FHLB, MasterCard, HSBC, American Honda Finance, HollyFrontier sell bonds; credit spreads ease

By Cristal Cody

Eureka Springs, Ark., Nov. 16 – Investment-grade issuance remained strong on Wednesday and included deals from the Federal Home Loan Bank System, Australia & New Zealand Banking Group, MasterCard Inc., HSBC Holdings plc, American Honda Finance Corp. and HollyFrontier Corp.

The Federal Home Loan Bank System sold $3.5 billion of three-year Global Notes.

Australia & New Zealand Banking Group tapped the primary market with a $3 billion four-tranche sale of fixed- and floating-rate notes.

MasterCard priced $2 billion of notes in three tranches.

HSBC Holdings came with $1.5 billion of 10-year subordinated notes.

American Honda Finance brought $1.2 billion of two-year notes in fixed- and floating-rate tranches.

HollyFrontier reopened its 10-year notes originally priced in March 2016 to raise $750 million on Wednesday.

The Markit CDX North American Investment Grade index softened about 1 basis point over the day to close at a spread of 75 bps.

Westpac Banking Corp.’s new 4.322% fixed-to-floating rate subordinated notes due Nov. 23, 2031 traded about 6 bps better in secondary trading earlier on Wednesday.

Goldman Sachs Group Inc.’s 3.5% notes due 2026 were flat.

FHLB brings $3.5 billion

The Federal Home Loan Bank System sold $3.5 billion of 1.375% Global Notes due Nov. 15, 2019 at 99.977 to yield 1.383% on Wednesday, according to a news release.

The notes priced with a spread of 10 bps over Treasuries.

Barclays, BofA Merrill Lynch and Nomura Securities International Inc. were the lead managers. The distribution group included 15 firms.

The notes were distributed globally with 65% going to U.S. investors, 3% to investors in Europe, 7% to Asia and 25% to investors in other countries.

The bulk, 40%, went to investment advisers/fund managers, while 31% went to central banks. Financial institutions took 9% of the notes, corporations bought 4%, state/local governments purchased 13%, and the remaining 3% went to other investor types.

The government-sponsored banks for financial institutions are based in Washington, D.C.

ANZ prices $3 billion

Australia & New Zealand Banking Group sold $3 billion of fixed-and floating-rate notes (Aa3/AA-/) in four tranches on Wednesday through its New York branch, according to a market source.

The company priced $850 million of three-year floating-rate notes at Libor plus 66 bps.

ANZ New Zealand sold $900 million of 2.05% three-year fixed-rate notes at a spread of 80 bps over Treasuries.

The $400 million tranche of five-year floating-rate notes priced at Libor plus 87 bps.

ANZ Banking Group sold $850 million of 2.55% five-year fixed-rate notes at a spread of 90 bps plus Treasuries.

ANZ Securities Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the lead managers.

The issuer is a corporate and investment banking company based in New York and a subsidiary of Australia & New Zealand Banking Group, a financial services company based in Melbourne, Australia.

MasterCard sells three tranches

MasterCard priced $2 billion of notes (A2/A/) in three tranches on Wednesday, according to a market source and an FWP filing with the Securities and Exchange Commission.

The company sold $650 million of 2% five-year notes at 99.429 to yield 2.121% and a spread of 45 bps plus Treasuries.

MasterCard placed $750 million of 2.95% 10-year notes at 99.819 to yield 2.971%. The notes priced with a spread of 75 bps over Treasuries.

The company also sold $600 million of 3.8% 30-year notes at 98.328 to yield 3.895% and a 95 bps plus Treasuries spread.

The notes priced on the tight side of guidance.

Citigroup Global Markets Inc., HSBC Securities (USA) Inc., BofA Merrill Lynch, Mizuho Securities USA Inc., U.S. Bancorp Investments Inc., Barclays, Goldman Sachs, Lloyds Securities Inc., Morgan Stanley & Co. LLC, MUFG and RBS Securities Inc. were the bookrunners.

Proceeds will be used for general corporate purposes.

MasterCard is a Purchase, N.Y., payment solutions company.

HSBC raises $1.5 billion

HSBC Holdings priced $1.5 billion of 4.375% 10-year subordinated notes with a spread of 215 bps over Treasuries on Wednesday, according to a market source and an FWP filing with the SEC.

The notes due Nov. 23, 2026 (A2/BBB+/A+) priced at 99.992 to yield 4.376% and on the tight side of guidance.

HSBC Securities was the bookrunner.

The notes are non-callable.

The London-based banking and financial services group plans to use the proceeds for general corporate purposes and to strengthen its capital base.

American Honda Finance prices

American Honda Finance priced $1.2 billion of two-year fixed- and floating-rate notes (A1/A+/) on Wednesday, according to FWP filings with the SEC.

The company sold $750 million of floating-rate notes at par to yield Libor plus 28 bps. The interest rate will initially reset on Feb. 9, 2017 and will reset on each interest payment date thereafter.

American Honda Finance also priced $450 million of 1.5% notes due Nov. 19, 2018 at 99.959 to yield 1.521% and a spread of 52 bps over Treasuries.

The bookrunners were BNP Paribas Securities Corp., Deutsche Bank Securities Inc., JPMorgan and Morgan Stanley.

American Honda Finance is a Torrance, Calif.-based financing arm of American Honda Motor Co.

HollyFrontier reopens

HollyFrontier priced a $750 million add-on to its 5.875% senior notes due April 1, 2026 on Wednesday in line with guidance at a spread of 362.5 bps over Treasuries, according to a market source.

Citigroup, BofA Merrill Lynch, Goldman Sachs, MUFG and TD Securities (USA) LLC were the bookrunners.

HollyFrontier originally sold the notes on March 15 in a $250 million offering at Treasuries plus 400 bps. The total outstanding is now $1 billion.

The company will use the proceeds for general corporate purposes, which may include a portion of the $845 million purchase price for a planned acquisition of Suncor Energy’s Petro-Canada Lubricants business and capital expenditures, according to a 424B5 filing with the SEC.

HollyFrontier is a Dallas-based petroleum refiner.

Westpac Banking firms

Westpac Banking’s 4.322% fixed-to-floating rate subordinated notes due 2031 were seen earlier on Wednesday about 6 bps better at 204 bps offered, according to a market source.

The company sold $1.5 billion of the notes on Tuesday at a spread of 210 bps plus Treasuries.

The Australian bank and financial services provider is based in Sydney.

Goldman unchanged

Goldman Sachs’ 3.5% notes due 2026 were quoted flat earlier in the session at 136 bps offered, according to a market source.

Goldman Sachs sold $2.75 billion of the 10-year notes on Thursday at a spread of 137.5 bps over Treasuries.

Goldman Sachs is a New York-based banking, securities and investment management company.

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