Busy primary sees Chevron, Eli Lilly, Kimberly-Clark do deals; AT&T firms; Southwestern mixed

By Aleesia Forni and Cristal Cody

Virginia Beach, Feb. 24 – Chevron Corp., Eli Lilly & Co., Kimberly-Clark Corp. and Westpac Banking Corp. took advantage of what continue to be excellent conditions for the high-grade bond market on Tuesday.

Chevron came to market with a $6 billion six-part offering of notes, all priced at the tight end of talk.

Eli Lilly sold a $2.2 billion three-part issue of senior notes. The deal saw stellar demand from investors and attracted an orderbook that was more than six times oversubscribed.

The orderbook for Kimberly-Clark’s $500 million offering of senior notes, which sold in two parts during the session, reached around $4 billion.

Westpac Banking priced its $1.5 billion five-year covered bond at the tight end of price talk.

In other primary action, Apollo Investment Corp. came to market with a $350 million issue of unsecured notes due March 3, 2025.

Also on Tuesday, Nissan Motor Acceptance Corp. issued $900 million of notes in two parts, TCF National Bank priced $150 million of subordinated bank notes, and Tucson Electric Power Co. sold an upsized $300 million issue of 10-year notes.

The session’s flurry of new issuance pushes the week’s total supply to $18 billion in just two sessions.

Bonds were seen ending the day mostly better, while investment-grade credit spreads tightened, according to sources on Tuesday.

The Markit CDX North American Investment Grade index firmed 2 basis points to a spread of 62 bps.

In the secondary market, AT&T Inc.’s notes (Baa1/BBB+/A) traded better.

Southwestern Energy Co.’s senior notes (Baa3/BBB-/) were mixed in trading but remain tighter than where the bonds priced in January.

Chevron sells $6 billion

Chevron sold $6 billion of notes (Aa1/AA/) in six tranches on Tuesday, according to a market source.

A $900 million tranche of floating-rate notes due 2017 priced at par to yield Libor plus 10 bps. The notes sold at the tight end of talk set in the 12.5 bps area over Libor. Guidance was set in the 15 bps area over Libor.

A second tranche was $1.75 billion of 1.365% notes due 2018 priced at par, or 40 bps over Treasuries. Price talk was set at 40 bps to 45 bps over Treasuries, which tightened from guidance set in the 50 bps area.

There was also $550 million of floaters due 2018 priced at par to yield Libor plus 17 bps. The notes were talked at the Libor equivalent to the fixed-rate notes due 2018.

Chevron also priced $1.75 billion of 1.961% notes due 2020 at par, or 50 bps over Treasuries. The notes sold at the tight end of talk set in the 50 bps to 55 bps area over Treasuries, having firmed from guidance set in the 60 bps area over Treasuries.

A $700 million tranche of 2.411% notes due 2022 sold at par, or Treasuries plus 62.5 bps. The notes priced tight of talk set at 65 bps to 70 bps over Treasuries. Talk had firmed from guidance set in the 75 bps area.

Finally, $350 million of floating-rate notes due 2022 sold at par to yield Libor plus 53 bps. The notes were talked at the Libor equivalent to the fixed-rate notes due 2022.

BofA Merrill Lynch, Barclays, Wells Fargo Securities LLC, Goldman Sachs & Co., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are the bookrunners.

Proceeds will be used for general corporate purposes, including refinancing a portion of commercial paper.

The petroleum, chemical, mining, power and energy company is based in San Ramon, Calif.

Eli Lilly sees demand

Eli Lilly sold $2.2 billion of senior notes (A2/AA-) in three parts on Tuesday, according to a market source and an FWP filed with the Securities and Exchange Commission.

The company priced $600 million of 1.25% five-year notes at 32 bps over Treasuries. Pricing was at the tight end of the 35 bps area talk, which tightened from guidance in the 45 bps area over Treasuries.

Pricing was at 99.912 to yield 1.28%.

There was also $800 million of 2.75% 10-year notes sold at 99.807 to yield 2.772%, or 80 bps over Treasuries. The notes priced at the tight end of talk set in the 85 bps area. Guidance was set at 100 bps to 105 bps over Treasuries.

Finally, $800 million of 3.7% 30-year notes sold at 115 bps over Treasuries. Pricing was at the tight end of the 120 bps area talk, which had firmed from guidance set in the area of Treasuries plus 135 bps.

The notes priced at 99.515 to yield 3.727%.

Deutsche Bank Securities Inc., Goldman Sachs, Morgan Stanley and BofA Merrill Lynch were the joint bookrunners.

Proceeds will be used to repay commercial paper issued in connection with the company’s acquisition of the animal health business of Novartis AG and for general corporate purposes.

The pharmaceutical company is based in Indianapolis.

Westpac covered bond

Westpac Banking priced a $1.5 billion 2% covered bond (Aa2/AA-/) due March 3, 2020 at mid-swaps plus 41 bps, a market source said.

The bond sold at the tight end of talk set at mid-swaps plus 41 bps to 42 bps.

Barclays, Citigroup Global Markets Inc., RBC Capital Markets and Westpac were the bookrunners.

The banking organization is based in Sydney, Australia.

Nissan new issue

In other new issue activity on Tuesday, Nissan Motor Acceptance priced $900 million of notes (A3/A-/) in two maturities, according to a source away from the trade.

The company issued $400 million of 1.5% three-year notes with a spread of 55 bps over Treasuries. The notes sold at the tight end of talk set at 55 bps to 57 bps over Treasuries.

Pricing was at 99.956 to yield 1.514%.

A $500 million tranche of 2.125% five-year notes sold at 68 bps over Treasuries. Pricing was at the tight end of talk set in the Treasuries plus 70 bps area.

Pricing was at 99.915 to yield 2.143%.

The bookrunners were Barclays, Citigroup Global Markets, BofA Merrill Lynch, Mizuho Securities and JPMorgan.

The financing and leasing company for Nissan vehicles is based in Irving, Texas.

Kimberly-Clark prices tight

Kimberly-Clark priced $500 million of senior notes (A2/A/A) in two parts on Tuesday, according to a market source and an FWP filed with the SEC.

There was $250 million of 1.85% notes due 2020 priced at 40 bps over Treasuries. The notes sold at the tight end of price talk set in the 45 bps area over Treasuries.

Pricing was at 99.938 to yield 1.863%.

A $250 million tranche of 2.65% notes due 2025 sold at 99.712 to yield 2.683%, or Treasuries plus 70 bps.

The notes priced at the tight end of the 75 bps area over Treasuries talk.

The bookrunners were Citigroup Global Markets, Deutsche Bank Securities, JPMorgan and Morgan Stanley.

Proceeds will be used for general corporate purposes.

The consumer paper products company is based in Irving, Texas.

Apollo unsecured notes

The primary market also saw Apollo Investment sell $350 million of 5.25% unsecured notes (/BBB/BBB) due March 3, 2025 with a spread of 338.4 bps over Treasuries, according to a company release and a 497AD filed with the SEC.

Pricing was at 99.043 to yield 5.375%.

The notes sold at the tight end of price talk, which was set at 5.375% to 5.5%.

The active bookrunners were Barclays and Citigroup Global Markets. Passive bookrunners were JPMorgan, SunTrust Robinson Humphrey Inc., BMO Capital, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities and UBS Securities LLC.

Apollo Investment expects to use proceeds from the offering to repay a portion of the debt owed under its senior secured, multi-currency revolving credit facility and for general corporate purposes, which may include investing in portfolio companies in accordance with its investment objective.

New York-based Apollo Investment Management, LP is the investment adviser.

Tucson upsizes

Tucson Electric Power priced an upsized $300 million issue of notes (Baa1/BBB+/BBB+) due March 15, 2025 with a spread of Treasuries plus 110 bps, a market source said.

Pricing was at 99.673 to yield 3.088%.

The notes sold at the tight end of talk.

Bookrunners were MUFG, SunTrust Robinson Humphrey and U.S. Bancorp Investments Inc.

The electric utility company plans to use proceeds to repay debt.

TCF sub bank notes

TCF National Bank priced $150 million of 4.6% 10-year subordinated bank notes (Baa2/BBB-/BB+) at 99.375 to yield 4.679%, or Treasuries plus 270 bps, a market source said.

Pricing was at the tight end of talk set in the 275 bps area over Treasuries.

The notes were priced by bookrunners JPMorgan and Morgan Stanley.

Proceeds are being used for general corporate purposes.

The national bank holding company is based in Wayzata, Minn.

AT&T improves

AT&T’s 3.9% notes due 2024 firmed 2 bps to 130 bps bid on Tuesday, a source said.

The issue priced in a $1 billion offering on March 5, 2014 at a spread of Treasuries plus 125 bps.

AT&T’s 4.8% bonds due 2044 tightened 4 bps to 204 bps bid, the source said.

AT&T sold $2 billion of the notes on June 3, 2014 at Treasuries plus 140 bps.

The telecommunications company is based in Dallas.

Southwestern Energy mixed

Southwestern Energy’s 4.05% notes due 2020 firmed about 10 bps to 201 bps bid, a market source said.

The company sold $850 million of the notes on Jan. 20 at a spread of 278 bps over Treasuries.

Southwestern Energy's 4.95% notes due 2025, priced in a $1 billion offering at 318 bps over Treasuries in the January deal, traded about 5 bps weaker at 256 bps bid, the source said.

Southwestern Energy is a Houston- based independent natural gas and oil company.

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