NIKE sees strong demand; TD adds tranche; tone positive in secondary; Morgan Stanley firms

By Aleesia Forni and Andrea Heisinger

New York, April 23 - Two sales hit the high-grade bond market Tuesday including one from NIKE, Inc., which has not sold bonds in the United States since 2003.

NIKE priced $1 billion of notes split evenly between maturities in 2023 and 2043. Demand was about $9 billion as of early afternoon, with some of the lowest borrowing rates recently seen on investment-grade bonds.

There was about $4.5 billion of investor interest for the 10-year notes and about $3.5 billion for the 30-year tranche, a source close to the trade said.

The source added that the 10-year notes came in nearly 20 basis points from initial guidance, while the 30-year bonds were sold 15 bps to 20 bps less than initial talk.

Meanwhile, Toronto-Dominion Bank sold $2.25 billion of notes due 2018 split into two parts. The Canadian financial priced $750 million of five-year floating-rate notes and $1.5 billion of five-year notes.

A sale of tier 2 subordinated notes was announced by UniCredit SpA. Pricing is expected in Wednesday's session.

"I'm not hearing of too much for tomorrow," a market source said after the close.

The secondary market's tone was positive during Tuesday's session, market sources said.

Meanwhile, the Markit CDX North American Investment Grade index was 1 bp tighter at a spread of 81 bps on Monday.

"The market is very strong today, with high beta up ½ or more and low beta up 1/4," one market source said.

In trading, Morgan Stanley's bonds were once again among the day's most actively traded names.

Both tranches of the bank's recently issued fixed-rate bonds were quoted tighter during the session.

Preferreds active

New offerings of preferred stock were announced Tuesday by CYS Investments Inc. and Citigroup Inc.

Citigroup priced $1.25 billion of $1,000-par fixed-to-floating rate notes.

"I believe that's all institutional," a trader said at midday, noting that he wasn't seeing any "real markets" for paper aside from a 99.75 bid.

"It doesn't seem like it's trading around in the gray market much," he said at midday.

After pricing, a market source said Citi's issue had gotten as good as "above 101" before coming back to end at par bid, par ¼ offered.

CYS Investments priced $200 million of series B cumulative redeemable preferreds. A trader said at midday that the deal had already launched and closed.

Price talk was around 7.5%, according to the trader. He quoted the issue at $24.80 bid, $24.82 offered in the gray market.

Meanwhile, Teekay Offshore Partners LP gave the terms of its $150 million series A cumulative redeemable preferreds that priced late Monday.

NIKE prices $1 billion

NIKE priced a $1 billion sale of notes (A1/A+/) in two maturities, an informed source said.

The sale will be the Beaverton, Ore.-based sports footwear and apparel company's first bond sale in the United States since 2003, the source said.

The trade included $500 million of 2.25% 10-year notes priced at a spread of Treasuries plus 58 bps. Initial price talk was in the Treasuries plus mid 70 bps area, and it was later revised to the 60 bps area, plus or minus 2 bps.

A $500 million tranche of 3.625% 30-year bonds sold at 75 bps over Treasuries. Initial guidance was at a 15 bps to 20 bps curve from the 10-year note's spread, and it was later amended to the 75 bps to 80 bps range.

BofA Merrill Lynch, Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. were the bookrunners.

Proceeds are being used for general corporate purposes.

TD sells five-year notes

Toronto-Dominion Bank sold $2.25 billion of five-year medium-term senior notes (Aa1/AA-/AA-) in two tranches, a market source said.

There was a floating-rate component added to the original single tranche of five-year fixed-rate notes.

That $750 million tranche of five-year floating-rate notes sold at par to yield Libor plus 55 bps.

There was $1.5 billion of 1.4% five-year notes priced at a spread of Treasuries plus 72 bps.

The bookrunners were Goldman Sachs & Co., J.P. Morgan Securities LLC, TD Securities (USA) LLC and Wells Fargo Securities LLC.

Proceeds are being added to the company's general funds to be used for general corporate purposes.

TD Bank last tapped the U.S. bond market with a $3 billion private offering of five-year covered bonds on March 5, 2012.

The bank and financial services company is based in Toronto.

UniCredit preps notes

UniCredit is expected to sell tier 2 subordinated bonds under Regulation S, a market source said.

The bonds (Baa2/BBB+/BBB+) are expected to price Wednesday after the books stay open overnight to take advantage of Asian and European investor interest, the source said.

The bookrunners are BNP Paribas Securities Corp., Citigroup and UniCredit.

The banking and financial services company is based in Rome and Milan, Italy.

Citi's $1,000-par preferreds

Citigroup priced $1.25 billion of 5.35% series D fixed-to-floating-rate noncumulative perpetual preferred stock, a market source said.

Each preferred (expected ratings: B1/BB/BB) has a $25,000 liquidation preference. They will be issued as $1,000-par depositary shares each representing a 1/25th interest.

Price talk was 5.375% to 5.5%.

Citigroup was the bookrunner.

While the dividend is fixed, dividends will be paid semiannually. Beginning Aug. 15, 2023, the preferreds will float at a rate of Libor plus 346.6 bps and the payments will be made quarterly.

The New York-based bank will use proceeds for general corporate purposes.

CYS prices preferreds

CYS Investments sold $200 million of 7.5% series B cumulative redeemable preferred stock, according to a press release.

Pricing was in line with guidance.

Morgan Stanley & Co. LLC, BofA Merrill Lynch and UBS Securities LLC were the joint bookrunning managers.

The Waltham, Mass.-based real estate investment trust will apply to list the new series of preferreds on the New York Stock Exchange under the ticker symbol "CYSPB."

Proceeds will be used for investments in agency residential mortgage-backed securities and for general corporate purposes.

Arlington's $25-par

Arlington Asset Investment Corp. will price an offering of $25-par senior notes due April 2023, the company said in a prospectus filed with the Securities and Exchange Commission.

MLV & Co. LLC and JMP Securities Inc. are the joint bookrunners.

The company intends to list the notes on the NYSE.

Proceeds will be used to acquire mortgage-backed securities and for general working capital purposes.

Arlington Asset is an Arlington, Va.-based investor in mortgage-backed securities.

Teekay prices

Teekay Offshore Partners priced $150 million of 7.25% series A cumulative redeemable preferred stock, the company said in an FWP filing with the SEC.

A trader saw the preferreds at $24.92 bid at midday. The issue freed to trade shortly after pricing.

BofA Merrill Lynch, Morgan Stanley and UBS are the joint bookrunning managers.

Proceeds will be used for general partnership purposes, including the funding of new building installments, capital conversion projects and the acquisitions of vessels that Teekay Corp. has or might offer. Pending approval for such uses, the company may use the funds to pay down a portion of its revolving credit facilities.

The Hamilton, Bermuda-based company provides marine transportation, oil production and storage services to the offshore oil industry.

Morgan Stanley firms

The secondary market saw Morgan Stanley's fixed-rate notes that priced on Monday trading tighter during Tuesday's session.

The sale included a reopening of the bank's 1.75% three-year notes to add $150 million.

The new bonds were quoted 3 bps better at 115 bps bid, 112 bps offered. They priced Monday at a spread of Treasuries plus 118 bps.

Meanwhile, the $2.5 billion of 2.125% five-year notes, which sold with a spread of 145 bps over Treasuries, traded 4 bps tighter at 141 bps bid, 138 bps offered.

The bank also priced a $300 million reopening of floating-rate notes due 2016 at Libor plus 125 bps and a $700 million tranche of five-year floating-rate notes at par to yield Libor plus 128 bps.

Morgan Stanley is a New York-based financial services company.

Stephanie N. Rotondo contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.