PepsiCo, John Deere price during busy primary session; Piedmont Office firms

By Cristal Cody and Aleesia Forni

Virginia Beach, Feb. 25 - PepsiCo Inc., John Deere Capital Corp. and LyondellBasell Industries NV were among the issuers making their way to a packed primary market on Tuesday.

PepsiCo sold the day's largest deal, pricing a $2 billion issue of senior notes in tranches due 2017 and 2024.

A $750 million tranche of 0.95% three-year notes priced at Treasuries plus 30 basis points.

There was also a $1.25 billion tranche of 3.6% 10-year notes priced at Treasuries plus 92 bps.

Both tranches of the deal priced at the tight end of talk, which had tightened 5 bps to 10 bps from earlier guidance.

The Pepsi deal was "certainly the focus" of Tuesday's session, one market source said, adding that the deal's orderbook was nearly six times oversubscribed.

The source noted that demand was slightly skewed toward the 10-year tranche.

John Deere Capital came to market with $1.45 billion of senior notes, which priced in three maturities.

The company sold a $550 million issue of floating-rate notes due 2016 to yield Libor plus 10 bps and a $400 million tranche of 1.95% five-year notes at 48 bps over Treasuries.

A $500 million tranche of 2.8% notes due 2021 priced at Treasuries plus 68 bps.

Meanwhile, TransCanada Pipelines Ltd. hit the market with a $1.25 billion issue of 4.625% 20-year senior notes, which sold at 100 bps over Treasuries.

The notes sold more than 20 bps tighter than original guidance.

LyondellBasell Industries sold a $1 billion issue of 4.875% notes due 2044 at Treasuries plus 130 bps.

Also on Tuesday, Piedmont Office Realty Trust Inc. sold an upsized $400 million of 4.45% notes due 2024 at 178 bps over Treasuries.

The notes priced at the tight end of talk.

Magellan Midstream Partners LP tapped its existing issue of 5.15% notes due 2043 to add $250 million during the session at 130 bps over Treasuries.

The original $300 million issue priced on Oct. 3 with a spread of Treasuries plus 145 bps.

Landwirtschaftliche Rentenbank announced plans to price a $700 million add-on to its existing floating-rate notes due Dec. 5, 2018, according to an informed source.

The notes have a coupon of Libor plus 11 bps.

Also joining the forward calendar on Tuesday, the European Investment Bank set price guidance for its planned dollar-denominated offering of three-year notes to yield mid-swaps plus 5 bps.

The offering is expected to price on Wednesday.

Fifth Third Bancorp was also in the market on Tuesday with a $500 million issue of five-year notes, though details of the sale were not available at press time.

In the preferred market on Tuesday, State Street Corp. priced $750 million of 5.9% series D fixed-to-floating-rate noncumulative perpetual preferred stock.

The preferreds will be sold as depositary shares representing a 1/4,000th interest. Price talk was originally around 6.25%.

The rush of new issuance expected for the week has not disappointed, with roughly $17 billion of supply pricing in just two sessions.

New issues traded mostly tighter, while spreads weakened slightly overall on the day, market sources said.

The Markit CDX North American Investment Grade series 21 index eased 1 bps to a spread of 65 bps.

Piedmont Office's 4.45% notes due 2024 headed out 3 bps tighter in aftermarket trading, a trader said.

John Deere Capital's 1.95% notes due 2019 firmed 1 bp, while the tranche of 2.8% notes due 2021 tightened 4 bps, according to traders.

LyondellBasell's 4.875% bonds due 2044 and TransCanada Pipelines's 4.625% notes due 2034 both were quoted 1 bp tighter on the bid side as the session closed.

The 5.15% bonds due 2043 that Magellan Midstream reopened firmed 2 bps in the secondary market, a trader said.

Pepsi's new notes priced late in the day with only the tranche of 10-year notes active in aftermarket trading, according to traders.

"Not seeing flow yet," one trader said.

Fifth Third's notes due 2019 traded going out the door at 76 bps bid, 75 bps offered, a trader said.

PepsiCo prices $2 billion

PepsiCo priced $2 billion of senior notes (A1/A-/) on Tuesday in tranches due 2017 and 2024, according to a syndicate source and an FWP filed with the Securities and Exchange Commission.

The sale included $750 million of 0.95% three-year senior notes sold with a spread of Treasuries plus 30 bps.

Pricing was at 99.886 to yield 0.989%.

A second tranche was $1.25 billion of 3.6% notes due 2024, which priced at 99.825 to yield 3.621%, or Treasuries plus 92 bps.

Both tranches sold at the tight end of talk, which had tightened 5 bps to 10 bps from earlier guidance.

Pepsi's notes due 2024 traded at 93 bps bid, 92 bps offered in the secondary market, according to a trader.

Citigroup Global Markets Inc., RBS Securities Inc. and UBS Securities LLC were the joint bookrunners.

Proceed will be used for general corporate purposes, including the repayment of commercial paper.

The Purchase, N.Y.-based global food and beverage company was last in the U.S. bond market with a $1.7 billion sale in two tranches on July 25.

John Deere three-parter

John Deere Capital sold $1.45 billion of senior notes (A2/A/) in three tranches on Tuesday, according to three separate FWP filings with the SEC.

The deal included $550 million of floating-rate notes due 2016 priced at par to yield Libor plus 10 bps.

A second tranche was $400 million of 1.95% five-year notes, which sold with a spread of 48 bps over Treasuries. Pricing was at 99.825 to yield 1.987%.

There was also $500 million of 2.8% notes due 2021 sold at Treasuries plus 68 bps, or 99.874, to yield 2.82%.

John Deere Capital's 1.95% notes due 2019 headed out in aftermarket trading at 47 bps bid, 44 bps offered, a trader said. A trader at another desk saw the notes at 43 bps offered soon after pricing.

The 2.8% notes due 2021 tightened to 64 bps bid, 63 bps offered.

Bookrunners were Barclays, Citigroup Global Markets, Goldman Sachs & Co. and BofA Merrill Lynch.

The funding arm of agriculture and industrial equipment maker Deere & Co. is based in Moline, Ill.

TransCanada new issue

TransCanada Pipelines priced $1.25 billion of 4.625% senior notes (A3/A-/) due 2034 on Tuesday at 100 bps over Treasuries, according to a market source and an FWP filing with the SEC.

The notes sold more than 20 bps tighter than original guidance.

TransCanada Pipelines's 4.625% notes due 2034 firmed to 99 bps bid, 98 bps offered in the secondary market, a trader said.

HSBC Securities (USA) LLC and J.P. Morgan Securities LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes and to repay short-term debt.

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

Lyondell prices 30-years

LyondellBasell priced $1 billion of 4.875% 30-year senior notes on Tuesday at Treasuries plus 130 bps, according to a market source and an FWP filing with the SEC.

The notes (Baa1/BBB/) priced at 98.831 to yield 4.95%.

LyondellBasell's 4.875% notes due 2044 firmed to 129 bps bid, 127 bps offered in the secondary market, according to a trader.

The offering was issued through financing subsidiary LYB International Finance BV and guaranteed by LyondellBasell Industries.

Barclays, Citigroup Global Markets and Deutsche Bank Securities Inc. were the bookrunners.

Proceeds will be used for general corporate purposes, including the repurchase of LyondellBasell's ordinary shares.

The Houston-based chemical company has executive offices in London and is incorporated in the Netherlands. It was last in the U.S. bond market with $1.5 billion of notes priced in two tranches on July 11, 2013.

Piedmont upsizes

Piedmont Office sold a $400 million issue of 4.45% 10-year senior notes (Baa2/BBB/) on Tuesday with a spread of Treasuries plus 178 bps, according to a market source and an FWP filed with the SEC.

The notes (Baa2/BBB/) sold at the tight end of talk and priced at 99.791 to yield 4.476%.

Piedmont's 4.45% notes due 2024 traded better in aftermarket trading at 175 bps bid, 171 bps offered, a trader said.

The bookrunners were JPMorgan, Morgan Stanley & Co. LLC, RBC Capital Markets LLC, SunTrust Robinson Humphrey Inc., BofA Merrill Lynch and U.S. Bancorp Investments Inc.

Proceeds will be used to repay outstanding secured mortgage debt.

Magellan adds on

Magellan Midstream Partners priced a $250 million add-on to its existing 5.15% senior notes due Oct. 15, 2043 with a spread of Treasuries plus 130 bps, according to a market source and a 424B2 filed with the SEC.

The notes (Baa1/BBB+/) priced at 103.085 to yield 4.95%.

Magellan Midstream's 5.15% notes due 2043 traded better after pricing at 128 bps bid, 126 bps offered, according to a trader.

Wells Fargo Securities LLC, Barclays, Mitsubishi UFJ Securities (USA) Inc. and U.S. Bancorp Investments were the bookrunners.

Proceeds will be used to repay borrowings under the company's revolving credit facility and for general partnership purposes, which may include capital expenditures.

The original $300 million of 5.15% 30-year senior notes priced on Oct. 3 with a spread of Treasuries plus 145 bps.

The energy transportation, storage and distribution company is based in Tulsa, Okla.

State Street preferreds

State Street sold $750 million of 5.9% series D fixed-to-floating-rate noncumulative perpetual preferred stock on Tuesday, according to market sources.

The preferreds will be sold as depositary shares representing a 1/4,000th interest. Price talk was originally around 6.25%.

Though sources said the deal had priced, an administrative issue with the company's regulatory filing delayed the release of its term sheet. Thus, certain details were unavailable as of press time.

Morgan Stanley, BofA Merrill Lynch, Goldman Sachs and Wells Fargo Securities are the joint bookrunners.

When declared, dividends will be payable on the 15th day of March, June, September and December, beginning June 15. The dividend will be fixed until March 15, 2024, at which time the dividend will begin to float at Libor plus a spread.

March 15, 2024 is also the first redemption date of the preferreds. The company can call the preferreds on or after that date at par plus accrued dividends. Additionally, the Boston-based financial holding company can redeem the preferreds prior to that date in whole upon the occurrence of a regulatory capital treatment event.

State Street will apply to list the new preferreds on the New York Stock Exchange under the ticker symbol "STTPD."

Proceeds will be used for general corporate purposes, which may include working capital, capital expenditures, potential acquisitions, investments or loans to subsidiaries, refinancing of outstanding obligations, shares repurchases or dividends.

Rentenbank eyes add-on

Landwirtschaftliche Rentenbank is planning to tap its existing issue of floating-rate notes (Aaa/AAA/AAA) due Dec. 5, 2018 to add $700 million, according to an informed source.

The notes are guaranteed by the Federal Republic of Germany and have a coupon of Libor plus 11 bps.

HSBC Securities, Morgan Stanley and Societe Generale are the bookrunners.

The total issue size is currently $700 million priced in two offerings.

The German development agency for agribusiness is based in Frankfurt.

EIB sets talk

The European Investment Bank set price guidance for its planned dollar-denominated offering of three-year notes on Tuesday to yield mid-swaps plus 5 bps, according to an informed source.

The issue is expected to price on Wednesday.

Citigroup Global Markets, Deutsche Bank Securities and Morgan Stanley are running the books.

The lender for the European Union is based in Kirchberg, Luxembourg.

Bank/brokerage CDS costs mixed

Investment-grade bank and brokerage CDS prices were mixed, according to a market source.

Bank of America Corp.'s CDS costs ended flat at 68 bps bid, 71 bps offered. Citigroup Inc.'s CDS costs were unchanged at 76 bps bid, 79 bps offered. JPMorgan Chase & Co.'s CDS costs eased 1 bp to 60 bps bid, 63 bps offered. Wells Fargo & Co.'s CDS costs were unchanged at 39 bps bid, 42 bps offered.

Merrill Lynch's CDS costs were flat at 71 bps bid, 74 bps offered. Morgan Stanley's CDS costs eased 1 bp to 85 bps bid, 88 bps offered. Goldman Sachs Group, Inc.'s CDS costs tightened 1 bp to 86 bps bid, 91 bps offered.

Paul Deckelman and Stephanie N. Rotondo contributed to this review.

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