Celgene does $8 billion deal for Receptos acquisition; bank, financial paper tighten

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 3 – Celgene Corp. was the highlight of Monday’s investment-grade bond market, pricing $8 billion of bonds to help finance its acquisition of Receptos, Inc.

The deal’s order book was more than three times oversubscribed, and tranches of the sale sold between 15 basis points to 25 bps tight of initial guidance.

Away from the megadeal, the primary market was mostly quiet to kick off the month of August.

Kimberly-Clark Corp. offered a $550 million two-part offering of senior notes, while J.B. Hunt Transport Services, Inc. priced its new $350 million seven-year note around 15 bps tight of price thoughts.

In total, the high-grade primary hosted $8.9 billion of new issuance during the session.

Sources are calling for around $25 billion to $30 billion of supply for the month’s opening week.

Investment-grade bank and financial paper traded mostly better on Monday, while credit spreads opened the session softer and continued to leak wider over the day, sources said.

Bank of America Corp.’s 4% notes due 2025 traded 6 bps better during the session.

JPMorgan Chase & Co.’s 3.125% notes due 2025 tightened 5 bps over the day.

Citigroup Inc.’s 3.3% senior notes due 2025 headed out 2 bps tighter in secondary trading.

The three-month Libor yield rose 1 bp to 31 bps on Monday.

The Markit CDX North American Investment Grade index eased 2 bps over the day to a spread of 72 bps.

Celgene prices $8 billion

Celgene led the primary market on Monday, pricing an $8 billion offering of senior notes (Baa2/BBB+) in five parts, according to a market source.

A $1 billion tranche of 2.125% three-year notes sold at 99.994 to yield 2.127%, or Treasuries plus 115 bps.

The notes sold at the tight end of the Treasuries plus 120 bps area guidance, which tightened from the Treasuries plus 140 bps area talk.

A $1.5 billion 2.875% five-year note sold at 140 bps over Treasuries. The issue priced at 99.819 to yield 2.914%.

The notes were guided in the area of Treasuries plus 145 bps, and initial talk was in the Treasuries plus 160 bps area.

Also, $1 billion of 3.55% notes due 2022 sold with a spread of 170 bps over Treasuries. Pricing was at 99.729 to yield 3.594%.

Pricing was at the tight end of the Treasuries plus 185 bps area guidance after having firmed from the Treasuries plus 185 bps area.

The company also issued $2.5 billion of 3.875% notes due 2025 at 99.034 to yield 3.993% with a spread of Treasuries plus 185 bps.

The issue came at the tight end of the Treasuries plus 190 bps area guidance. The notes were initially talked in the Treasuries plus 200 bps area.

Finally, $2 billion of 5% notes due 2045 sold at 215 bps over Treasuries. Pricing was at 99.691 to yield 5.02%.

Price guidance was set in the Treasuries plus 220 bps area, which tightened from the Treasuries plus 230 bps area.

Bookrunners were J.P. Morgan Securities LLC, BofA Merrill Lynch, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Barclays, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and Morgan Stanley & Co. LLC.

Proceeds will be used to help finance its acquisition of Receptos, with any remaining proceeds to be used for general corporate purposes.

The global biopharmaceutical company is based in Summit, N.J.

Kimberly-Clark two-parter

Also on Monday, Kimberly-Clark sold $550 million of senior notes (A2/A/A) in two parts, according to a market source and an FWP filed with the Securities and Exchange Commission.

The offering included $250 million of 2.15% five-year notes priced at 65 bps over Treasuries. The issue sold at 99.957 to yield 2.159%.

Price guidance was set in the range of Treasuries plus 65 bps to 70 bps, having firmed from initial talk in the range of 75 bps to 80 bps over Treasuries.

Also, $300 million of 3.05% 10-year notes priced at 99.631 to yield 3.093% with a spread of 95 bps over Treasuries.

The notes sold at the tight end of the 95 bps to 100 bps over Treasuries guidance. Initial talk was in the 105 bps to 110 bps range over Treasuries.

The bookrunners were Deutsche Bank Securities and Goldman Sachs.

Proceeds will be used to repay $300 million of 4.875% notes due Aug. 15, 2015 and to repay commercial paper debt.

The consumer paper products company is based in Irving, Texas.

J.B. Hunt seven-years

Rounding out the day’s primary activity, J.B. Hunt priced $350 million of 3.3% seven-year senior notes (Baa1/BBB+/) at Treasuries plus 145 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 99.126 to yield 3.34%.

The notes sold at the tight end of the Treasuries plus 150 bps area guidance, which firmed from initial price talk set in the 160 bps area over Treasuries.

Goldman Sachs, JPMorgan and Morgan Stanley are the bookrunners for the issue, which is guaranteed by J.B. Hunt Transport, Inc.

Proceeds will be used to repay $250 million of 3.375% notes due Sept. 15, 2015, to repay $97 million of long-term debt outstanding under a revolving credit agreement and for other general corporate purposes, including capital expenditures, additions to working capital and the repurchase of common stock.

J.B. Hunt is a Lowell, Ark.-based full truckload transportation and delivery service company.

Bank of America firms

Bank of America’s 4% notes due 2025 tightened 6 bps in secondary trading to 202 bps bid on Monday, according to a market source.

Bank of America sold $2.5 billion of the notes (Baa2/A-/A) on Jan. 16, 2015 at Treasuries plus 225 bps.

The financial services company is based in Charlotte, N.C.

JPMorgan better

JPMorgan Chase’s 3.125% notes due 2025 were quoted at 141 bps bid in late afternoon trading, 5 bps better on the day, according to a market source.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Jan. 16, 2015 at 145 bps over Treasuries.

The financial services company is based in New York City.

Citigroup improves

Citigroup’s 3.3% senior notes due 2025 firmed 2 bps to 156 bps bid in the secondary market, a source said.

Citigroup sold $1.5 billion of the notes (Baa2/A-/A) on April 22 at Treasuries plus 135 bps.

The investment bank is based in New York.

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