Fifth Third’s two tranches join Masco’s crossover deal in primary; Apple, IBM, Cisco unchanged

By Cristal Cody and Aleesia Forni

New York, March 10 – The investment-grade primary saw another slowed session on Thursday.

The market took a pause as the European Central Bank cut its main interest rate to zero and its bank deposit rate to minus 0.4% and expanded its quantitative easing program to €80 billion from €60 billion.

Just two new deals entered the primary market, a $1.5 billion two-part offering from Fifth Third Bank and a $900 million split-rated offering from Masco Corp.

Fifth Third nabbed an order book that was nearly 3.5 times oversubscribed, bringing in spreads by 17.5 basis points to 37 bps compared to initial thoughts.

This pushes the week’s total supply to $32 billion.

Investment-grade bonds were mostly unchanged in secondary trading on Thursday. Credit spreads opened the day 5 bps tighter and firmed an additional 1 bp over the session.

The Markit CDX North American Investment Grade index closed the day 6 bps tighter at a spread of 91 bps.

Apple Inc.’s 3.25% senior notes due 2026 (Aa1/AA+) were flat on the day but traded about 2 bps better on the week.

International Business Machines Corp.’s 3.45% senior notes due 2026 (Aa3/A-/A+) were stable over the session and nearly 10 bps tighter since Monday.

Cisco Systems, Inc.’s 2.95% senior notes due 2026 were unchanged going out in secondary trading and about 7 bps tighter over the week.

Fifth Third’s two tranches

Fifth Third Bank priced $1.5 billion of notes on Thursday in two tranches, a market source said.

There was $750 million of 2.3% three-year senior notes (A3/A-/A) priced at 99.977 to yield 2.308%, or Treasuries plus 120 bps.

The notes priced at the tight end of the Treasuries plus 125 bps area guidance. Initial talk was in the Treasuries plus 137.5 bps area.

Also, $750 million of 3.85% 10-year subordinated notes (Baa1/BBB+/A-) sold at 99.901 to yield 3.862% with a spread of 193 bps over Treasuries.

Guidance was in the Treasuries plus 195 bps area, having tightened from the Treasuries plus 230 bps area.

Bookrunners were Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Fifth Third and Goldman Sachs & Co.

Fifth Third is a Cincinnati-based financial services company.

Masco crossovers

Masco was in Thursday’s market with a $900 million split-rated offering of senior notes (Ba2/BBB/BB+) in two tranches, according to an informed source and an FWP filed with the Securities and Exchange Commission.

The sale included $400 million of 3.5% five-year notes sold at 99.656 to yield 3.575% with a spread of 212.5 bps over Treasuries.

The tranche sold at the tight side of the Treasuries plus 225 bps area guidance and was initially talked in the Treasuries plus 250 bps area.

And $500 million of 4.375% 10-year notes sold at 99.524 to yield 4.434%, or Treasuries plus 250 bps.

The notes were guided in the Treasuries plus 262.5 bps area. Initial talk was in the Treasuries plus 287.5 bps area.

Bookrunners were Citigroup, Deutsche Bank, J.P. Morgan Securities LLC, RBC Capital Markets LLC and SunTrust Robinson Humphrey Inc.

The Taylor, Mich.-based manufacturer of products for the home improvement and new home construction markets plans to use the proceeds to repay its $1 billion of 6.125% notes due Oct. 3, 2016 and $300 million of 5.85% notes due March 15, 2017.

Apple flat

Apple’s 3.25% note due 2026 traded flat at 103 bps bid on Thursday, a market source said.

Apple priced $2 billion of the notes on Feb. 16 at a spread of 150 bps plus Treasuries.

The computer and mobile communications device company is based in Cupertino, Calif.

IBM unchanged

IBM’s 3.45% notes due 2026 were unchanged in the secondary market on Thursday at 134 bps bid, a source said.

The company sold $1.35 billion of the notes on Feb. 16 at 170 bps over Treasuries.

The information technology and computer company is based in Armonk, N.Y.

Cisco stable

Cisco Systems’ 2.95% notes due 2026 headed out flat in secondary trading at 91 bps bid, according to a market source.

The company sold $750 million of the notes (A1/AA-) on Feb. 22 at 120 bps over Treasuries.

San Jose, Calif.-based Cisco produces internet protocol-based networking and other communications and information technology products.

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