Nomura prices first U.S. deal, Enbridge, Rentenbank sell notes; Nomura, Enbridge up in trading

By Andrea Heisinger and Cristal Cody

New York, Feb. 25 - Nomura Holdings, Inc., Enbridge Energy Partners, LP and Landwirtschaftliche Rentenbank AG each priced bonds on an otherwise weak Thursday in the high-grade bond market.

Nomura's sale totaling $3 billion went overnight from Wednesday and then priced late in the day Thursday. It was made up of $1.5 billion each of five-year and 10-year notes. The amount of time it took for the sale to get done may have had to do with it being the financial's first dollar-denominated bond issue and a lack of outstanding notes to price off.

"I think they were just going with what recent [financials] of those maturities priced at," a syndicate source away from the deal said. "Otherwise, I don't really know why it took so long.

Enbridge sold $500 million of 10-year notes in the afternoon. The deal priced tight to talk and was about seven times oversubscribed.

Rentenbank priced $1 billion of four-year notes under Rule 144A.

Market conditions worsened through the day, but deals got done anyway.

"It was kind of bad out there, but we still had stuff price," a market source said.

Investors and traders found plenty of activity in Treasuries on Thursday but investment-grade secondary activity slid nearly 20% to about $11 billion in overall volume, according to sources.

"Tough to get much done with Treasuries on fire," one trader said.

Treasuries were tighter on the day. The yield on the 10-year Treasury note firmed 6 bps to 3.63%. Also, the yield on the 30-year Treasury bond was tighter at 4.58% from 4.64%.

Meanwhile, the CDX Series 13 North American high-grade index was slightly weaker by 1 bp at a mid bid-asked spread level of 94 bps, a source reported.

In secondary trading, new paper from Nomura and Enbridge tightened, according to sources. Elsewhere in the secondary, debt from Coca-Cola Co. and Coca-Cola Enterprises Inc. moved little on the companies' deal news, a trader noted.

Nomura sells first dollar bonds

Nomura Holdings sold $3 billion of senior notes (Baa2/BBB+) in two tranches late in the day in the Japanese financial's first dollar-denominated offering in the U.S. market, a source away from the offering said.

The sale went overnight after being announced early on Wednesday, and priced late in the day.

A $1.5 billion tranche of 5% five-year notes priced to yield 275 bps over Treasuries. That was wide to initial price whispers of the 262.5 bps area, a source said late on Wednesday.

The $1.5 billion of 6.7% 10-year notes sold at a spread of Treasuries plus 310 bps. They were talked at the 287.5 bps area, and priced wide to that.

There appeared to be considerable interest in the sale as of early Thursday, a source said, with about $10 billion on the books. The amount of time it took to price was "not a problem of demand," a source said.

Proceeds are being used for general corporate purposes.

Nomura Securities is bookrunner, with Bank of America Merrill Lynch and Citigroup Global Markets as senior co-managers.

The financial services company is based in Tokyo, Japan.

Enbridge sells 10-years

Enbridge Energy Partners priced $500 million of 5.2%10-year senior unsecured notes (Baa2/BBB) by mid-afternoon at Treasuries plus 155 bps.

They priced at the tight end of talk for a spread in the 160 bps area, the source said, after being launched at 155 bps. There was about $3.5 billion in orders on the books.

Citigroup Global Markets, Morgan Stanley & Co. and Wells Fargo Securities were bookrunners.

Proceeds are being used to repay a portion of commercial paper and credit facility borrowings used to finance a portion of capital expansion projects.

The oil and petroleum transport and storage company is based in Houston.

Deals price despite weaker market

Market tone dipped in the morning, a source said, calling it "noticeably weaker."

A new deal from Nomura took nearly two full days to get done, after being announced early Wednesday.

It was likely not the weak market that made the deal take so long, a source said.

"I think the books were large, and it was their first [U.S. dollar bond deal]," he said. "It just took some time."

A syndicate source said that, thankfully, the high-grade bond market did not mirror a drop on the equity market.

There are no deals set to price on Friday, with most issuers planning to wait until the coming week.

Two syndicate sources - one from a small desk and another from a large one - said that they had full calendars coming up.

"It's supposed to pick up substantially," the source from the smaller desk said, adding that "it's about time."

Rentenbank prices $1 billion

Germany's Rentenbank sold $1 billion of four-year notes (Aaa/AAA/AAA) early in the day to yield Treasuries plus 95.3 bps, a source away from the sale said.

Full terms were not available at press time as the deal was done off London syndicate desks.

The notes were sold via Rule 144A.

Barclays Capital, HSBC Securities and RBC Capital Markets were bookrunners.

The lender to Germany's agriculture and food industry is based in Frankfurt.

Nomura gains

Nomura Holdings' new notes firmed more than 20 basis points in secondary trading after pricing Thursday afternoon, a source said.

The $3 billion of notes in two tranches includes $1.5 billion of notes due 2015, which priced at Treasuries plus 275 bps, and $1.5 billion of notes due 2020, which priced at Treasuries plus 310 bps.

The five-year notes firmed in late trading, with one source "seeing 255 bps" near the market close.

In addition, the 10-year notes tightened to 283 bps, according to the source.

"Nice trade for someone," one trader said. "There seems to be a lot of gray market activity, especially in the 10-years."

Enbridge firms

The $500 million of 5.2% notes due 2020 that Enbridge Energy priced earlier in the day also tightened strongly in the secondary market, according to a trader.

Enbridge priced the notes at Treasuries plus 155 bps. As the market neared the close, the notes firmed to 143 bps bid, 141 bps offered, the trader said.

Coca-Cola paper unfazed

Meanwhile on Thursday, Coca-Cola reversed course and said it would acquire the North American operations of its largest bottler, Coca-Cola Enterprises, after PepsiCo, Inc. announced plans to buy out its two largest bottlers last year.

But high-grade debt from Coca-Cola or Coca-Cola Enterprises saw little activity in the secondary, according to sources.

"There wasn't much trading at all in either today," one trader said.

Under the terms of the deal, Atlanta-based Coca-Cola will give up is 34% stake in the bottler and assume $8.88 billion of Coca-Cola Enterprises' debt. Also, Coca-Cola will sell its bottling operations in Norway and Sweden for $822 million to Coca-Cola Enterprises. Shareholders of Coca-Cola Enterprises will get one share of the new European-focused bottling company and $10 a share in cash.

Coca-Cola Enterprises also gains an option to buy Coca-Cola's 83% stake in its German bottling operations. The company plans to issue debt to fund the acquisitions.

"We will initially issue $2 billion [resulting] in net debt to EBITDA of 1.7 times. Long-term [we'll] operate within 2½ to 3 times of net debt EBITDA," Bill Douglas, Coca-Cola Enterprises' chief financial officer, said on a conference call with analysts on Thursday to discuss the deal.

The transaction is expected to produce cost-savings and give Coca-Cola control of about 90% of its North American bottling operations.

The deals are expected to close in the fourth quarter.

PepsiCo's $7.8 billion takeovers of Pepsi Bottling Group Inc. and PepsiAmericas Inc. are expected to close later this month.

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