United Technologies sells $4 billion; Kimberly-Clark prices; bank, financial paper better

By Cristal Cody

Tupelo, Miss., May 1 – United Technologies Corp. and Kimberly-Clark Corp. tapped the investment-grade primary market on Monday.

United Technologies sold $4 billion of fixed-rate senior notes in five tranches and dropped a floating-rate tranche from the final deal.

Kimberly-Clark came with $350 million of 30-year senior notes.

Also on Monday, PepsiCo Inc. priced C$750 million of seven-year senior notes in a deal that follows the company’s $3 billion dollar-denominated five-tranche notes sale on Thursday.

High-grade deal volume is expected to be strong on Tuesday, a market source said.

About $25 billion to $30 billion of U.S. bond volume is expected over the week.

The Markit CDX North American Investment Grade index ended the day less than 1 basis point tighter at a spread of 63 bps.

In secondary activity, bank and financial paper traded mostly better.

BB&T Corp.’s 2.75% senior medium-term notes due April 1, 2022 tightened about 5 bps.

Mitsubishi UFJ Financial Group, Inc.’s 3.677% senior notes due Feb. 22, 2027 firmed 2 bps.

Citigroup, Inc.’s 4.75% subordinated notes due May 18, 2046 traded 3 bps better.

United Technologies prices

United Technologies sold $4 billion of fixed-rate senior notes (A3/A-) in five tranches on Monday, according to a market source and an FWP filing with the Securities and Exchange Commission.

In the first tranche, United Technologies priced $1 billion of 1.9% three-year notes at 99.951 to yield 1.917% and a spread of Treasuries plus 45 bps.

The company sold $500 million of 2.3% five-year notes at 99.779 to yield 2.347% or Treasuries plus 50 bps.

United Technologies placed $800 million of 2.8% seven-year notes at 99.792 to yield 2.833%. The notes priced with a spread of 70 bps over Treasuries.

The $1.1 billion tranche of 3.125% 10-year notes priced at par to yield a spread of Treasuries plus 80 bps.

In the final tranche, the company sold $600 million of 4.05% 30-year notes at 99.724 to yield 4.066%, or Treasuries plus 105 bps.

The tranches all priced on the tight side of guidance.

BofA Merrill Lynch, Citigroup Global Markets Inc., Goldman Sachs & Co., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, BNP Paribas Securities Corp., Deutsche Bank Securities Inc., Mizuho Securities USA Inc., Morgan Stanley & Co. LLC, RBC Capital Markets Corp. and Wells Fargo Securities LLC were the bookrunners.

Proceeds will be used to repay at maturity the company’s $1.5 billion 1.8% notes due June 1, 2017, to repay commercial paper and for general corporate purposes.

United Technologies is a Hartford, Conn.-based company that provides technology products and services to the building and aerospace industries.

Kimberly-Clark sells bonds

Kimberly-Clark sold $350 million of 3.9% 30-year senior notes (A2/A/A) on Monday at 99.282 to yield 3.941%, according to a market source and an FWP filing with the SEC.

The notes priced with a spread of 93 bps over Treasuries, on the tight side of guidance.

J.P. Morgan Securities, Citigroup Global Markets, Morgan Stanley and Goldman Sachs were the bookrunners.

Kimberly-Clark may redeem the notes with a make-whole call until six months before maturity and then a par call.

Proceeds will be used for general corporate purposes, including to repay a portion of the company’s $950 million of 6.125% notes due Aug. 1, 2017 and a portion of its commercial paper.

The consumer paper products company is based in Irving, Texas

PepsiCo places C$750 million

PepsiCo priced C$750 million of 2.15% seven-year senior notes (A1/A+/A) on Monday at 99.935 to yield 2.16% in an SEC-registered offering, according to a market source.

The notes priced with a spread of 87 bps versus the interpolated Government of Canada bond curve.

HSBC Securities (Canada) Inc., RBC Dominion Securities Inc. and TD Securities Inc. were the bookrunners.

PepsiCo announced the Canadian dollar-denominated offering on Thursday when it priced a $3 billion dollar-denominated five-part offering of notes.

Proceeds from the Canadian deal will be used for general corporate purposes, including the repayment of commercial paper, according to a 424B2 filed with the Securities and Exchange Commission.

PepsiCo is a Purchase, N.Y.-based food and beverage company.

BB&T tightens

BB&T’s 2.75% notes due April 1, 2022 traded about 5 bps tighter on Monday at 61 bps bid, a market source said.

The company priced $1 billion of the five-year notes (A2/A-/A+) on March 16 at a spread of 75 bps over Treasuries.

The bank and financial services company is based in Winston-Salem, N.C.

MUFG firms

Mitsubishi UFJ Financial’s 3.677% notes due Feb. 22, 2027 tightened 2 bps during the session to 106 bps bid, a market source said.

The $1 billion tranche of 10-year notes (A1/A/A) priced on Feb. 15 at a Treasuries plus 118 bps spread.

The bank is based in Tokyo.

Citigroup better

Citigroup’s 4.75% subordinated notes due May 18, 2046 (Baa3/BBB/A-) firmed 3 bps in the secondary market on Monday to 182 bps bid, according to a market source.

The notes were priced on Feb. 7 in a $750 million add-on at a spread of 173 bps over Treasuries.

Citigroup originally sold $1 billion of the notes on May 11, 2016 at a spread of Treasuries plus 225 bps.

The financial services company is based in New York.

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