MetLife, RBC, Washington REIT among day's deals as pace slows; Goldman Sachs bond active

By Aleesia Forni and Andrea Heisinger

New York, Sept. 12 - There was a wide variety of sectors in the high-grade bond market on Wednesday, and nearly all of the deals were less than $500 million in size.

The Royal Bank of Canada sold $2.5 billion of five-year covered bonds. The bonds were the first of its kind not sold privately, meaning individual investors could get in on the deal.

Metropolitan Life Insurance Institutional Funding II and MetLife Global Funding I priced $1.75 billion of floating-rate notes in two tranches. The sale was done privately under Rule 144A and Regulation S.

Another insurance name in the market was Infinity Property & Casualty Corp., which priced $275 million of 10-year senior notes. The size of the offering was increased by $25 million.

Washington Real Estate Investment Trust also priced an upsized deal of $300 million of 10-year notes.

A deal of 25-year tier 2 senior notes was announced by Danske Bank. Pricing of the notes is expected on Thursday, a source said.

Private Export Funding Corp. reopened an issue of notes due in 2017 to add $150 million in early afternoon.

Bank of New York Mellon Corp. sold $550 million of perpetual preferred stock shares. The size of the trade was increased from $250 million.

Volume is expected to drop, at least slightly, on Thursday as issuers and syndicate desks await an announcement from the Federal Reserve Federal Open Market Committee, which will conclude a two-day meeting in the afternoon.

"I don't know - not hearing of much," a source said late in the day. "We've been so busy, it wouldn't surprise [me] if it got a little quiet."

A syndicate source said their desk could have a deal to price on Thursday and added that otherwise issuers are going to hold off on selling bonds due to the Fed meeting.

As of late Wednesday, there had already been upwards of $25 billion of investment-grade corporate issuance for the week.

The Markit CDX Series 18 North American Investment Grade index was 4 bps tighter at a spread of 94 bps on Tuesday.

The secondary market, seeming to have "stalled" throughout the day, saw activity in Goldman Sach's 30-year bond due 2037.

RBC's covered bonds

RBC priced $2.5 billion of 1.2% five-year covered bonds in the U.S. market to yield mid-swaps plus 35 bps, a market source said.

The deal was priced in line with talk in the mid-30 bps over mid-swaps area. There was upwards of $5 billion on the books for the offering, the source said.

The bonds (Aaa/AAA) were registered with the Securities and Exchange Commission, the source said, adding that this is rare for covered bonds.

Bookrunners were Morgan Stanley & Co. LLC, RBC Capital Markets LLC and RBS Securities Inc.

The financial services company is based in Toronto.

MetLife prices floaters

MetLife tapped the market for $1.75 billion of floating-rate notes (Aa3/AA-/AA-) in two maturities, a source away from the deal said.

The sale included $1 billion of one-year floaters priced by MetLife Institutional Funding at par to yield Libor plus 10 basis points.

A $750 million tranche of floaters due 2014 sold by MetLife Global Funding priced at par to yield at Libor plus 35 bps.

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

Bank of America Merrill Lynch and U.S. Bancorp Investments Inc. were bookrunners.

The unit of insurance and employee benefits company MetLife, Inc. is based in New York City.

Infinity Property's 10-years

Infinity Property & Casualty was in the market with an upsized $275 million deal of 5% 10-year senior notes, pricing them at par to yield 5%, an informed source said.

The deal size was increased from $250 million.

The notes (Baa2/BBB/BBB) were sold at a spread of Treasuries plus 323.5 bps.

Barclays and Goldman Sachs & Co. were bookrunners.

Proceeds from the sale are being used to redeem up to $210 million of 5.5% 10-year notes due on Feb. 18, 2014 and for general corporate purposes.

The holding company for personal auto insurance subsidiaries is based in Birmingham, Alabama.

Washington REIT upsizes

Washington REIT priced an upsized $300 million of 3.95% 10-year notes (Baa2/BBB/) to yield Treasuries plus 225 bps, a source close to the trade said.

There was roughly $1.25 billion in demand for the bonds, which caused both the upsizing and the tightening of the spread from initial talk.

The size of the deal was increased from $250 million. There was price guidance in the 250 bps area, with the bonds selling tighter than that level.

Bookrunners were Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

Proceeeds are being used to repay borrowings under lines of credit and for general corporate purposes.

The equity REIT for a variety of property types is based in Rockville, Md.

Pefco's reopening

Private Export Funding reopened its offering of 1.375% exempt secured notes due in February of 2017 to add $150 million, a market source said.

The notes (Aaa/AA+/) were priced at a spread of Treasuries plus 19 bps.

Bookrunner was U.S. Bancorp Investments Inc.

The company assists with financing U.S. exports through private capital and is based in New York City.

Danske Bank plans deal

Danske Bank is pricing 25-year Tier 2 senior notes under Regulation S, a market source said.

The notes (Baa1/A-/) are expected to price on Thursday, the source said.

Bookrunners are BNP Paribas Securities Corp., Danske Bank, HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC and UBS Securities LLC.

The financial services company is based in Copenhagen.

BNY Mellon's preferreds

The Bank of New York Mellon sold $550 million of 5.2% series C noncumulative perpetual preferreds, a market source said.

The shares will be issued as depositary shares representing a 1/4,000th interest.

Liquidation preference is $100,000 per share.

Price talk was around 5.25% as of midday, a trader said, and the notes were sold tighter than that level. The size of the deal was increased from $250 million.

"I'd rather own them than State Street at 5.25%," the trader said. When asked why, he said that BNY Mellon had "a better model" and was holding "a lot of money just as a clearinghouse."

He said the company posed a lower risk and that it was "easier to quantify return on capital."

He saw the proposed issue trading at less 15 cents bid, less a dime offered in the gray market.

BNY Mellon will apply to list the preferreds on the New York Stock Exchange under the ticker symbol "BKPC."

Bank of America Merrill Lynch, Citigroup Global Markets Inc., Goldman Sachs & Co., JPMorgan Securities LLC and BNY Mellon Capital Markets LLC were bookrunners.

Proceeds will be used for general corporate purposes. Some of the proceeds might be contributed to subsidiaries to be used for general corporate purposes.

BNY Mellon is a New York-based financial services firm.

Goldman Sachs firms

Seeing active trading on Wednesday, Goldman Sachs' 30-year bond due 2037 closed the session 4 bps tighter at 333 bps bid.

Goldman priced the $2.5 billion 6.75% bond at 190 bps over Treasuries in September 2007.

Stephanie N. Rotondo contributed to this review

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