RBS brings CoCo tier 1 notes; Time Warner flat to tighter; Verizon firms

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 5 – Royal Bank of Scotland Group plc priced a $3.15 billion issue of perpetual tier 1 securities during a quiet session for investment-grade bonds on Wednesday.

The subordinated contingent convertible notes sold in two parts: $2 billion of notes that are non-callable for five-years and $1.15 billion of notes non-callable for 10 years.

Both tranches priced at the tight end of price guidance.

Elsewhere in the primary market, NextEra Energy Capital Holdings, Inc. priced a remarketing of $649,994,000 of series F debentures due Sept. 1, 2017, which were originally issued as part of NextEra Energy’s corporate units on Sept. 11, 2012.

The preferred primary market also saw some activity on Wednesday, with Citigroup Inc. selling $1.25 billion of 5.95% $1,000-par issue of series Q fixed-to-floating noncumulative preferreds, a market source reported.

A trader quoted the issue at 99.875 bid, par offered.

In the secondary market on Wednesday, Time Warner Inc.’s notes (Baa2/BBB) traded unchanged to 2 basis points tighter following the company’s release of strong second-quarter sales and profit figures.

In other trading, Time Warner Cable Inc.’s 4.125% notes due 2021 were about 1 bp better. The company is being acquired by Charter Communications, Inc. in a $78.7 billion cash and stock deal expected to close by the end of the year.

Verizon Communications Inc.’s 3.5% notes due 2024 firmed 3 bps during the session.

AT&T Inc.’s 3.4% notes due 2025 were about 1 bp softer in secondary trading.

The Markit CDX North American Investment Grade index was unchanged to modestly tighter, going out at a spread of 72 bps on Wednesday.

RBS CoCo securities

Royal Bank of Scotland Group priced $3.15 billion of perpetual subordinated contingent convertible additional tier 1 securities (/B/BB-) in two tranches on Wednesday, according to a market source.

A $2 billion tranche of notes that are non-callable for five years priced at par to yield 7.5%.

The notes were guided in the 7.625% area following initial price talk in the area of 7.75%.

A second tranche, which is non-callable for 10 years, priced at par to yield 8%.

Pricing was at the tight end of the 8.125% area guidance. Initial talk was in the 8.25% area.

RBS Securities Inc. is the global coordinator, structuring adviser, lead manager and bookrunner and is joined by Credit Suisse Securities (USA) LLC, BofA Merrill Lynch and Morgan Stanley & Co. LLC as joint lead bookrunners and managers.

The deal is expected to further strengthen the company’s capital base.

The financial services company is based in Edinburgh.

NextEra remarketing

NextEra Energy Capital sold a remarketing of $649,994,000 of series F debentures due Sept. 1, 2017 on Wednesday at Treasuries plus 115 bps, according to an FWP filed with the Securities and Exchange Commission.

The 2.056% notes priced at 100.342 to yield 1.886%.

The debentures (Baa1/BBB+/A-) are guaranteed by NextEra Energy Inc.

Goldman Sachs & Co., Barclays and Citigroup Global Markets Inc. are the remarketing agents.

The debentures were originally issued as part of NextEra Energy’s corporate units on Sept. 11, 2012.

NextEra Energy is a clean-energy company based in Juno Beach, Fla.

Citigroup preferreds

Citigroup sold $1.25 billion of 5.95% $1,000-par series Q fixed-to-floating noncumulative preferred stock on Wednesday, according to a market source.

Citigroup Global Markets is the bookrunner.

The preferreds will be issued as depositary shares representing a 1/25th interest.

Dividends will be fixed and payable semiannually through Aug. 15, 2020. After that date, the dividend floats at Libor plus 409.5 bps and will be payable quarterly.

The preferreds become redeemable Aug. 15, 2020 or in whole within 90 days of a regulatory capital treatment event at par plus accrued dividends.

The new issue will not be listed on any exchange.

The New York-based bank will use the proceeds for general corporate purposes. That may include funding operating units and subsidiaries, financing possible acquisitions or expansion and refinancing or extending the maturity of existing debt obligations.

Time Warner mixed

Time Warner’s 3.6% notes due 2025 firmed 2 bps to 180 bps bid on Wednesday, a 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 unchanged in trading at 206 bps bid.

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

Time Warner is a media company based in New York.

Time Warner Cable tightens

Time Warner Cable’s 4.125% notes due 2021 firmed about 1 bp to 214 bps bid over the day, a market source said.

Time Warner Cable (Baa2/BBB/BBB) sold $700 million of the notes in 2010 at 155 bps plus Treasuries.

The broadband communications company is based in New York City.

Verizon tighter in trade

Verizon’s 3.5% notes due 2024 traded 3 bps better in late afternoon trading at 154 bps bid, 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.

AT&T eases

AT&T’s 3.4% notes due 2025 were seen about 1 bp weaker at 181 bps bid in the secondary market, a source said.

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.

Stephanie N. Rotondo contributed to this review.

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