Lam Research, Santander, Dominion, USAA, Quest among day’s issuers; credit spreads mostly flat

By Cristal Cody

Eureka Springs, Ark., May 23 – As expected, Monday’s primary market was busy with investment-grade issuers bringing deals ahead of the Memorial Day holiday.

The week’s issuance is expected to be strong through Wednesday with as much as $25 billion of volume forecast.

High-grade issuers including Lam Research Corp., Santander Holdings USA Inc., Dominion Resources Inc., USAA Capital Corp., Northern States Power Co., Quest Diagnostics Inc., Tri-State Generation and Transmission Association, Inc. and Eversource Energy tapped the market on Monday.

The Markit CDX North American Investment Grade index ended the day mostly unchanged at a spread of 84 basis points.

In the secondary market, AT&T Inc.’s 4.125% senior notes due 2026 headed out 3 bps wider.

Southern Co.’s senior notes (Baa2/BBB+/A-) were quoted flat to about 1 bp softer earlier in the day.

Dell, Inc.’s 6.02% senior secured notes due 2026 were seen 2 bps weaker early Monday.

Lam prices $2.4 billion

Lam Research sold $2.4 billion of senior notes in three tranches on Monday, according to a market source and a company release.

The company sold $800 million of 2.8% notes due June 15, 2021 with a spread of 145 bps over Treasuries, on the tight side of talk of 150 bps, plus or minus 5 bps, plus Treasuries.

Lam Research priced $600 million of 3.45% notes due June 15, 2023 with a spread of 185 bps over Treasuries. The notes were talked to price at Treasuries plus 190 bps, plus or minus 5 bps.

The $1 billion tranche of 3.9% notes due June 15, 2026 priced at 210 bps over Treasuries, compared to guidance of 215 bps, plus or minus 5 bps, plus Treasuries.

Goldman Sachs & Co., Barclays, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were the bookrunners.

Proceeds will be used to fund the cash portion of the company’s acquisition of KLA-Tencor Corp. and to prepay KLA-Tencor’s outstanding term loans.

If the merger is not completed before Dec. 30, the company will be required to redeem the seven-year and 10-year notes under special mandatory redemption provisions.

Lam Research is a Fremont, Calif.-based semiconductor equipment company.

Santander raises $1 billion

Santander Holdings USA sold $1 billion of 2.7% three-year senior notes with a spread of 165 bps over Treasuries on Monday, on the tight side of guidance of 170 bps, plus or minus 5 bps, over Treasuries, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes priced at 99.98 to yield 2.707%.

JPMorgan, Citigroup, Santander Investment Securities Inc. and UBS Securities LLC were the bookrunners.

Proceeds will be used for general corporate purposes.

Boston-based Santander Holdings USA is the parent company of Sovereign Bank and a subsidiary of Spain’s Banco Santander, SA.

Dominion sells $550 million

Dominion Resources sold $550 million in a remarketing of its 2.962% three-year junior subordinated notes at 100.099 to yield 2.929% on Monday, according to an FWP filing with the SEC.

The notes due July 1, 2019 priced with a spread of 187.5 bps plus Treasuries.

The offering was a remarketing of its 1.18% series B notes originally sold as components of the company’s 2013 series B equity units issued in June 2013.

Citigroup, Credit Suisse Securities (USA) LLC and Goldman Sachs were the remarketing agents.

Proceeds from the remarketing will be used to purchase a portfolio of Treasury securities due on or about July 1, 2016.

Dominion Resources is an energy producer and transporter based in Richmond, Va.

USAA brings $400 million

USAA Capital priced $400 million of 2% five-year notes with a spread of 65 bps over Treasuries on Monday, according to a market source.

The notes (Aa1/AA+) were guided to price at 65 bps, plus or minus 2 bps, over Treasuries.

Deutsche Bank Securities Inc., JPMorgan and Wells Fargo Securities LLC were the active bookrunners.

USAA Capital is a San Antonio-based subsidiary of the United Services Automobile Association.

Northern States Power prices

Northern States Power sold $350 million of 3.6% 30-year first mortgage bonds at 99.402 to yield 3.663% on Monday, according to an FWP filing with the SEC.

The bonds priced with a spread of 100 bps over Treasuries, on the tight side of guidance of 105 bps, plus or minus 5 bps, plus Treasuries.

The bookrunners were BNY Mellon Capital Markets, LLC, BofA Merrill Lynch, RBC Capital Markets, LLC and Scotia Capital (USA) Inc.

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

The electric and natural gas utility is based in Minneapolis.

Quest sells $500 million

Quest Diagnostics priced $500 million of 3.45% 10-year senior notes on Monday at 99.723 to yield 3.483% and a spread of 165 bps plus Treasuries, according to a market source and an FWP filing with the SEC.

The notes were guided at Treasuries plus 170 bps, plus or minus 5 bps.

Goldman Sachs, Mizuho Securities USA Inc. and Wells Fargo were the bookrunners.

Proceeds will be used to repay debt and for general corporate purposes.

The diagnostic testing company is based in Madison, N.J.

Tri-State sells bonds

Tri-State Generation and Transmission Association priced $250 million of 4.25% 30-year first mortgage bonds in a private placement offering that closed on Monday, according to a market source and an 8-K filing with the Securities and Exchange Commission.

The series 2016A bonds (A3/A) priced with a spread of 170 bps over Treasuries.

BofA Merrill Lynch, U.S. Bancorp Investments, Inc. and Wells Fargo were the bookrunners.

Tri-State Generation and Transmission Association is a Westminster, Colo.-based cooperative electricity supplier.

Eversource places debentures

Nstar Electric Co., doing business as Eversource Energy, sold $250 million of 2.7% 10-year debentures at 99.652 to yield 2.74% on Monday, according to a market source and an FWP filing with the SEC.

The debentures priced with a spread of 90 bps over Treasuries, compared to guidance of 95 bps, plus or minus 5 bps, over Treasuries.

The joint bookrunners were BNY Mellon Capital Markets LLC, Citigroup, MUFG and Mizuho.

Proceeds will be used to repay short-term debt, to fund capital expenditures and for working capital.

The Boston-based company is engaged in the energy delivery business through utility subsidiaries.

AT&T softens

AT&T’s 4.125% notes due 2026 (Baa1//A-) eased 3 bps on Monday to 170 bps bid, a market source said.

AT&T priced a $900 million tap of the bonds on May 3 at a spread of Treasuries plus 150 bps.

The notes originally were priced on Jan. 29 in a $1.5 billion tranche at 195 bps over Treasuries.

AT&T is a Dallas-based telecommunications company.

Southern mixed

Southern’s 3.25% notes due 2026 traded early Monday at 144 bps offered, according to a market source.

The notes were quoted on Friday at 145 bps bid, 143 bps offered, according to a market source.

Southern sold $1.75 billion of the notes on Thursday at 145 bps over Treasuries.

The company’s 4.4% notes due 2046 were seen flat at 176 bps offered in the secondary market.

The notes traded on Friday at 179 bps bid, 176 bps offered.

Southern priced $2 billion of the bonds in Thursday’s sale at 180 bps over Treasuries.

The electric utility company is based in Atlanta.

Dell eases

Dell’s 6.02% notes due 2026 were seen about 2 bps softer from Friday at 419 bps offered in early secondary trading Monday, a market source said.

The notes (Baa3/BBB-/BBB-) traded on Friday at 422 bps bid, 417 bps offered.

The company sold $3.75 billion of the notes on May 17 at Treasuries plus 425 bps.

Dell is a Round Rock, Texas-based technology and services company.

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