Verizon sells $1 billion green notes; Jersey Power reopens 2015 issue; credit spreads tighten

By Cristal Cody

Tupelo, Miss., Feb. 5 – Verizon Communications Inc. led deal action in the high-grade bond market on Tuesday with a $1 billion offering of 10-year green notes.

The session also saw an issue from Jersey Central Power & Light Co., which priced a $400 million add-on to its 4.3% notes due 2026 that were originally brought to the market in 2015.

In other supply on Tuesday, Canadian National Railway Co. tapped the Canadian high-grade market with an C$800 million two-part offering of senior notes.

A dollar-denominated deal along with euro bonds may be in the works from Altria Group Inc., which held investor calls on Monday.

Meanwhile, credit spreads continue to improve since the Federal Reserve left rates unchanged last week.

The Markit CDX North American Investment Grade 31 index firmed nearly 2 basis points on Tuesday to a spread of 64 bps.

The index was flat at a spread of 73 bps in the same period a week ago.

Otherwise, market action was light ahead of the U.S. president’s State of the Union address on Tuesday night.

Most of the Asian markets are closed for the week due to the Lunar New Year celebrations.

Market sources predicted about $15 billion to $20 billion of high-grade supply this week, with some expecting as little as $10 billion depending on Altria’s offering.

On Monday, high-grade corporate issuers priced $5.7 billion of bonds.

The sovereign, supranational and agency primary market has been quiet this week to date.

New corporate issues sold Monday tightened about 3 bps to 15 bps in the secondary market, a source said.

Micron Technology, Inc.’s $1.8 billion of split-rated fixed-rate senior notes (Baa3/BB+/BBB-) priced in three tranches firmed about 10 bps to 15 bps. The Boise, Idaho-based semiconductor company’s $700 million tranche of 5.327% notes due 2029 tightened about 12 bps in secondary trading. Micron priced the notes with a 260 bps over Treasuries spread.

Bank of America Corp.’s $3 billion of 3.974% fixed-to-floating rate notes due 2030 sold Monday tightened about 4 bps in the secondary market.

The Charlotte, N.C.-based financial services company (A3/A-/A+) priced the notes at a spread of Treasuries plus 125 bps. The rate will reset to Libor plus 121 bps after an initial fixed-rate period.

In other secondary trading, Charter Communications, Inc.’s 5.05% senior secured notes due 2029 have tightened about 10 bps over the past two sessions.

Verizon sells green notes

Verizon Communications priced a $1 billion offering of 3.875% 10-year green senior notes (Baa1/BBB+/A-) on Tuesday at 99.811 and a spread of Treasuries plus 120 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

The notes priced on the tight side of guidance in the Treasuries plus 125 bps area. Initial talk was in the Treasuries plus 140 bps area.

BofA Merrill Lynch and Goldman Sachs & Co. LLC were the bookrunners.

Verizon is a New York City-based telecommunications company.

Jersey Power reopens

Jersey Central Power & Light priced a $400 million reopening of its 4.3% notes due 2026 on Tuesday to yield Treasuries plus 135 bps, a market source said.

The notes (Baa2/BBB/BBB-) priced tighter than the initial Treasuries plus 155 bps to 160 bps area talk.

The bookrunners were Barclays, Citigroup Global Markets Inc., KeyBanc Capital Markets Inc. and Morgan Stanley & Co. LLC.

The utility originally sold $250 million of the notes on Aug. 15, 2015 at 99.68 to yield 4.339, or a spread of Treasuries plus 220 bps. The total outstanding is now $650 million.

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

Charter notes tighten

Charter Communications’ 5.05% notes due 2029 (Ba1/BBB-/BBB-) firmed 5 bps on Tuesday to 205 bps bid, a market source said.

The issue also tightened about 5 bps over Monday’s session.

Company subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. sold $1.25 billion of the notes on Jan. 14 at a spread of Treasuries plus 235 bps.

Charter is a Stamford, Conn.-based broadband communications company.

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