Wells Fargo, Imperial Tobacco price; AT&T weaker; Verizon firms; CVS long bonds tight

By Aleesia Forni and Cristal Cody

Virginia Beach, July 15 – Wells Fargo & Co. and Imperial Tobacco Group plc priced large deals amid volatile market conditions on Wednesday.

Wells Fargo sold three tranches of holding company notes in senior and subordinated tranches during the session.

The tranches sold around 5 basis points to 10 bps tight of initial price thoughts.

Imperial Tobacco offered a four-part new issue to help finance its planned acquisition of cigarette brands from Reynolds American Inc. and Lorillard Inc.

A source noted that demand for the offering was solid, and the deal nabbed an order book that was more than two times oversubscribed.

The day’s activity pushes the week’s total supply to $42.9 billion, already blowing away sources’ expectations of around $25 billion of issuance.

Bonds in the telecommunications sector were mixed over the day.

AT&T Inc.’s 3.4% notes due 2025 widened 7 bps in secondary trading.

Verizon Communications Inc.’s 3.5% notes due 2024 traded 2 bps better during the session.

Time Warner Inc.’s bonds (Baa2/BBB) were unchanged to 1 bp softer.

Earlier in the day, Charter Communications Inc.’s senior secured notes (Ba1/BBB-) were about 1 bp to 3 bps weaker.

Also in early trading, CVS Health Corp.’s $15 billion six-part offering of senior notes (Baa1/BBB+) brought on Monday traded mostly better.

The Markit CDX North American Investment Grade series 23 index was unchanged to modestly softer at a spread of 67 bps on Wednesday.

Wells Fargo offering

Wells Fargo priced on Wednesday $6 billion of holding company notes in senior and subordinated tranches due 2020 and 2027, a market source said.

There was $2.75 billion of 2.6% senior holding company notes (A2/A+/AA-) due July 22, 2020 priced at 99.944 to yield 2.612%, or Treasuries plus 100 bps.

The notes sold on top of guidance, which had tightened from the Treasuries plus 110 bps area.

Also priced was $750 million of floating-rate senior holding company notes (A2/A+/AA-) due July 22, 2020 sold at par to yield Libor plus 88 bps.

Guidance was at the Libor equivalent to the five-year notes.

Finally, $2.5 billion of 4.3% subordinated holding company notes (A3/A/A+) priced at 99.62 to yield 4.341% with a spread of Treasuries plus 200 bps.

Pricing was on top of talk. Initial guidance was in the 205 bps to 210 bps range over Treasuries.

Wells Fargo Securities LLC was the bookrunner.

The bank is based in San Francisco.

Imperial acquisition financing

Imperial Tobacco Group priced $4.5 billion of senior notes (Baa3/BBB) in four tranches on Wednesday, an informed source said.

A $500 million tranche of 2.05% three-year notes sold at Treasuries plus 120 bps.

The issue was guided at the Treasuries plus 120 bps to 125 bps range, having firmed from Treasuries plus 135 bps to 140 bps.

The company also priced $1.25 billion of 2.95% five-year notes at 155 bps over Treasuries.

Pricing was at the tight end of the Treasuries plus 155 bps to 160 bps guidance. Initial talk was in the range of Treasuries plus 165 bps to 170 bps.

There was also a $1.25 billion 3.75% seven-year note sold with a spread of Treasuries plus 195 bps.

The tranche sold at the tight end of the Treasuries plus 195 bps to 200 bps guidance having tightened from the Treasuries plus 205 bps area.

Finally, a $1.5 billion 4.25% 10-year note priced at 215 bps over Treasuries.

Guidance was in the range of Treasuries plus 215 bps to 220 bps. The notes were initially talked in the range of Treasuries plus 225 bps to 235 bps.

Proceeds will be used to finance the company’s acquisition of cigarette brands from Reynolds American Inc. and Lorillard Inc.

Bookrunners are BofA Merrill Lynch, BNP Paribas Securities Corp., HSBC Securities and Mizuho Securities.

The maker of cigarettes and tobacco products is based in Bristol, England.

AT&T wider

AT&T’s 3.4% notes due 2025 headed out 7 bps weaker over the day at 175 bps bid, according to a market source.

The company sold $5 billion of the notes (/BBB+/A-) on April 23 at a spread of Treasuries plus 150 bps.

The telecommunications company is based in Dallas.

Verizon tightens

Verizon’s 3.5% notes due 2024 firmed 2 bps to 151 bps bid during the session, according to a market source.

The company sold $2.5 billion of the notes (Baa1/BBB+/A-) on Oct. 22, 2014 at Treasuries plus 135 bps.

The telecommunications company is based in New York City.

Time Warner flat to softer

Time Warner’s 3.6% notes due 2025 eased 1 bp during the session to 164 bps bid, a market source said.

The company sold $1.5 billion of the notes on May 28 at Treasuries plus 150 bps.

Time Warner’s 4.85% debentures due 2045 were flat in trading at 195 bps bid.

The company sold $600 million of the debentures in the May 28 offering at 195 bps plus Treasuries.

The media company is based in New York.

Charter eases

Charter Communications’ 6.484% notes due 2045 were quoted at 329 bps offered earlier in the day, according to a market source.

The company sold $3.5 billion of the 30-year bonds on Thursday at Treasuries plus 335 bps.

The provider of cable, internet and phone services is based in Stamford, Conn.

CVS mixed

CVS Health’s 1.9% notes due 2018 traded better early in the session at 79 bps offered, a market source said.

CVS Health sold $2.25 billion of the three-year notes on Monday at Treasuries plus 85 bps.

The tranche of 2.8% notes due 2020 improved modestly to 109 bps offered in secondary trading.

The company sold $2.75 billion of the notes in Monday’s offering at a spread of Treasuries plus 110 bps.

CVS Health’s 3.875% notes due 2025 were 1 bp softer than issuance at the start of the day at 156 bps offered.

The notes priced in a $3 billion tranche at Treasuries plus 155 bps.

CVS Health’s 5.125% bonds due 2045 were quoted better at 184 bps offered.

The company sold $3.5 billion of the bonds in Monday’s sale at Treasuries plus 190 bps.

The pharmacy retailer is based in Scarsdale, N.Y.

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