at 99.378 to yield 4.073%.

There was also $1.8 billion of 5.375% notes due 2044 sold with a spread of Treasuries plus 175 bps.

Pricing was at 99.574 to yield 5.402%.

Both tranches sold at the tight end of talk.

Goldman Sachs & Co., Morgan Stanley & Co. LLC, RBS Securities Inc. and Scotiabank were the joint bookrunners.

Proceeds will be used for the repurchase of the company's notes accepted for purchase in a tender offer and for general corporate purposes.

The securities are guaranteed by Richmond, Va.-based parent Philip Morris USA Inc., a cigarette and smokeless tobacco product maker.

Intesa sells $1.25 billion

Italy's Intesa Sanpaolo sold $1.25 billion of 3.875% notes (Baa2/BBB/BBB+) due Jan. 15, 2019 to yield Treasuries plus 260 bps, an informed source said.

Pricing was tight of guidance.

The notes priced at 99.98 to yield 3.88%.

Banca IMI, Citigroup Global Markets Inc., Goldman Sachs and J.P. Morgan Securities LLC were the bookrunners.

Proceeds will be used for general corporate purposes.

The financial services company is based in Turin, Italy.

Northern's subordinated notes

Also on Monday, Northern Trust priced a $750 million issue of subordinated notes (A2/A/) due Oct. 30, 2025 with a spread of Treasuries plus 145 bps, according to a syndicate source.

Pricing was at 99.886 to yield 3.962%.

BofA Merrill Lynch, Goldman Sachs, Barclays and Morgan Stanley were the joint bookrunners.

Proceeds will be used for general corporate purposes.

The financial holding company is based in Chicago.

Flowserve new issue

The primary also saw Flowserve price a $300 million issue of 4% senior notes (Baa2/BBB-/BBB) due Nov. 15, 2023 on Monday with a spread of Treasuries plus 155 bps, according to an informed source and a filing with the Securities and Exchange Commission.

Pricing was at 99.532 to yield 4.057%.

BofA Merrill Lynch, JPMorgan, Credit Agricole CIB and Wells Fargo Securities LLC were the joint bookrunners.

Proceeds will be used to repay the current balance under the company's revolving credit facility and for general corporate purposes, which may include acquisitions.

The flow control systems manufacturer is based in Irving, Texas.

Colgate's five-year notes

Colgate-Palmolive (Aa3/AA-/) priced $300 million of 1.5% five-year notes at 99.402 on Monday, according to an FWP filed with the SEC.

Proceeds will be used for general corporate purposes, including the retirement of commercial paper.

The notes feature a make-whole call at Treasuries plus 5 bps.

HSBC Securities (USA) Inc., JPMorgan and Morgan Stanley were the joint bookrunners.

Colgate-Palmolive is a New York City-based consumer products company.

Bank/brokerage CDS costs down

Investment-grade bank and brokerage CDS prices declined on Monday, according to a market source.

Bank of America Corp.'s CDS costs firmed 2 bps to 97 bps bid, 100 bps offered. Citigroup Inc.'s CDS costs declined 2 bps to 88 bps bid, 91 bps offered. JPMorgan Chase & Co.'s CDS costs tightened 3 bps to 84 bps bid, 87 bps offered. Wells Fargo & Co.'s CDS costs were unchanged at 55 bps bid, 59 bps offered.

Merrill Lynch's CDS costs firmed 2 bps to 95 bps bid, 100 bps offered. Morgan Stanley's CDS costs tightened 4 bps to 110 bps bid, 113 bps offered. Goldman Sachs Group, Inc.'s CDS costs declined 1 bp to 117 bps bid, 120 bps offered.

Paul Deckelman contributed to this review.

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