KeyCorp prices $450 million preferreds; steady bond supply eyed; Walmart notes firm

By Cristal Cody

Tupelo, Miss., April 22 – KeyCorp priced an upsized $450 million of 5.625% $25-par perpetual non-cumulative redeemable preferred stock on Monday in the day’s sole reported investment-grade offering.

Activity stayed fairly quiet over the session with several financial markets including in Europe closed for Easter Monday observance, sources report.

The Markit CDX North American Investment Grade 32 index softened modestly over the day to a spread of 57 basis points.

The week is expected to see a seasonal $15 billion to $25 billion of issuance, according to a BofA Merrill Lynch report released on Friday.

Corporate issuers priced about $19 billion of investment-grade bonds last week ahead of the early U.S. market close on Thursday and Good Friday holiday.

Bank and financial supply was in focus in the past week with deals from issuers including Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co.

The four largest U.S. banks issued $8.75 billion of dollar-denominated notes, €1 billion of euro-denominated notes and C$1 billion of Canadian dollar-denominated notes following first quarter earnings reports last week, while the “brokers have not yet,” BofA Merrill Lynch analysts note in the note.

In the secondary market, financial paper traded mostly flat to softer on Monday, a source said.

Walmart Inc. 3.25% notes due July 8, 2029 priced last week tightened 2 bps.

KeyCorp prints

KeyCorp priced an upsized $450 million of 5.625% $25-par series G non-cumulative redeemable preferred shares (Baa3/BB+/BB) on Monday, according to a market source and an FWP filed with the Securities and Exchange Commission.

The company sold 18 million depositary shares in the offering. Each depositary share represents 1/40th of a share of the series G preferred stock.

The preferreds priced on top of guidance and came tighter than initial talk in the 5.75% to 5.875% area. The deal was upsized from $200 million.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., UBS Securities LLC and Wells Fargo Securities LLC were the bookrunners.

Cleveland, Ohio-based KeyCorp is a financial services company and parent company of KeyBank.

Walmart improves

In secondary trading, Walmart’s 3.25% notes due July 8, 2029 improved 2 bps to 63 bps bid from where the notes were last seen on Thursday, according to a market source.

The notes traded flat at 65 bps bid ahead of Thursday’s early market close and Good Friday holiday.

Walmart sold $1.25 billion of the notes (Aa2/AA/AA) on Tuesday at a Treasuries plus 67 bps spread.

Price guidance was in the Treasuries plus 70 bps area, with initial talk at the Treasuries plus low 80 bps area.

The discount retailer is based in Bentonville, Ark.

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