Air Lease, Jersey Central Power brave volatile market; Duke Energy, BNY Mellon firm

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 11 – Air Lease Corp. and Jersey Central Power & Light Co. braved volatile market conditions on Tuesday, bringing a combined $750 million of new bond issuance to the high-grade primary market.

The slower session came on the heels of the surprise news overnight that China had reduced the value of its currency following weakening trade data.

Jersey Central Power sold a new $250 million long 10-year note at a 220 basis points spread over Treasuries after widening the deal’s spread from initial price thoughts.

In its shorter-dated new issue, Air Lease sold $550 million three-year notes around 10 bps tighter than talk.

Tuesday’s two new deals paired with Monday’s blowout primary session to push the week’s total supply to $14.75 billion.

Meanwhile, Canadian primary action has remained light over the summer, according to market sources.

“There’s been very soft markets in Canada for new issues for a few weeks,” one source said. “I would expect there is probably some pent-up supply of new issuance of some companies ready to seek financing but are just waiting for a signal the market is going to be more receptive. The China yuan devaluation started the day off on the wrong foot.”

In the secondary market, Duke Energy Progress Inc.’s $1.2 billion two-part offering of first mortgage bonds (Aa2/A/A+), which were brought to market on Monday, traded 3 bps better.

Bank of New York Mellon’s 2.6% notes due 2020 that priced on Monday traded about 2 bps better than issuance.

Barclays plc’s new 5.25% senior notes due 2045 traded about 1 bp wider than issuance, while its short-dated existing paper widened 5 bps over the trading session.

Credit spreads headed out weaker.

The Markit CDX North American Investment Grade index was about 1.5 bps wider late afternoon at a spread of 75 bps.

The CDX has ranged from a low spread of 60.4 bps to a high spread of 76.4 bps over the past 12 months, according to a Barclays Bank plc market note on Tuesday.

Air Lease offering prices

Air Lease priced a $500 million offering of 2.625% three-year senior notes (BBB-) on Tuesday with a spread of Treasuries plus 180 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes were guided in the 180 bps to 185 bps range over Treasuries following initial talk in the area of Treasuries plus 190 bps.

Pricing was at 99.5 to yield 2.797%.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Mizuho Securities USA Inc., Wells Fargo Securities LLC, BMO Capital Markets Corp., BNP Paribas Securities Corp., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Credit Suisse Securities (USA) LLC, Fifth Third Securities Inc., Lloyds Securities, MUFG, Naxitis, RBC Capital Markets LLC, Santander, and SunTrust Robinson Humphrey Inc. are the bookrunners.

Proceeds will be used for general corporate purposes, which may include the purchase of commercial aircraft and the repayment of debt.

Air Lease is a Los Angeles-based aircraft leasing company.

Jersey Central prices wide

Jersey Central Power & Light priced $250 million 4.3% notes due Jan. 15, 2026 to yield Treasuries plus 220 bps on Tuesday, a market source said.

The notes (Baa2/BBB-) priced at 99.68 to yield 4.339%.

The notes sold at the wide end of the Treasuries plus 215 bps area talk.

Bookrunners for the Rule 144A and Regulation S deal were Mizuho Securities, Morgan Stanley & Co. LLC, Scotia Capital and Credit Suisse Securities (USA) LLC.

The company plans to use the proceeds to repay debt, for working capital and for general corporate purposes.

The subsidiary of electric company FirstEnergy Corp. is based in Akron, Ohio.

Duke Energy firms

Duke Energy’s 3.25% notes due 2025 were seen early in the day at 102 bps offered, according to a trader.

The company sold $500 million of the 10-year notes on Monday at Treasuries plus 105 bps.

Duke Energy’s 4.2% bonds due 2045 traded over the day at 127 bps offered in the secondary market.

The bonds priced in a $700 million tranche on Monday at Treasuries plus 130 bps.

Raleigh, N.C.-based Duke Energy Progress is an electricity distributor in North Carolina and South Carolina.

BNY Mellon modestly better

Bank of New York Mellon’s new 2.6% notes due 2020 (A1/A+/AA-) traded late afternoon on Tuesday at 98 bps offered, a trader said.

The bank sold $1.1 billion of the notes on Monday at 100 bps over Treasuries in a total $1.4 billion two-part offering of fixed- and floating-rate paper.

BNY Mellon is a New York-based financial services company.

Barclays soft

Barclays’ new 5.25% bonds due 2045 (Baa3/BBB/A) headed out in secondary trading on Tuesday at 236 bps offered, a trader said.

Barclays sold $1.5 billion of the senior notes on Monday at Treasuries plus 235 bps.

The company’s 2.875% notes due 2020 eased 5 bps on Tuesday to 140 bps bid, according to a market source.

Barclays sold $1 billion of the notes on June 1 at Treasuries plus 142 bps.

The financial services company is based in London.

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