GSK, Goldcorp, SEB bring bonds as issuance pace slows; recent deals mixed in secondary market

By Aleesia Forni and Andrea Heisinger

New York, March 13 - The marquee sale in the high-grade bond market's Wednesday session was from GlaxoSmithKline Capital Inc.

The company sold $3 billion in three parts. A fourth tranche of three-year floating-rate notes was considered, but without enough reverse inquiry, it was not added.

Canadian gold producer Goldcorp Inc. priced $1.5 billion of bonds due 2018 and 2023.

Financial services company Skandinaviska Enskilda Banken AB sold $1.25 billion of five-year notes. The trade was about two times oversubscribed at $2.5 billion, a source close to the trade said.

Australian conglomerate Wesfarmers Ltd. priced an upsized $750 million of five-year notes in a private offering. The size was increased from $500 million, a source said.

Indiana Michigan Power Co. tapped the market for $250 million of 10-year notes.

Germany's FMS Wertmanagement tapped the market for $2 billion of three-year notes in a sale that went overnight from Tuesday.

Thursday's primary will see more deals, sources said late on Wednesday.

"We have a couple looking," one source said. "The market continues to be OK, so this [issuance] should keep going."

The Markit CDX Series 18 North American Investment Grade index was 1 basis point tighter at a spread of 79 bps on Wednesday.

The secondary market saw Tuesday's new issues from Union Pacific Corp., Georgia Power Co. and Discovery Communications LLC trade mixed during the session.

Georgia Power's 30-year bond was quoted 2 bps better on the day, while Union Pacific's notes were trading weaker.

Meanwhile, Discovery's recent deal traded unchanged to better on Wednesday.

GSK's $3 billion trade

GlaxoSmithKline Capital priced $3 billion of senior notes (A1/A+/) in three maturities, a market source said.

A $1.25 billion tranche of 0.7% three-year notes priced at a spread of Treasuries plus 35 bps. Guidance was in the 40 bps area.

There was $1.25 billion of 2.8% 10-year notes sold at a spread of 90 bps over Treasuries. Price talk was in the 95 bps area.

Finally, there was $500 million of 4.2% 30-year bonds priced at Treasuries plus 105 bps. The bonds were talked in the 110 bps area.

The bookrunners were Deutsche Bank Securities Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC and UBS Securities LLC.

Proceeds are being used for general corporate purposes including refinancing existing debt.

The sale is guaranteed by Brentford, England-based GlaxoSmithKline plc.

GlaxoSmithKline last tapped the U.S. bond market with a $5 billion offering in three parts on May 2, 2012. That trade included a 0.75% three-year note sold at Treasuries plus 45 bps and a 2.85% 10-year note priced at 100 bps over Treasuries.

The pharmaceutical and consumer health products company has its U.S. headquarters in Wilmington, Del.

Goldcorp prices tight

Goldcorp priced $1.5 billion of notes (Baa2/BBB+/) in two tranches, a source close to the trade said.

A $500 million tranche of 2.125% five-year notes was priced at a spread of Treasuries plus 135 bps. Pricing was at the tight end of talk in the 140 bps area, plus or minus 5 bps.

There was also $1 billion of 3.7% 10-year notes sold at a spread of 175 bps over Treasuries. The notes were priced at the tight end of talk in the 180 bps area, plus or minus 5 bps.

BofA Merrill Lynch and HSBC Securities (USA) Inc. were active bookrunners.

Proceeds are being used to repay $862.5 million of convertible notes maturing in August 2014 and for capital expenditures, capital investment and working capital.

The gold producer is based in Vancouver, B.C.

SEB offers fives

Skandinaviska Enskilda Banken, or SEB, was in the market to price $1.25 billion of 1.75% five-year notes (A1/A+/A+) at Treasuries plus 100 bps, an informed source said.

The size was projected to be $750 million to $1 billion, the source said. Guidance was in the 105 bps to 110 bps over Treasuries range.

The sale was done under Rule 144A and Regulation S.

The bookrunners were BofA Merrill Lynch, Barclays, Citigroup Global Markets Inc. and Deutsche Bank.

The financial services company is based in Stockholm.

Wesfarmers upsizes

Wesfarmers sold $750 million of 1.874% five-year notes at a spread of Treasuries plus 100 bps, an informed source said.

The size was increased from $500 million, the source added.

The notes (A3/A-/) were priced at par to yield 1.874%.

There is a make-whole call at Treasuries plus 15 bps.

Pricing was done under Rule 144A and Regulation S.

BofA Merrill Lynch, Barclays, Goldman Sachs and JPMorgan were the bookrunners.

Wesfarmers was last in the U.S. bond market with a $650 million sale of 2.983% five-year notes priced at 115 bps over Treasuries on May 9, 2011.

The conglomerate and retailer is based in Perth.

FMS's short bond

FMS Wertmanagement sold $2 billion of 0.625% three-year notes (Aaa/AAA/AAA) early in the day at mid-swaps plus 8 bps, or Treasuries plus 23.05 bps, an informed source said.

The sale went overnight from Tuesday.

Citigroup, Deutsche Bank, Goldman Sachs and Morgan Stanley & Co. LLC were the bookrunners.

Proceeds are being used to refinance existing liabilities, to replace short-term with long-term funding and for general corporate purposes.

The sale is guaranteed by the Federal Republic of Germany.

The financial services company is based in Munich.

Indiana Michigan's 10-year

Indiana Michigan Power sold $250 million of 3.2% 10-year senior notes (Baa2/BBB/BBB) at Treasuries plus 120 bps, a market source said.

The bookrunners were Credit Suisse Securities (USA) LLC, KeyBanc Capital Markets Inc. and UBS.

Proceeds are being used for general corporate purposes relating to the company's utility business.

Indiana Michigan was last in the bond market with a $475 million sale of 7% 10-year notes priced on Jan. 12, 2009 at 475 bps over Treasuries.

The subsidiary of American Electric Power Co. Inc. is based in Fort Wayne, Ind.

Discovery notes flat, better

Discovery Communications' recent notes traded unchanged to slightly better on Wednesday, one trader said.

The company was in Tuesday's market with a $1.2 billion sale of senior notes in two parts.

The $350 million tranche of 3.25% 10-year notes traded unchanged at 125 bps bid, 123 bps offered following Tuesday's pricing with a spread of Treasuries plus 125 bps.

The company's $850 million of 4.875% 30-year bonds traded 2 bps tighter at 163 bps bid, 161 bps offered. The notes sold with a spread of 165 bps over Treasuries.

The media company is based in Silver Spring, Md.

Union Pacific's two notes

The secondary market also saw Union Pacific's $650 million of bonds, which priced in two parts on Tuesday, trade wider on the day, a market source said.

The $325 million tranche of 2.75% 10-year notes was quoted 2 bps wider at 80 bps bid, 79 bps offered. The company sold the notes at a spread of Treasuries plus 80 bps.

The $325 million tranche of 4.25% 30-year bonds, which priced at 110 bps over Treasuries on Tuesday, traded at 111 bps bid, 106 bps offered.

The railroad transportation company is based in Omaha.

Georgia Power better

Georgia Power's recent deal was trading better in the secondary, a trader said.

The $400 million tranche of 4.3% 30-year bonds was quoted 2 bps better at 108 bps bid, 102 bps offered during the session. The company sold the notes at a spread of Treasuries plus 110 bps.

The sale also included a $250 million tranche of three-year floating-rate notes, which sold at par to yield Libor plus 32 bps.

The electric utility is based in Atlanta.

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