U.S. Bank sells notes post-earnings; HCP prices; secondary market sees 'definitely strong' day

By Aleesia Forni and Andrea Heisinger

New York, July 18 - There were two straight investment-grade deal priced on Wednesday by U.S. Bancorp and HCP, Inc. and another done in the preferred stock market.

The $1.3 billion sale of 10-year notes from U.S. Bancorp came after the financial company announced second-quarter earnings in the morning. The bank reported a record net income of $1.42 billion for Q2 based on strong lending and credit account activity and growth in loans, according to a press release. The quarter showed a 17.6% increase from the same period in 2011, when net income was $1.20 billion.

HCP was back in the market for the second time in 2012, pricing $300 million of 10-year senior notes. The size of the trade was increased by $50 million on strong investor demand.

"We announced it at 9 a.m. and it went subject by 9:45," a source who worked on the trade said. "It went incredibly fast."

The market tone was "fine" for the day, with some watching continued earnings announcements from financial and corporate names including Bank of America Corp.

"The Dow [Jones industrial average] ended up 100, so it wasn't too bad," a market source said. "Tomorrow's looking quiet."

The preferred stock market remained active. Stanley Black & Decker Inc. brought a $750 million sale of 5.75% 40-year $25-par junior subordinated notes.

In the secondary market, bank and financial paper was 5 basis points to 15 bps better on the day. JPMorgan Chase & Co.'s bonds due 2019 tightened 13 bps, while Morgan Stanley's bonds due 2032 closed the session 6 bps better.

Meanwhile, technology, media and telecommunications paper ended the day 5 bps to 10 bps better, a trader said.

"Everything was definitely strong," the trader added.

U.S. Bank sells $1.3 billion

U.S. Bancorp priced a $1.3 billion issue of 2.95% 10-year subordinated notes following its announcement of record earnings for the second quarter, a market source said.

The notes (A1/A-/A+) were priced at a spread of Treasuries plus 150 bps. The paper sold in line with guidance.

The bonds traded 12 bps tighter near the end of the session at 138 bps bid, 133 bps offered, a trader said.

The bookrunners were Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and U.S. Bancorp Investments Inc.

The financial services company is based in Minneapolis.

HCP upsizes 10-year issue

REIT HCP priced an upsized $300 million of 3.15% 10-year senior notes (Baa2/BBB/BBB+) to yield Treasuries plus 180 bps, an informed source said.

The deal size was increased from $250 million, the source said, both due to the $1.5 billion of demand on the books and because "the company was able to do it as well."

A trader saw the bonds at 178 bps bid, 174 bps offered later in the session.

The notes were sold tighter than whispered guidance in the 225 bps area and at the low end of revised talk in the 185 bps area, plus or minus 5 bps.

Goldman Sachs & Co., J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the bookrunners.

Proceeds are being used for general corporate purposes including funding future acquisitions or investments.

HCP was last in the market with a $450 million offering of 3.75% seven-year notes priced at 250 bps over Treasuries on Jan. 18.

The REIT for the health-care industry is based in Long Beach, Calif.

Black & Decker hugely upsized

Stanley Black & Decker priced a massively upsized offering of 5.75% $25-par junior subordinated notes due 2052 after the market closed Wednesday.

The deal was originally expected to be about $200 million, and initial price talk was 5.875%.

A trader said the issue was trading at par already in the gray market ahead of pricing.

After the bell, but before the deal actually priced, a market source said the paper was trading "very well" at par or "just under."

Settlement is expected July 25.

Bank of America Merrill Lynch, Morgan Stanley, UBS Securities LLC and Wells Fargo are the joint bookrunning managers. Citigroup Global Markets Inc. and RBC Capital Markets LLC are the co-managers.

Proceeds will be used for general corporate purposes, which may include repayment of short-term debt and the refinancing of recent and near-term debt maturities.

Morgan Stanley firms

Morgan Stanley's 7.25% bonds due 2032 closed the session at 374 bps bid, 6 bps tighter than Wednesday's close.

The bank priced the $1 billion deal in March 2002.

JPMorgan tightens

JPMorgan's 6.4% bonds due 2038 ended the day 13 bps better at 189 bps bid.

The $2.5 billion deal priced in 2008.

Stephanie N. Rotondo contributed to this review

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