HSBC prices; Philip Morris, Colgate upsize deals; Coach notes widen; Home Depot soft

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 4 – A hodgepodge of issuers entered the investment-grade primary on Tuesday, bringing more than $6.6 billion of new paper to market.

HSBC USA Inc. priced a $2.7 billion new issue in the day’s largest trade, attracting around $4.3 billion of orders for the three-part offering.

Both Philip Morris International Inc. and Colgate-Palmolive Co. were in the primary with upsized bond deals.

Philip Morris sold $1.25 billion of senior notes in tranches due 2017 and 2025.

Colgate-Palmolive priced its $600 million of new issue at the tight end of talk.

Meantime, 3M Co. sold a $1.5 billion three-part offering of notes, while Northern States Power Co. sold $600 million of mortgage bonds in two tranches around 15 basis points to 20 bps tight of initial price thoughts.

Tuesday’s activity pushes the week’s total new issuance to $15.55 billion.

In the secondary market, Coach Inc.’s 4.25% senior notes due 2025 widened 5 bps over the day after the company released weaker fourth-quarter and fiscal 2015 revenue and earnings.

Home Depot Inc.’s 4.25% senior notes due 2046 traded 2 bps softer.

The Markit CDX North American Investment Grade index headed out unchanged to modestly weaker at a spread of 72 bps.

HSBC sells $2.7 billion

HSBC USA priced a $2.7 billion three-part offering of senior notes (A2/A) on Tuesday, according to an informed source and an FWP filed with the Securities and Exchange Commission.

An $850 million tranche of 2% notes due 2018 sold at 99.829 to yield 2.059% with a spread of Treasuries plus 100 bps.

The notes sold at the tight end of guidance set in the Treasuries plus 105 bps area following initial talk in the range of Treasuries plus 110 bps to 115 bps.

The bank also sold $250 million of floaters due 2018 at par to yield Libor plus 77 bps. The notes were guided in the Libor equivalent to the three-year fixed-rate notes.

Finally, $1.6 billion of 2.75% notes due 2020 priced at 99.912 to yield 2.769%, or 117 bps over Treasuries.

Guidance was in the Treasuries plus 120 bps area, tightened from talk in the range of Treasuries plus 125 bps to 130 bps.

HSBC Securities (USA) Inc. was the bookrunner.

The bank plans to use the proceeds for general corporate purposes.

HSBC USA is a subsidiary of HSBC Holdings, a London-based banking and financial services group.

3M new issue

Also on Tuesday, 3M priced $1.5 billion of senior notes (Aa3/AA-) in three parts, according to an FWP filed with the SEC.

Included in the sale was $450 million of 1.375% three-year notes sold with a spread of 38 bps over Treasuries. Pricing was at 99.822 to yield 1.436%.

The issue sold at the tight end of the Treasuries plus 40 bps area guidance, tightened from the range of Treasuries plus 45 bps to 50 bps.

A $500 million 2% five-year piece sold at 99.424 to yield 2.122%, or Treasuries plus 52 bps.

Pricing was at the tight end of guidance set in the Treasuries plus 55 bps area. Initially, the notes were talked in the Treasuries plus 65 bps area.

The company sold $550 million of 3% 10-year notes at 99.615 to yield 3.045% with an 82 bps spread over Treasuries.

Guidance was in the Treasuries plus 85 bps area following initial talk in the Treasuries plus 95 bps area.

Bookrunners were BofA Merrill Lynch, Goldman Sachs & Co. and J.P. Morgan Securities LLC.

The multinational conglomerate is based in Maplewood, Minn.

Philip Morris two-parter

Philip Morris International sold an upsized $1.25 billion of senior notes (A2/A/A) in tranches due 2017 and 2025 on Tuesday, according to a market source.

There was $500 million of 1.25% two-year notes priced with a spread of Treasuries plus 65 bps.

Pricing was at the tight end of the Treasuries plus 65 bps to 70 bps guidance, having tightened from talk in the Treasuries plus 80 bps area.

Also, $750 million of 3.375% 10-year notes sold with a spread of 128 bps over Treasuries.

Guidance was set in the Treasuries plus 130 bps area, tightened from initial talk in the range of Treasuries plus 140 bps to 145 bps.

Barclays, BNP Paribas Securities Corp. and Societe Generale are the bookrunners.

Proceeds will be added to the company’s general funds.

The producer of cigarette and tobacco products is based in New York City.

Colgate upsizes

The session also hosted Colgate-Palmolive, which sold on Tuesday $600 million of 4% senior medium-term notes, series H, with a spread of 110 bps over Treasuries, according to a market source and an FWP filed with the SEC.

Pricing was at 99.756 to yield 4.014%.

The notes (Aa3/AA-) sold at the tight end of guidance set in the 112.5 bps area over Treasuries. Initial talk was set in the range of Treasuries plus 125 bps to 130 bps.

BofA Merrill Lynch, Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC were the bookrunners.

Proceeds will be used for general corporate purposes, which include the retirement of commercial paper.

Colgate-Palmolive is a New York City-based consumer products company.

Northern States mortgage bonds

Northern States Power was in Tuesday’s market with a $600 million offering of first mortgage bonds (Aa3/A/A+) in tranches due Aug. 15, 2020 and Aug. 15, 2045, according to a market source and an FWP filed with the SEC.

The company sold a $300 million tranche of 2.2% five-year bonds with a spread of Treasuries plus 65 bps. Pricing was at 99.816 to yield 2.239%.

Also, $300 million of 4% 30-year bonds sold at 98.367 to yield 4.095%, or Treasuries plus 120 bps.

The bookrunners are BNP Paribas Securities, BNY Mellon Capital Markets LLC, MUFG, Mizuho Securities and Morgan Stanley.

Proceeds will be added to the company’s general funds and used to repay debt and for general corporate purposes.

The electric and natural gas utility is based in Minneapolis.

Coach weaker

Coach’s 4.25% notes due 2025 were quoted 5 bps weaker at 270 bps bid in late afternoon trading on Tuesday, a market source said.

Coach sold $600 million of the notes (Baa2/BBB-/BBB) on Feb. 23 at Treasuries plus 225 bps.

The luxury leather goods company is based in New York.

Home Depot eases

Home Depot’s 4.25% notes due 2046 eased 2 bps to 130 bps bid in secondary trading, a market source said.

The company sold $1.25 billion of the bonds (A2/A/A) on May 28 at Treasuries plus 135 bps.

The home improvement retailer is based in Atlanta.

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