Supply thins; South Carolina Electric prices two tranches; Fluor eyed; new bonds mixed

By Cristal Cody

Tupelo, Miss., Aug. 15 – High-grade deal action slowed considerably on Wednesday following heavy volume in the previous two sessions.

South Carolina Electric & Gas Co. upsized its two-part offering of first mortgage bonds on Wednesday to $700 million from $600 million as the lone bond issuer, a source said.

CenterPoint Energy, Inc. also priced $800 million of 6.125% $1,000-par fixed-to-floating-rate perpetual prefereds.

In other activity over the day, Irving, Texas-based engineering and construction firm Fluor Corp. (Baa1/A-/) held fixed-income investor calls, according to a market source. BofA Merrill Lynch and BNP Paribas Securities Corp. are the arrangers.

More than $24 billion of investment-grade bonds have priced week to date, compared to market forecasts of about $25 billion to $30 billion of supply for the entire week.

Issuance has been led by an $11 billion seven-tranche offering of notes from United Technologies Corp. on Monday and a $3 billion four-part bond deal from AstraZeneca plc on Tuesday.

Bonds were mixed in the secondary market on Wednesday.

United Technologies’ senior notes (Baa1/BBB+) eased about 2 basis points but remain better than issuance.

McDonald’s Corp. senior medium-term notes (Baa1/BBB+/) priced as part of a $1.8 billion three-tranche deal on Monday were flat to about 1 bp tighter.

The Markit CDX North American Investment Grade 30 index closed the day about 1.5 bps wider at a spread of 63 bps.

South Carolina Gas prices

South Carolina Electric & Gas priced $700 million of first mortgage bonds (Baa1/BBB+/BBB) in two tranches on Wednesday, according to a market source and an FWP filing with the Securities and Exchange Commission.

The company sold $300 million of 3.5% three-year bonds at a spread of Treasuries plus 83 bps, on the tight side of guidance in the Treasuries plus 85 bps area, plus or minus 2 bps. The issue was initially talked to price in the Treasuries plus 120 bps area.

A $400 million tranche of 4.25% 10-year bonds priced at a Treasuries plus 143 bps spread. The bonds were guided to print in the Treasures plus 145 bps area, plus or minus 2 bps, in from initial price talk in the Treasuries plus 175 bps area.

J.P. Morgan Securities LLC, BofA Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC were the bookrunners.

South Carolina Electric & Gas is a regulated utility based in Cayce, S.C.

United Technologies eases

In the secondary market, United Technologies’ 3.65% notes due Aug. 16, 2023 softened about 2 bps on Wednesday to 86 bps bid, a source said.

The company sold $2.25 billion of the five-year notes on Monday at a 90 bps over Treasuries spread.

United Technologies’ 4.125% notes due Nov. 16, 2028 also traded about 2 bps weaker during the session to head out at 120 bps bid.

The $3 billion tranche priced in Monday’s offering at a spread of 125 bps over Treasuries.

United Technologies is a Hartford, Conn.-based company that provides technology products and services to the building and aerospace industries.

McDonald’s mixed

McDonald’s reopened 3.8% notes due April 1, 2028 firmed about 1 bp to 95 bps in secondary trading on Wednesday, a market source said.

McDonald’s priced a $550 million tap of the notes on Monday at a Treasuries plus 98 bps spread.

The company originally sold $500 million of the 10-year notes at a spread of 100 bps over Treasuries on March 14. The total outstanding is $1.05 billion.

McDonald’s new 4.45% notes due Sept. 1, 2048 were unchanged on the day at 140 bps bid.

The notes priced in a $750 million tranche on Monday at a spread of 143 bps over Treasuries.

The fast food chain is based in Chicago.

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