Hewlett-Packard Enterprise brings $14.6 billion deal; HSBC firms; Ford Motor Credit soft

By Aleesia Forni and Cristal Cody

Virginia Beach, Sept. 30 – Hewlett-Packard Enterprise Co. priced a $14.6 billion megadeal on Wednesday, giving some life to what has been an otherwise sleepy investment-grade primary market this week.

One source noted the deal was slated to price at the front end of the week but was pushed back due to the volatile market conditions.

The nine-part deal, which was issued in connection with the company’s spinoff from Hewlett-Packard Co., garnered a solid $30 billion order book, with some tranches pricing between 10 basis points and 15 bps tighter than initial talk.

Thursday’s primary also hosted new deals from International Bank for Reconstruction and Development (World Bank) and United Parcel Service, Inc., bringing the week’s total supply to more than $23.3 billion.

Bank and financial paper was mixed in secondary trading over the session after mostly widening on Tuesday.

HSBC Holdings plc’s 4.25% subordinated notes due 2025 traded 1 bp tighter.

Bank of America Corp.’s 3.875% senior notes due 2025 were unchanged.

Ford Motor Credit Co. LLC’s 4.134% senior notes due 2025 eased 5 bps in the secondary market.

The Markit CDX North American Investment Grade 25 index ended mostly unchanged to modestly tighter at a spread of 93 bps. The index has ranged from a low spread of 60.7 bps to a high of 93.3 bps over the past 12 months, according to a Barclays Bank plc report on Wednesday.

HP sells $14.6 billion

The primary market saw Hewlett-Packard Enterprise price a $14.6 billion nine-part offering of senior notes (Baa2/BBB/A-) on Wednesday, a market source said.

There was $2.25 billion of 2.45% two-year notes sold at 99.944 to yield 2.479%, or Treasuries plus 185 bps, tighter than guidance set in the Treasuries plus 195 bps area.

Initially, talk was in the Treasuries plus 200 bps area.

Also, $350 million of two-year floaters sold at par to yield Libor plus 174 bps.

A $2.65 billion tranche of 2.85% three-year notes sold at 99.872 to yield 2.895% with a spread of Treasuries plus 200 bps.

The notes sold tighter than guidance set in the Treasuries plus 210 bps area following talk in the Treasuries plus 215 bps area.

A $250 million three-year floater sold at par to yield Libor plus 193 bps.

The company also priced $3 billion of 3.6% five-year notes at 99.972 to yield 3.606%, or Treasuries plus 225 bps.

Pricing came tighter than the Treasuries plus 235 bps area guidance. Initially, talk was in the Treasuries plus 240 bps area.

Also priced was $1.35 billion of 4.4% seven-year notes at 99.802 to yield 4.433%, or Treasuries plus 270 bps.

Guidance was in the Treasuries plus 280 bps area, tightened from initial talk in the Treasuries plus 280 bps area.

There was $2.5 billion of 4.9% 10-year notes sold at Treasuries plus 290 bps. Pricing was at 99.725 to yield 4.935%.

The notes sold tighter than the Treasuries plus 300 bps area guidance.

Also, $750 million of 6.2% 20-year notes sold at 99.942 to yield 6.205% with a spread of Treasuries plus 335 bps.

Guidance was in the Treasuries plus 345 bps area.

Finally, $1.5 billion of 6.35% 30-year notes sold at 99.932 to yield 6.355%, or Treasuries plus 350 bps.

The notes were guided and initially talked in the Treasuries plus 360 bps area.

Bookrunners are J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Goldman Sachs & Co., BofA Merrill Lynch and Deutsche Bank Securities Inc.

The notes were sold via Rule 144A and Regulation S.

Hewlett-Packard Enterprise plans to distribute the proceeds to Hewlett-Packard Co., which plans to use a portion of the cash distribution to redeem or repurchase some of its outstanding notes.

Hewlett Packard Enterprise is Hewlett-Packard’s wholly owned subsidiary focused on enterprise technology infrastructure, software, services and financing. The information technology company is based in Palo Alto, Calif.

World Bank taps market

Also on Wednesday, International Bank for Reconstruction and Development (World Bank) priced $5.25 billion of global notes (Aaa/AAA/AAA) in three- and seven-year tranches, according to a market source and a company news release.

A $4 billion tranche of 1% three-year notes sold at mid-swaps plus 7 bps, at the tight end of talk set in the mid-swaps plus 8 bps area.

Pricing was at 99.83 to yield 1.058%, or Treasuries plus 14.7 bps.

There was also $1.25 billion of 1.875% seven-year notes priced at mid-swaps plus 20 bps.

The notes priced in line with talk set in the area of mid-swaps plus 20 bps.

The issue sold at 99.876 to yield 1.895% and with a spread of 14.15 bps over Treasuries.

Bookrunners are BofA Merrill Lynch, Citigroup, Morgan Stanley & Co. LLC and RBC Capital Markets LLC.

The issuer is based in Washington, D.C.

UPS sells add-on

United Parcel Service sold a $46.5 million tap of its existing floating-rate senior notes (Aa3/A+) due Sept. 15, 2065 at par to yield Libor minus 30 bps on Wednesday, according to an FWP filing with the Securities and Exchange Commission.

Bookrunners are UBS Securities LLC and Deutsche Bank Securities.

The notes may be called in 2045 at 105 and then at amounts declining annually by 50 bps until 2055, when the notes are callable at par.

The notes are putable on each Sept. 15 until Sept. 15, 2020 at 98, on each Sept. 15 to Sept. 15, 2025 at 99 and on Sept. 15, 2026 and every third year thereafter at par until Sept. 15, 2062.

The original $57,726,000 issue priced on Sept. 14.

Proceeds will be used for general corporate purposes.

The package delivery and supply chain management company is based in Atlanta.

HSBC improves

HSBC’s 4.25% notes due 2025 firmed 1 bp to 238 bps bid on Wednesday, according to a market source.

The notes widened 5 bps in secondary trading on Tuesday.

HSBC sold $1.5 billion of the notes (A2/A+) on Aug. 10 at a spread of Treasuries plus 212 bps.

The banking and financial services company is based in London.

Bank of America flat

Bank of America’s 3.875% senior notes due 2025 were unchanged on Wednesday at 170 bps bid after widening 5 bps in the previous session, a source said.

Bank of America sold $2.5 billion of the notes (Baa1/A-/A) on July 27 at 167 bps over Treasuries.

The financial services company based in Charlotte, N.C.

Ford Motor Credit eases

Ford Motor Credit’s 4.134% notes due 2025 traded 5 bps weaker on Wednesday at 209 bps bid, a market source said.

The company sold $700 million of the notes (Baa3/BBB-/BBB-) on July 30 at Treasuries plus 187.5 bps.

Ford Motor Credit is the financing arm of Dearborn, Mich.-based automaker Ford Motor Co.

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