HSBC, Council of Europe, NorthWestern continue flood of issuance; First American notes tighten

By Aleesia Forni and Cristal Cody

Virginia Beach, Nov. 5 – The pace of the investment-grade primary bond market showed no signs of a slowdown on Wednesday, with roughly $8.7 billion of issuance priced during the session.

This follows the roughly $20 billion of supply seen during the first two trading days of the new month.

HSBC USA Inc. brought to market a $2.4 billion four-part senior notes offering on Wednesday, with the two fixed-rate tranches pricing around 10 basis points tight of initial guidance.

Also on Wednesday, Council of Europe Development Bank sold a $1 billion five-year offering, while Fannie Mae came to market with $3.5 billion of Benchmark Notes.

Both NorthWestern Corp.’s new $450 million of 30-year first mortgage notes and Leggett & Platt Inc.’s new $300 million of 10-year notes sold at the tight end of price talk.

First American Financial Corp. sold a $300 million offering of bonds around 20 bps tight of guidance.

The session also saw Cytec Industries Inc. come to the primary with a $250 million issue of long five-year bonds.

Associated Banc-Corp was also in the market on Wednesday with a $500 million two-part note sale, though details were unavailable at press time.

Wednesday’s primary activity pushed the week’s total supply to nearly $29 billion of new issuance.

With the primary’s activity unlikely to slow during Thursday’s session ahead of Friday’s non-farm payrolls, the market is on pace to top sources’ expectations of a $30 billion week.

In the secondary market, First American’s 4.6% notes due 2024 tightened more than 10 bps in aftermarket trading, a trader said.

NorthWestern’s 4.176% first mortgage bonds due 2044 headed out better on the offered side, according to a trader.

Cytec’s 3.9% notes due 2025 tightened 2 bps in secondary trading.

Leggett & Platt’s 2.8% notes due 2024 were mostly flat, a trader said.

In other new issue trading, HSBC USA’s 2.375% notes due 2019 were quoted 2 bps tighter on the offered side.

The Markit CDX North American Investment Grade series 23 index was unchanged at a spread of 65 bps.

HSBC four-parter

HSBC USA priced $2.4 billion of senior notes (A2/A+/) in four tranches on Wednesday, according to an FWP filed with the Securities and Exchange Commission.

The sale included $350 million of three-year floaters priced at par to yield Libor plus 34 bps.

There was also a $750 million tranche of 1.5% three-year notes priced at 99.982 to yield 2.388%, or Treasuries plus 55 bps.

The bank also sold $350 million of five-year floating-rate notes at par to yield Libor plus 61 bps.

Finally, $1 billion of 2.375% notes due 2019 priced at 99.939 to yield 2.388%, or Treasuries plus 75 bps.

HSBC Securities (USA) Inc. was the bookrunner.

The bank plans to use proceeds for general corporate purposes.

In secondary trading, HSBC USA’s 2.375% notes due 2019 traded at 73 bps offered, a trader said.

The company’s other tranches of notes were not seen in secondary trading.

HSBC USA is subsidiary of HSBC Holdings, a London-based banking and financial services group.

CoE new issue

Council of Europe Development Bank priced $1 billion of 1.75% five-year global bonds (Aa1/AA+/AA+) at mid-swaps plus 1 bp, an informed source said.

Price talk was set in the mid-swaps plus 3 bps area.

The notes sold at 99.757 to yield 1.801%.

The bookrunners were Credit Agricole, HSBC Securities, Morgan Stanley & Co. LLC and TD Securities.

The financing and development institution for social projects in Europe is based in Paris.

NorthWestern mortgage bonds

NorthWestern Corp., doing business as NorthWestern Energy, priced $450 million of 4.176% first mortgage bonds due 2044 at par with a spread of Treasuries plus 112.5 bps, according to an FWP filed with the SEC.

The notes (A1/A-/A) sold at the tight end of price talk.

Credit Suisse Securities (USA) LLC, BofA Merrill Lynch and J.P. Morgan Securities LLC were the bookrunners.

Proceeds will be used for the company’s acquisition of PPL Montana, LLC's hydroelectric generating facilities and assets in Montana.

NorthWestern Energy’s 4.176% first mortgage bonds due 2044 traded at 105 bps offered in the secondary market, a trader said.

NorthWestern is an electricity and natural gas provider based in Sioux Falls, S.D.

First American prices tight

First American Financial priced $300 million of 4.6% senior notes (Baa3/BBB-/BBB) due 2024 on Wednesday at Treasuries plus 225 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 99.975 to yield 4.603%.

The notes sold at the tight end of price talk, which had firmed from guidance set in the mid-200 bps area over Treasuries.

The bookrunners were JPMorgan, Goldman Sachs & Co., U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC.

Proceeds will be used for general corporate purposes.

First American’s 4.6% notes due 2024 tightened to 214 bps bid, 212 bps offered in the secondary market, according to a trader.

The financial services, title insurance and settlement company is based in Santa Ana, Calif.

Leggett brings $300 million

Leggett & Platt priced $300 million of 3.8% senior notes (Baa1/BBB+/) due 2024 at Treasuries plus 148 bps, according to a market source and an FWP filed with the SEC.

Pricing was at the tight end of talk.

The notes sold at 99.744 to yield 3.831%.

The bookrunners were JPMorgan, Wells Fargo Securities, U.S. Bancorp Investments, MUFG and SunTrust Robinson Humphrey Inc.

Leggett & Platt’s 2.8% notes due 2024 traded flat at 148 bps bid, 147 bps offered in the secondary market, a trader said.

The company plans to use proceeds from the sale of the notes for general corporate purposes, which may include the repayment or refinancing of existing debt, including repayment of its 4.65% senior notes due Nov. 15, 2014 and commercial paper debt incurred for general corporate purposes, the funding of possible future acquisitions and/or stock repurchases.

The diversified manufacturer is based in Carthage, Mo.

Cytec offering

Cytec Industries priced $250 million of 3.95% senior notes (Baa2/BBB-/) due 2025 on Wednesday at Treasuries plus 160 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 99.959 to yield 3.955%.

The notes sold tight of guidance.

The bookrunners are Citigroup Global Markets Inc., RBS Securities Inc. and Wells Fargo Securities.

Proceeds will be used to purchase for cash or redeem $141.8 million of the company’s 2015 notes and $82 million of its 2017 notes. Remaining proceeds will be used for general corporate purposes.

Cytec’s 3.9% notes due 2025 firmed to 158 bps bid, 154 bps offered in the secondary market, according to a trader.

Cytec is a Woodland Park, N.J.-based specialty chemicals and materials technology company.

Fannie Mae Benchmark Notes

Fannie Mae priced $3.5 billion of 1.75% Benchmark Notes due 2019 at Treasuries plus 20 bps, according to a market source.

Pricing was at 99.554 to yield 1.843%.

The notes priced in line with talk, set in the 20 bps area over Treasuries.

Barclays, JPMorgan and Morgan Stanley were the joint lead managers.

By investor type, fund managers picked up 47.7%, central banks 24.3%, commercial banks 11%, insurance companies 6.2%, corporate pensions 5.7%, state and local governments 5% and retail 0.1%.

About 64.4% of orders came from the U.S., 13.5% from Europe, 10% from Asia and 12.1% from other regions.

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

Bank/brokerage CDS costs

Investment-grade bank and brokerage CDS prices were mostly lower on Wednesday, according to a market source.

Bank of America Corp.’s CDS costs fell 2 bps to 66 bps bid, 69 bps offered. Citigroup Inc.’s CDS costs were 2 bps lower at 66 bps bid, 69 bps offered. JPMorgan Chase & Co.’s CDS costs were 1 bp higher at 58 bps bid, 61 bps offered. Wells Fargo & Co.’s CDS costs were flat at 44 bps bid, 47 bps offered.

Merrill Lynch’s CDS costs were 2 bps lower at 69 bps bid, 71 bps offered. Morgan Stanley’s CDS costs ended 2 bps lower at 78 bps bid, 79 bps offered. Goldman Sachs Group, Inc.’s CDS costs were 1 bp lower at 80 bps bid, 83 bps offered.

Paul Deckelman contributed to this review.

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