Lockheed Martin flooded with orders; Apple firms; bank, financial paper steady

By Aleesia Forni and Cristal Cody

Virginia Beach, Feb. 12 – Lockheed Martin Corp. and European Bank for Reconstruction and Development (EBRD) came to the primary market on Thursday during another strong session for the investment-grade market.

Lockheed Martin was swamped with orders for its first bond offering since 2011, with the new deal’s book reaching more than $10 billion.

All three tranches of the new $2.25 billion deal sold around 15 basis points to 20 bps tight of initial guidance.

Also on Thursday, EBRD priced $1 billion of seven-year notes in line with price talk, and Citigroup Inc. sold a $500 million add-on to its senior notes due 2018.

More than $28.9 billion of new issuance has hit the investment-grade primary bond market this week, topping what was predicted to be around a $25 billion week.

Looking forward, another quiet primary is expected to close out the week on Friday ahead of the extended holiday weekend.

Bonds came in modestly over the day, sources reported.

The Markit CDX North American Investment Grade index firmed 1 bp to a spread of 66 bps.

Apple Inc.’s 2.5% senior notes due 2025 tightened 3 bps in secondary trading.

Bank and financial paper was mostly unchanged.

Bank of America Corp.’s 4% subordinated medium-term notes due 2025 and JPMorgan Chase & Co.’s 3.125% notes due 2025 were flat over the session but stronger than issuance.

Lockheed Martin offering

Lockheed Martin priced $2.25 billion of senior notes (Baa1/A-/A-) in three tranches on Thursday, according to a market source.

A $750 million tranche of 2.9% 10-year notes sold at 99.714 to yield 2.933%, or Treasuries plus 95 bps.

Pricing was at the tight end of the Treasuries plus 100 bps area talk, which had tightened from earlier guidance set in the 115 bps area over Treasuries.

There was also $500 million of 3.6% bonds due 2035 priced at 99.138 to yield 3.661%, or 110 bps over Treasuries.

Pricing was at the tight end of talk set in the 115 bps area. Guidance was set in the 125 bps area over Treasuries.

Finally, $1 billion of 3.8% 30-year bonds sold at 130 bps over Treasuries. The notes sold at 98.92 to yield 3.861%.

The notes priced at the tight end of the 135 bps area talk, which had firmed from guidance set at 145 bps to 150 bps over Treasuries.

Goldman Sachs & Co., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, BofA Merrill Lynch, Citigroup Global Markets Inc. and Wells Fargo Securities LLC were the bookrunners.

Proceeds will be used for general corporate purposes.

The global security company is based in Bethesda, Md.

EBRD prices in line

The European Bank for Reconstruction and Development sold $1 billion of 1.875% seven-year notes on Thursday at mid-swaps plus 1 bp, according to a market source.

Pricing was in line with talk.

The notes (Aaa/AAA/AAA) sold at 99.733.

Citigroup Global Markets, HSBC Securities (USA) Inc., Morgan Stanley and TD Securities were the bookrunners.

The lender to banks, businesses and industries is based in London.

Citigroup adds on

Citigroup sold a $500 million add-on to its existing 1.8% senior notes (Baa2/A-/A) due 2018 on Thursday at Treasuries plus 90 bps, an informed source said.

Citigroup Global Markets was the bookrunner.

The total issue size now sits at $2.5 billion, including $2 billion priced on Jan. 29 at Treasuries plus 97 bps.

The bank is based in New York.

Apple tightens

Apple’s 2.5% notes due 2025 tightened 3 bps to 76 bps bid, a market source said.

Apple sold $1.5 billion of the 10-year notes (Aa1/AA+/) on Feb. 2 at a spread of Treasuries plus 85 bps.

The computer and mobile communications device company is based in Cupertino, Calif.

Bank of America unchanged

Bank of America’s 4% notes due 2025 headed out flat at 193 bps bid, according to a source.

The issue (Baa3/BBB+/) priced on Jan. 16 in a $2.5 billion offering at Treasuries plus 225 bps.

The financial services company is based in Charlotte, N.C.

JPMorgan steady

JPMorgan Chase’s 3.125% notes due 2025 traded flat at 125 bps bid, a market source said.

JPMorgan sold $2.5 billion of the 10-year notes (A3/A/A+) on Jan. 16 at 145 bps over Treasuries.

The financial services company is based in New York City.

Bank/brokerage CDS costs lower

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

Bank of America’s CDS costs were 2 bps lower at 64 bps bid, 67 bps offered. Citigroup’s CDS costs were also 2 bps lower at 76 bps bid, 81 bps offered. JPMorgan Chase’s CDS costs were flat at 64 bps bid, 67 bps offered. Wells Fargo & Co.’s CDS costs were down 2 bps to 45 bps bid, 48 bps offered.

Merrill Lynch’s CDS costs were 2 bps lower at 67 bps bid, 70 bps offered. Morgan Stanley’s CDS costs declined 2 bps to 73 bps bid, 78 bps offered. Goldman Sachs Group’s CDS costs were 2 bps lower at 82 bps bid, 85 bps offered.

Paul Deckelman contributed to this review.

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