Southwest, BPCE, ICE price despite government shutdown; new issues tighten in trading

By Cristal Cody and Aleesia Forni

Virginia Beach, Oct. 1 - The U.S. government shutdown did little to keep issuers away from the high-grade primary market on Tuesday, as Southwest Gas Corp., France's BPCE SA and IntercontinentalExchange Group Inc. sold new deals during the session.

The day's largest trade came from IntercontinentalExchange, which priced $1.4 billion of notes in two tranches at the tight end of talk.

The deal included $600 million of five-year 2.5% notes sold at Treasuries plus 100 basis points and $800 million of 10-year 4% notes sold at 145 bps over Treasuries.

In other primary action, BPCE sold a $400 million tap of its floating-rate notes due 2016 to yield Libor plus 83 bps.

There was also a new deal from Southwest Gas, which priced a $250 million issue of senior notes due 2043 at Treasuries plus 112.5 bps. The notes priced at the tight end of talk.

KfW also came to Tuesday's primary with $1 billion of floating-rate notes due 2014 sold at par to yield Federal Funds rate plus 5 bps.

One syndicate source said the market "should see a good amount of [primary] activity" on Wednesday, though he was skeptical the week's issuance would reach the previously expected $20 billion.

Investment-grade bonds and bank and brokerage credit default swaps costs tightened on Tuesday, according to market sources.

The Markit CDX North American Investment Grade series 21 index firmed 2 bps to a spread of 80 bps. Investment-grade bond spreads closed 2 bps tighter on a month-over-month basis, according to a market source.

Bonds traded flat over the morning session with little reaction to the government shutdown, sources said.

"It was dead quiet," one source said.

In the secondary market late afternoon, Southwest Gas' new 4.875% 30-year bonds tightened 2½ bps, a trader said.

ICE Group's two tranches of notes due 2018 and 2023 traded stronger going out.

ICE prices tight

IntercontinentalExchange Group came to the primary on Tuesday selling a two-part offering of notes (A3/A/) in five- and 10-year tranches, according to a market source and an FWP filed with the Securities and Exchange Commission.

Both tranches priced at the tight end of talk.

The company priced $600 million of 2.5% notes due 2018 with a spread of Treasuries plus 100 bps, or 99.911, to yield 2.519%.

An $800 million tranche of 4% notes due 2023 was sold at 145 bps over Treasuries.

Pricing was at 99.225 to yield 4.095%.

In secondary trading, ICE Group's 2.5% notes due 2018 firmed to 103 bps bid, a trader said.

The company's tranche of 4% notes due 2023 traded tighter at 139 bps bid.

BofA Merrill Lynch, Wells Fargo Securities LLC, BMO Capital Markets Corp. and Mitsubishi UFJ Securities (USA) Inc. were the joint bookrunners.

Proceeds will be used to fund the merger of IntercontinentalExchange Inc. and NYSE Euronext Inc.

IntercontinentalExchange is an Atlanta-based operator of regulated futures exchanges, trading platforms and clearing houses.

KfW sells $1 billion

Meanwhile, KfW sold $1 billion of floating-rate notes (Aaa/AAA/AAA) due Oct. 30, 2014 at par on Tuesday to yield Federal Funds rate plus 5 bps, according to an FWP filed with the SEC.

Barclays and Goldman Sachs International managed the sale.

The German government-owned development bank is based in Frankfurt.

BPCE taps floaters

Another overseas issuer, BPCE, priced a $400 million add-on to its floating-rate senior notes due April 25, 2016 at 101.074 to yield Libor plus 83 bps on Tuesday, according to a market source.

The notes have a coupon of Libor plus 125 bps.

BofA Merrill Lynch, Morgan Stanley & Co. LLC and Natixis Securities America LLC were the joint bookrunners.

The financial services company is based in Paris.

Southwest's 30-year notes

Southwest Gas sold $250 million of 30-year senior notes (Baa1/A-/A) on Tuesday with a spread of Treasuries plus 112.5 bps, according to an FWP filing with the SEC.

The notes priced at the tight end of talk, which was set in the area of Treasuries plus 115 bps. Pricing was at 99.922 to yield 4.88%.

Southwest Gas' 4.875% notes due 2043 tightened late afternoon in the secondary market to 110 bps bid, 107 bps offered, a trader said.

Proceeds will be used to repay debt under a credit facility.

Joint bookrunners were KeyBanc Capital Markets, Mitsubishi UFJ Securities and U.S. Bancorp Investments Inc.

The natural gas distributor is based in Las Vegas.

Bank/brokerage CDS costs firm

Investment-grade bank and brokerage CDS costs tightened on Tuesday, according to a market source.

Bank of America Corp.'s CDS costs firmed 3 bps to 102 bps bid, 107 bps offered. Citigroup Inc.'s CDS costs came in 6 bps to 93 bps bid, 98 bps offered. JPMorgan Chase & Co.'s CDS costs tightened 4 bps to 87 bps bid, 92 bps offered. Wells Fargo & Co.'s CDS costs closed 2 bps firmer at 60 bps bid, 65 bps offered.

Merrill Lynch's CDS costs firmed 2 bps to 96 bps bid, 101 bps offered. Morgan Stanley's CDS costs went out 4 bps tighter at 133 bps bid, 138 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 5 bps to 124 bps bid, 127 bps offered.

Paul Deckelman contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.