NAB, KeyBank join DDR, Aon in primary market; CBL, DDR notes tighten in trading

By Cristal Cody and Aleesia Forni

Virginia Beach, Nov. 21 - The high-grade primary market showed no signs of a slowdown on Thursday, as issuers came to the market to price roughly $3.8 billion of new paper.

National Australia Bank hit the primary with a $2 billion sale of bonds in two parts, according to an informed source.

The bank sold $750 million of three-year floaters at par to yield Libor plus 43 basis points and a $1.25 billion 2% covered bond due 2019 at mid-swaps plus 47 bps.

Meanwhile, KeyBank NA sold a $750 million issue of three-year senior notes in two parts on Thursday.

There was $400 million of three-year floaters sold at par to yield Libor plus 49 bps.

A second tranche was $350 million of 1.1% notes sold at Treasuries plus 58 bps.

The session also saw CBL & Associates LP price an upsized issue of $450 million of 5.25% 10-year senior notes at Treasuries plus 260 bps.

Aon plc was also in Thursday's market with an upsized issue, selling $350 million issue of 4% senior notes due 2023 at Treasuries plus 125 bps.

The deal was priced 20 bps tighter than original guidance, according to a market source.

In other primary action, DDR Corp. sold $300 million of 3.5% senior notes due 2021 at Treasuries plus 150 bps.

Freddie Mac hit the primary to price $2 billion of floaters on Thursday at one-month Libor minus 1 bps, a source said.

Demand for new deals continues to be solid, with many of the day's trades tightening significantly from original guidance.

Aon's new issue was sold 20 bps tighter than original guidance, according to a market source.

A syndicate source noted that KeyBank's fixed-rate notes priced "about 10 [bps] tighter than guidance," and the deal was nearly three times oversubscribed.

KeyBank's short-dated notes priced on Thursday were not seen in late afternoon secondary trading, according to market sources.

CBL's 5.25% notes due 2023 sold earlier in the day traded more than 10 bps better on the offered side, a trader said.

In other secondary trading, Aon's 4% senior notes due 2023 and DDR's 3.5% notes due 2021 tightened on the offered side, according to a trader.

NAB sells $2 billion

National Australia Bank priced $2 billion of bonds in two parts on Thursday, according to an informed source.

The sale included $750 million of three-year floating-rate notes priced at par to yield Libor plus 43 bps.

There was also a $1.25 billion 2% covered bond due 2019 priced with a spread of mid-swaps plus 47 bps, or 99.908, to yield 2.019%.

Both tranches were sold in Rule 144A and Regulation S deals.

Barclays, BofA Merrill Lynch, J.P. Morgan Securities LLC and National Australia Bank were the joint bookrunners.

Melbourne, Australia-based National Australia Bank is the nation's largest lender.

KeyBank two-parter

Also on Thursday, KeyBank priced $750 million of senior notes (A3/A-/A-) due 2016 in two tranches, according to an informed source.

The deal included $350 million of 1.1% notes due 2016 priced at Treasuries plus 58 bps, or 99.924, to yield 1.12%.

Pricing was at the tight end of talk.

There was also a $400 million tranche of three-year floaters sold at par to yield Libor plus 49 bps.

Credit Suisse Securities (USA) LLC, JPMorgan, Morgan Stanley & Co. LLC and Keybanc Capital Markets LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes.

KeyBank is a Cleveland-based financial services company.

CBL upsizes

There was also a new issue from CBL & Associates on Thursday.

The company sold an upsized $450 million of 5.25% 10-year senior notes (Baa3/BBB-/) with a spread of Treasuries plus 260 bps, according to a syndicate source.

CBL originally planned to sell $250 million of notes.

Pricing was at 98.972 to yield 5.384%.

The notes sold at the tight end of talk.

CBL's 5.25% notes due 2023 headed out in secondary trading at 248 bps offered, a trader said.

JPMorgan, U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC were the joint bookrunners.

Proceeds will be used to reduce amounts outstanding under the company's revolving credit facilities and for general business purposes.

The notes will be guaranteed by CBL & Associates Properties Inc.

CBL is a Chattanooga, Tenn.-based owner and developer of malls and shopping centers.

Aon prices tight

Aon came to Thursday's primary market to price an upsized $350 million issue of 4% senior notes (Baa2/A-/BBB+) due 2023 at Treasuries plus 125 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.649 to yield 4.043%.

The notes priced at the tight end of talk.

Aon's 4% senior notes tightened to 121 bps offered in secondary trading, a trader said.

BofA Merrill Lynch, Deutsche Bank Securities Inc., JPMorgan and Morgan Stanley were the bookrunners.

Proceeds will be used to repay commercial paper and for general corporate purposes.

The notes are guaranteed by London-based Aon's subsidiary, Aon Delaware.

The professional services company was last in the U.S. bond market with a $250 million sale of 4.45% 30-year notes priced at 137.5 bps over Treasuries on May 21.

DDR new issue

Meanwhile, DDR was in Thursday's session with a $300 million sale of 3.5% senior notes (Baa2/BBB-/BBB/) due 2021 priced at Treasuries plus 150 bps, according to a syndicate source and an FWP filing with the SEC.

Pricing was at 99.327 to yield 3.607%.

The notes sold at the tight end of talk.

DDR's 3.5% notes traded at 146 bps offered, said a trader late in the day.

Citigroup Global Markets Inc., Wells Fargo Securities, U.S. Bancorp Investments, RBS Securities Inc. and Scotia Capital (USA) Inc. were the joint bookrunners.

The company intends to use proceeds from the offering to repay debt under its $750 million unsecured revolving credit facility and for general corporate purposes, which may include the repayment of secured and unsecured debt.

The real estate investment trust is based in Beachwood, Ohio.

Freddie Mac sells floaters

Freddie Mac priced $2 billion of floating-rate notes on Thursday at one-month Libor minus 1 bps, according to an informed source.

Deutsche Bank Securities, JPMorgan and Nomura Securities Co. Ltd. were the joint bookrunners.

The government-backed mortgage buyer is based in McLean, Va.

Bank/brokerage CDS costs fall

Investment-grade bank and brokerage CDS prices fell on Thursday, according to a market source.

Bank of America Corp.'s CDS costs firmed 3 bps to 85 bps bid, 88 bps offered. Citigroup Inc.'s CDS costs tightened 3 bps to 83 bps bid, 86 bps offered. JPMorgan Chase & Co.'s CDS costs declined 2 bps to 76 bps bid, 79 bps offered. Wells Fargo & Co.'s CDS costs were flat at 47 bps bid, 54 bps offered.

Merrill Lynch's CDS costs tightened 3 bps to 85 bps bid, 90 bps offered. Morgan Stanley's CDS costs declined 4 bps to 101 bps bid, 104 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 1 bp to 107 bps bid, 110 bps offered.

Paul Deckelman contributed to this review.

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