TD Bank, Kohl's sell ahead of expected Verizon deal; Kohl's tightens; Verizon notes widen

By Cristal Cody and Aleesia Forni

Virginia Beach, Va., Sept. 5 - The high-grade bond market continued to be busy on Thursday. Toronto-Dominion Bank, Kohl's Corp. and Japan Finance Organization for Municipalities all sold new deals during the day.

The day's largest deal came from Toronto-Dominion Bank, which sold a $3.25 billion three-part offering of notes during the session.

The deal included $2.5 billion of floating-rate notes, which sold at par to yield Libor plus 46 basis points.

TD Bank also priced $500 million of 1.5% three-year notes with a spread of Treasuries plus 62 bps and $750 million of 2.625% five-year notes with a spread of Treasuries plus 82 bps.

Both tranches of the bank's deal priced at the tight end of talk.

Another financial name came to Thursday's primary. Japan Finance Organization sold $1.5 billion of 2.5% notes due 2018 at mid-swaps plus 55 bps, according to a market source.

Inter-American Development Bank was also in the day's primary with $750 million of five-year floating-rate notes.

The deal priced at par to yield Libor plus 3 bps, an informed source said.

The primary also saw Kohl's sell a $300 million offering of 4.75% notes due 2023 at Treasuries plus 180 bps, according to a market source and a filing with the Securities and Exchange Commission.

Issuers have been rushing to the market during the shortened post-Labor Day week, pricing more than $20 billion of high-grade bonds.

Players had predicted the week's total to be $15 billion to $20 billion.

"People are expecting the big Verizon [Communications Inc.] deal coming up, so the thought is to get in ahead of that," one syndicate source said late during Thursday's session.

The telecommunications company is predicted to price a large deal this year to finance part of its purchase of Vodafone Group plc's stake in Verizon Wireless.

Investment-grade bonds ended softer on the day, according to market sources.

The Markit CDX Series 20 North American Investment Grade index eased 1 bp to a spread of 84 bps.

In the secondary market, Kohl's new 4.75% notes due 2023 firmed on the offer side, a trader said.

"No markets" were seen in Toronto-Dominion's late-afternoon three-part deal, a trader said.

Verizon's bonds traded more than 15 bps weaker since Tuesday, according to traders.

TD Bank prices tight

Tuesday's primary market saw Toronto-Dominion Bank price an issue in three parts, according to an informed source.

The bank priced $2.5 billion of floating-rate notes due 2016 at par to yield Libor plus 46 bps.

TD Bank also brought a $500 million fixed-rate tranche of 1.5% three-year notes priced with a spread of Treasuries plus 62 bps. The notes priced at the tight end of the Treasuries plus 65 bps area talk.

A $750 million issue of 2.625% notes due 2018 sold with a spread of Treasuries plus 82 bps, tight of the Treasuries plus 85 bps area talk. Pricing was at 99.819 to yield 2.664%.

Citigroup Global Markets Inc., Goldman Sachs & Co., Morgan Stanley & Co. LLC and TD Securities are the joint bookrunners.

The financial services and banking company is based in Toronto.

Japan Finance's $1.5 billion

In other primary action, Japan Finance Organization for Municipalities came to market with $1.5 billion of 2.5% notes due Sept. 12, 2018 with a spread of mid-swaps plus 55 bps, according to a market source.

The notes priced at 99.855 to yield 2.531%.

The sale was done under Rule 144A and Regulation S.

Citigroup, Deutsche Bank Securities Inc. and Nomura Securities were the joint bookrunners.

The lender to local governments is based in Tokyo.

IADB prices floaters

Meanwhile, Inter-American Development Bank priced $750 million of five-year floating-rate notes at par to yield Libor plus 3 bps, according to an informed source.

BNP Paribas Securities Corp., Deutsche Bank and HSBC Securities were the joint bookrunners.

The provider of development financing for Latin America and the Caribbean is based in Washington, D.C.

Kohl's sells 10-year notes

Kohl's priced $300 million of 4.75% notes (Baa1/BBB+/BBB+) due 2023 with a spread of Treasuries plus 180 bps, according to a market source and a filing with the SEC.

Pricing was in line with the 180 bps area talk.

The notes priced at 99.75 to yield 4.782%.

Kohl's notes were seen at 178 bps offered going out on Thursday, a trader said.

BofA Merrill Lynch, J.P. Morgan Securities LLC and Morgan Stanley were the joint bookrunners.

Kohl's plans to use proceeds from the offering for general corporate purposes, which may include funding the company's share repurchase program, meeting working capital requirements and funding capital expenditures related to its continued store growth and store remodeling program.

The department store chain is based in Menomonee Falls, Wis.

Verizon widens

Verizon's 2.45% notes due 2022 (Baa1/BBB+/A-) traded going out at 148 bps bid, a trader said.

The notes traded going out on Tuesday at 128 bps bid after trading earlier in the day at 128 bps bid in the first session open since the New York-based telecommunications company announced on the Labor Day holiday that it will buy Vodafone Group's 45% stake in Verizon Wireless.

The notes traded on Friday at 129 bps bid, 124 bps offered.

Verizon sold $1.75 billion of the notes in November 2012 at a spread of Treasuries plus 75 bps.

Moody's Investors Service, Standard & Poor's and Fitch Ratings downgraded Verizon's debt following the acquisition announcement due to the roughly $67 billion of new debt that will be taken on for the deal.

Market participants speculate Verizon will bring up to $25 billion of bonds in various currencies in the next few months to finance the deal.

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