ArcelorMittal brings big deal; CSX, Viacom price; Hewlett-Packard ends flat; Citi notes firm

By Andrea Heisinger and Cristal Cody

New York, Feb. 23 - The tone of the high-grade bond market stayed positive enough on Thursday for a large deal from ArcelorMittal to price. CSX Corp. and Viacom Inc. brought smaller trades.

Lower numbers for jobless claims were released in the morning, which may have propelled some issuers into the primary, a source said.

"Any good data is good," the source said.

ArcelorMittal priced $3 billion of notes with maturities in 2015, 2017 and 2022. All of the tranches priced tighter than initial guidance but at substantially wider spreads than the company's last deal a year ago.

CSX priced $300 million of 30-year bonds, and Viacom's deal totaled $750 million of three- and 30-year bonds.

There wasn't anything really notable about the market tone for the day, but issuers were ready to go at the open.

"I don't think the [jobless] numbers pushed anyone in," a source said. "We were all focused on our trades today, but I didn't see anything change."

The Markit CDX Series 17 North American Investment Grade index firmed 1 basis point to a spread of 97 bps on Thursday.

Hewlett-Packard Co.'s bonds ended unchanged after trading 5 bps wider earlier as the market digested the company's report that fiscal first-quarter earnings fell 44%.

Viacom's short-dated notes traded 6 bps better, while the 30-year tranche firmed about 1 bp.

ArcelorMittal's three tranches of bonds all came in more than 20 bps in secondary trading.

Citigroup Inc.'s notes that sold on Wednesday firmed about 3 bps on Thursday, a trader said.

John Deere Capital Corp.'s two fixed-rate tranches that priced on Wednesday traded flat to 5 bps better, a trader said on Thursday.

Marriott International, Inc.'s new notes also traded better on Thursday.

Secondary activity picked up on Thursday.

"One of the busier days of the week," a trader said.

The benchmark 10-year Treasury note yield fell 1 bp to 1.99%. The 30-year bond yield dropped 2 bps to 3.13%.

ArcelorMittal sells $3 billion

ArcelorMittal priced $3 billion of notes (Baa3/BBB-/BBB) in three tranches, a source who worked on the trade said.

A source said there was roughly $18 billion of demand on the books for the deal.

The $500 million of 3.75% three-year paper priced at a spread of Treasuries plus 340 bps. The notes priced tighter than guidance in the 350 bps area.

There was also a $1.4 billion tranche of 4.5% five-year notes sold at Treasuries plus 370 bps. The spread was tighter than talk in the 380 bps area.

A$1.1 billion tranche of 6.25% 10-year notes priced to yield Treasuries plus 435 bps. The bonds also were sold tighter than talk in the 445 bps area.

Bank of America Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were the bookrunners.

Proceeds are being used for general corporate purposes and to repay debt.

ArcelorMittal was last in the market with a $3 billion offering of notes in three parts on Feb. 28, 2011. The 3.75% five-year notes from that deal were priced at 170 bps over Treasuries, while a 5.5% 10-year note was priced at 215 bps over Treasuries.

In secondary trading, the notes due 2015 were seen going out 30 bps tighter at 310 bps bid, 300 bps offered, a trader said.

The notes due 2017 firmed to 347 bps bid, 340 bps offered.

The tranche of notes due 2022 tightened to 410 bps bid, 405 bps offered.

The steel and mining company is based in Luxembourg.

Viacom's two tranches

Viacom priced $750 million of senior paper (Baa1/BBB+/BBB+) in two maturities, an informed source said.

A source said there was about $5.5 billion on the books for the deal.

"There were a few drops after we came out with talk, but nothing major," the source said.

The $500 million tranche of 1.25% three-year notes sold at a spread of Treasuries plus 90 bps. The paper priced tighter than whispered talk in the 105 bps to 110 bps range and at the low end of guidance in the 95 bps area.

A second tranche of $250 million of 4.5% 30-year bonds priced at Treasuries plus 150 bps. The bonds sold tighter than whispered guidance in the 165 bps to 170 bps range and at the tight end of talk in the 155 bps area.

BNP Paribas Securities Corp., Morgan Stanley & Co. LLC and Wells Fargo Securities LLC ran the books.

Proceeds are being used for general corporate purposes.

Viacom was last in the market with a $1 billion offering of notes with five- and 10-year maturities on Dec. 7.

In the secondary market, Viacom's notes due 2015 traded better at 84 bps bid, 79 bps offered, a trader said.

Earlier, the notes were seen at 86 bps bid, 82 bps offered, another trader said.

The 30-year tranche was seen 1 bp tighter at 149 bps bid, 145 bps offered.

The entertainment company is based in New York.

CSX offers long bond

CSX priced $300 million of 4.4% 30-year senior notes (Baa3/BBB/BBB) to yield Treasuries plus 133 bps, according to an FWP filing with the Securities and Exchange Commission.

The bookrunners were JPMorgan and UBS Securities LLC.

Proceeds are being used primarily in connection with the planned $275 million contribution to the company's qualified pension plan and also for general corporate purposes including debt repayment, common stock repurchase, capital expenditures, working capital, productivity improvements and cost reductions at transportation units.

CSX was last in the market with a $600 million sale of 4.75% 30-year bonds on Oct. 27 at 145 bps over Treasuries.

In the secondary market, the new bonds due 2043 traded tighter at 131 bps bid, 126 bps offered, according to traders.

The transportation supplier is based in Jacksonville, Fla.

Hewlett-Packard unchanged

Hewlett-Packard's 4.65% global notes due 2021 widened 5 bps in secondary trading earlier on Thursday before going out flat at 176 bps bid, 171 bps offered, a trader said.

"Back to unchanged," the trader said.

Hewlett-Packard sold the $1.5 billion issue on Dec. 6 at a spread of 260 bps over Treasuries.

The company reported on Wednesday that earnings fell to $1.47 billion, or 73 cents a share, in the fiscal first quarter from $2.6 billion, or $1.17 a share, in the same period a year ago. Revenue fell 7% to $30 billion.

Hewlett-Packard is a computer and technology company based in Palo Alto, Calif.

Citi firms

The 2.65% notes due 2015 that Citigroup sold Wednesday firmed to 227 bps bid, 222 bps offered, a trader said on Thursday.

Citigroup sold $1.25 billion of the notes (A3/A-/A) at a spread of 230 bps over Treasuries on Wednesday.

The financial services company is based in New York.

John Deere flat to better

John Deere Capital's notes (A2/A/) sold on Wednesday traded flat to firmer on Thursday, according to a trader.

The 1.4% notes due 2017 were flat at 55 bps bid, 51 bps offered. John Deere Capital sold $500 million of the notes at a spread of Treasuries plus 55 bps.

The 2.75% notes due 2022 tightened to 72 bps bid, 60 bps offered. The notes were sold in a $500 million tranche at 77 bps over Treasuries.

The manufacturer and distributor of John Deere agricultural and industrial equipment is based in Moline, Ill.

Marriott tightens

Marriott International's 3% senior notes due 2019 were seen at 169 bps bid, 164 bps offered in secondary trading, a source said on Thursday.

Marriott sold $400 million of the series K notes (Baa2/BBB/BBB) at Treasuries plus 175 bps. The notes had traded better at 168 bps bid, 163 bps offered after pricing on Wednesday.

The lodging company is based in Bethesda, Md.

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