Hospira, Moody's tap market; Shell International's long bonds tighten in quiet trading

By Cristal Cody and Aleesia Forni

Tupelo, Miss., Aug. 7 - Another solid day of high-grade bond issuance took place on Wednesday, sources said, as Shell International Finance BV, Hospira Inc. and Moody's Corp. priced bonds during the session.

The day's largest deal came from Shell International, selling $3.75 billion of notes in five-, 10- and 30-year tranches, according to a syndicate source.

The deal was nearly 2½ times oversubscribed, the source noted, adding that there was strong demand for the oil and gas company's new notes.

The deal consisted of $1.5 billion 1.9% notes due 2018 at a spread of Treasuries plus 55 basis points.

There was also a $1 billion tranche of 3.4% 10-year notes sold with a spread of 83 bps over Treasuries, and a $1.25 billion tranche of 4.55% notes due 2043 priced at 92 bps over Treasuries.

The day's new deal from Moody's sold at the tight end of talk, with the $500 million of 4.875% senior notes due 2024 pricing at a spread of 235 bps over Treasuries, according to a syndicate source.

Meanwhile, pharmaceutical company Hospira priced $350 million of 5.2% notes due 2020 at Treasuries plus 325 bps.

The session also saw Macquarie Bank Ltd. price $1 billion 2% notes at the tight end of talk on Wednesday. The notes were sold with a spread of 143 bps over Treasuries.

In other primary action, International Transmission Co. priced $285 million of 4.625% first mortgage bonds due 2043, according to a market source.

The notes were sold at a spread of 95 bps over Treasuries.

One syndicate source noted that the market "should see a few" new issues during Thursday's session, though he said he expects the pace to be somewhat slower compared to earlier in the week.

Secondary market activity remained light from "summer doldrums" with many participants out for vacations, a trader said.

Shell's new bonds traded mostly tighter, though the 10-year notes eased about 2 bps in the secondary market, a trader at another desk said.

Shell's 1.9% notes due 2018 closed 1 bp tighter at 54 bps bid, 53 bps offered, a trader said.

The tranche of 3.4% notes due 2023 widened 2 bps to 85 bps bid, 83 bps offered.

Shell's 4.55% bonds due 2043 firmed to 87 bps bid, 85 bps offered.

The Markit CDX Series 20 North American Investment Grade index rose 1 bp to a spread of 76 bps on Wednesday.

Shell sells three-parter

Shell priced on Wednesday $3.75 billion of notes in five-, 10- and 30-year tranches, according to a syndicate source and an FWP filing with the Securities and Exchange Commission.

The company priced $1.5 billion 1.9% notes due 2018 at a spread of Treasuries plus 55 bps, or 99.934 to yield 1.914%.

There was also a $1 billion tranche of 3.4% 10-year notes sold with a spread of 83 bps over Treasuries. Shell priced the notes at 99.79 to yield 3.425%.

Finally, a $1.25 billion tranche of 4.55% notes due 2043 priced at 92 bps over Treasuries. The notes priced at 99.32 to yield 4.592%.

The notes will be guaranteed by Royal Dutch Shell plc.

Barclays, Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC were the bookrunners.

The company plans to use the proceeds for general corporate purposes.

Shell was last in the market with $1.75 billion of guaranteed notes in two tranches on Nov. 29, 2012.

The oil and gas company is based in the Hague, the Netherlands.

Macquarie gets $1 billion

In other primary news, Macquarie Bank came to Wednesday's market with a three-year issue of $1 billion 2% notes priced at a spread of 143 bps over Treasuries, according to an informed source.

Price talk was set in the area of Treasuries plus 145 bps.

The notes were priced at 99.965 to yield 2.012%.

BofA Merrill Lynch, Citigroup Global Markets Inc., HSBC and Macquarie Bank were the bookrunners for the Rule 144A and Regulation S deal.

The banking unit of Macquarie Group Ltd. is based in Sydney, Australia.

Moody's prices tight

Ratings and research agency Moody's priced $500 million of 4.875% senior notes due 2024 during Wednesday's session at a spread of 235 bps over Treasuries, according to a syndicate source.

The notes came at the tight end of talk, which was set at Treasuries plus 235 bps to 240 bps.

The notes were sold at 99.431 to yield 4.945%.

BofA Merrill Lynch and J.P. Morgan Securities LLC were the joint bookrunners.

The company plans to use proceeds for general corporate purposes.

The New York City-based agency was last in the market with $500 million 4.5% 10-year senior notes on Aug. 15, 2012.

Hospira sells cross-overs

A split-rated issue came to market on Wednesday from Hospira, according to a syndicate source and a FWP filing with the SEC.

The company sold $350 million of 5.2% notes due 2020 at Treasuries plus 325 bps.

The notes were priced at 99.751 to yield 5.243%

Hospira also brought to market $350 million 5.8% notes due 2023, which also came with a spread of 325 bps over Treasuries.

The 10-year notes were sold at 99.663 to yield 5.854%

Joint bookrunners for the seven-year deal were Morgan Stanley, Goldman Sachs & Co., JPMorgan, Citigroup, RBS Securities Inc. and U.S. Bancorp Investments Inc.

Morgan Stanley, Goldman Sachs, JPMorgan, Citigroup, RBS Securities and Mitsubishi UFJ Securities (USA) Inc. were the joint bookrunners for the 10-year tranche.

The company plans to use the proceeds from the sale, along with cash on hand, to redeem its $400 million outstanding of 5.9% notes due June 2014 and $250 million outstanding 6.4% notes due May 2015.

The specialty pharmaceutical and medical delivery company is based in Lake Forest, Ill.

ITC taps market

International Transmission priced $285 million of 4.625% first mortgage bonds due 2043 at a spread of 95 bps over Treasuries on Wednesday, according to a company news release and a market source.

Barclays and Goldman Sachs were the bookrunners.

The deal had been talked at Treasuries plus 100 bps.

Proceeds, together with revolver borrowings, will be used to repay the company's $185 million outstanding term loan due July 14, 2014 and the $100 million owed to ITC under an intercompany advance agreement.

International Transmission is a wholly owned subsidiary of ITC Holdings Corp., a Novi, Mich.-based power transmission company.

Hyundai Capital tightens

Hyundai Capital America's 1.875% notes due 2016 tightened to 120 bps bid, 112 bps offered in Wednesday's secondary market, a trader said.

The company priced $500 million of the notes at 130 bps over Treasuries on Tuesday.

Hyundai Capital America's 2.875% notes due 2018 traded better at 149 bps bid, 148 bps offered. The company sold $500 million of the notes at Treasuries plus 155 bps.

The U.S. financing arm of Hyundai is based in Irvine, Calif.

Bank/brokerage CDS costs dip

Investment-grade bank and brokerage credit default swap costs declined, a market source said on Wednesday.

Bank of America Corp.'s CDS costs fell 1 bp to 108 bps bid, 112 bps offered. Citigroup Inc.'s CDS costs dropped 3 bps to 100 bps bid, 104 bps offered. JPMorgan Chase & Co.'s CDS costs fell 1 bp to 76 bps bid, 80 bps offered. Wells Fargo & Co.'s CDS costs eased 2 bps to 63 bps bid, 67 bps offered.

Merrill Lynch's CDS costs ended unchanged at 98 bps bid, 108 bps offered. Morgan Stanley's CDS costs declined 1 bp to 137 bps bid, 141 bps offered. Goldman Sachs Group, Inc.'s CDS costs fell 2 bps to 126 bps bid, 130 bps offered.

Paul Deckelman contributed to this review

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