SMBC, TD Bank, Exelon bring deals during solid session; bank, financial paper tighten

By Aleesia Forni and Cristal Cody

Virginia Beach, Jan. 8 – The investment-grade bond market’s momentum continued on Thursday, with Sumitomo Mitsui Banking Corp., Kommunalbanken AS, Toronto-Dominion Bank, Exelon Generation Co. LLC and Nederlandse Waterschapsbank NV pricing new deals during another strong session.

Sumitomo Mitsui Banking’s new $2.25 billion of notes garnered an orderbook that was more than three times oversubscribed.

All three tranches of the new issue sold around 15 basis points to 20 bps tight of initial guidance.

Nederlandse Waterschapsbank sold its $1.5 billion of notes due 2018 in line with initial price guidance.

Toronto-Dominion Bank came to market with a $1.1 billion offering of two-year floaters.

The session also saw Kommunalbanken sell $1 billion of five-year notes and Exelon Generation price an upsized $750 million notes due 2020.

Both deals sold at the tight end of price talk.

Fannie Mae was also in Thursday’s market, pricing $3 billion of Benchmark Notes due Jan. 21, 2020.

Following a slower start to the week due to rocky market conditions, the high-grade primary has since roared to life, hosting more than $38 billion of new issuance.

Investment-grade credit spreads and bank and financial paper improved over the session, market sources said.

The Markit CDX North American Investment Grade series 23 index firmed 2 bps to a spread of 68 bps on Thursday.

Citigroup Inc.’s 3.75% notes due 2024 reversed losses from the start of the week and tightened nearly 10 bps in secondary trading.

Bank of America Corp.’s 4% notes due 2024 firmed 3 bps.

Goldman Sachs Group Inc.’s 3.85% notes due 2024 traded more than 5 bps better.

JPMorgan Chase & Co.’s 3.625% senior notes due 2024 firmed 5 bps in the secondary market.

SMBC sells $2.25 billion

Sumitomo Mitsui Banking priced $2.25 billion of notes (A1/A+/) in three tranches on Thursday, according to a market source.

The offering included $500 million of three-year floating-rate notes priced at par to yield Libor plus 58 bps.

There was also $750 million of 1.75% notes due 2018 priced at 80 bps over Treasuries.

Pricing was at 99.956 to yield 1.765%.

The notes sold at the tight end of talk, set in the 80 bps to 85 bps area after tightening from initial guidance in the 95 bps to 100 bps area.

A third tranche was $1 billion of 2.45% notes due 2020 sold at 99.832 to yield 2.486%, or 100 bps over Treasuries.

The issue sold at the tight end of the Treasuries plus 100 bps to 105 bps talk, which had firmed from initial guidance set in the 115 bps area.

Bookrunners were SMBC Nikko, Barclays, Citigroup Global Markets Inc., Goldman Sachs & Co. and J.P. Morgan Securities LLC.

Sumitomo Mitsui is a Tokyo-based financial services company.

NWB prices in line

Nederlandse Waterschapsbank priced $1.5 billion of 1.25% notes (Aaa/AA+/) due 2018 at mid-swaps plus 7 bps, a market source said.

The notes sold in line with talk.

Daiwa, JPMorgan and RBC Capital Markets LLC were the bookrunners.

The financial services company for the public sector is based in the Hague, the Netherlands.

TD Bank floaters

Toronto-Dominion Bank priced $1.1 billion of floating-rate senior medium-term notes (Aa1/AA-/AA-), series A, due 2017 at par to yield Libor plus 26 bps on Thursday, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes were guided in the high-20 bps area over Libor.

TD Securities (USA) LLC and Citigroup Global Markets were the joint bookrunners.

Proceeds will be added to the company’s general funds and used for general corporate purposes.

The financial services and banking company is based in Toronto.

Kommunalbanken new issue

Kommunalbanken priced a $1 billion offering of 1.625% five-year notes (Aaa/AAA/) at mid-swaps plus 9 bps, a market source said.

Pricing was at 99.528.

Talk was set in the 10 bps area over mid-swaps.

The sale was done under Rule 144A and Regulation S.

The bookrunners were BofA Merrill Lynch, JPMorgan, Morgan Stanley & Co. LLC and Nomura.

The government-funded lender to municipalities is based in Oslo.

Exelon upsizes

Exelon Generation priced an upsized $750 million of 2.95% senior notes (Baa2/BBB/BBB+) due 2020 with a spread of Treasuries plus 145 bps, according to a market source and an FWP filed with the SEC.

The notes were sold at the tight end of talk.

Pricing was at 99.981 to yield 2.954%.

Barclays, Morgan Stanley, Citigroup Global Markets, Credit Suisse Securities (USA) LLC and JPMorgan were the joint bookrunners.

Proceeds will be used to fund the optional redemption of Exelon’s $550 million of 4.55% senior notes due June 15, 2015 and for general corporate purposes.

The energy producer is a subsidiary of Chicago-based Exelon Corp.

Fannie Mae Benchmark Notes

Fannie Mae priced $3 billion of 1.625% Benchmark Notes due Jan. 21, 2020 at Treasuries plus 15.5 bps on Thursday, according to a company news release.

Price talk was set in the Treasuries plus 14.5 bps area.

Pricing was at 99.899 to yield 1.646%.

Barclays, Deutsche Bank Securities Inc. and JPMorgan were the joint lead managers.

The government-backed mortgage lender is based in Washington, D.C.

Citigroup stronger

Citigroup’s 3.75% notes due 2024 (Baa2/A-/A) tightened to 135 bps bid on Thursday, according to a market source.

The notes traded in Wednesday’s session at 144 bps offered.

Citigroup sold $1.25 billion of the 10-year notes on June 9, 2014 at Treasuries plus 115 bps.

The bank is based in New York City.

Bank of America improves

Bank of America’s 4% notes due 2024 (Baa2/A-/A) tightened 3 bps over the day to 139 bps bid, a market source said.

Bank of America sold $2.75 billion of the notes on March 27, 2014 at 137 bps plus Treasuries.

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

Goldman firms

Goldman Sachs’ 3.85% notes due 2024 (Baa1/A-/A) firmed about 6 bps to 142 bps bid, a source said.

Goldman Sachs sold $2.25 billion of the notes on June 30, 2014 at a spread of Treasuries plus 135 bps.

The financial services company is based in New York City.

JPMorgan tightens

JPMorgan’s 3.625% senior notes due 2024 (A3/A/A+) traded 5 bps better at 121 bps bid, according to a market source.

JPMorgan priced the $2 billion issue on May 6, 2014 at Treasuries plus 110 bps.

The financial services company is based in New York City.

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