Du Pont, TransCanada, MassMutual, HSBC among sellers in strong primary; new deals rule market

By Andrea Heisinger and Cristal Cody

New York, Sept. 20 - E.I. du Pont de Nemours & Co., Georgia Power Co., Canadian Pacific Railway Co., TransCanada Pipelines Ltd., MassMutual Global Funding LLC, Anglo American Capital plc, National Australia Bank and HSBC USA Inc. priced deals on Monday as issuers tried to get into the market ahead of the Federal Reserve meeting.

Du Pont had the largest deal, pricing an upsized $2 billion of notes in three tranches. The size had been expected at a minimum of $1.1 billion, with all of the tranches increasing due to demand and all pricing at the tight end of talk.

One of the larger sales came from Anglo American Capital with its $1.25 billion in two tranches. Both notes priced at the tight end of guidance.

There were two Canadian companies selling bonds for the day. Canadian Pacific Railway priced $350 million of bonds due 2023 by mid-afternoon to fund pension plan contributions. The other came from TransCanada Pipelines with a $1 billion sale of 10-year notes.

Southern Co. subsidiary Georgia Power was the first to price its upsized deal of $500 million of three-year notes. The size was increased from $350 million on demand.

Mass Mutual Global Funding priced an upsized $700 million deal in two tranches privately. A tranche of three-year floaters was upsized, and the sale also included five-year notes.

National Australia Bank priced a $1 billion deal of five-year notes in the 144A private placement market.

Another financial deal came from HSBC USA with $750 million of 10-year notes that priced later in the day after being announced in early afternoon.

There is a Federal Reserve meeting on Tuesday, but no major announcements are expected from it. Issuers are likely going to wait until Wednesday to bring deals to the market regardless, sources said.

"Depending on how the Fed goes, we should have a slower day," one source said. "We have a decent calendar for the week, but most of it's not [pricing] until Wednesday."

Secondary trading remained strong on the steady supply of new deals, sources said.

The new notes from TransCanada, Du Pont and Canadian Pacific firmed in the secondary, sources said.

"Corps still dominated by new issue," a source said. "Seems like secondary is holding up fine - just most of the flow going to new issues."

Overall investment-grade Trace volume rose 7% to about $10.2 billion, according to a market source.

Volume was "not great but not bad" on Monday, one trader said.

The Markit CDX Series 14 North American investment-grade index eased 3 bps to a spread of 107 bps, according to Markit Group Ltd.

U.S. Treasuries rose on Monday on a new round of Federal Reserve purchases and as traders prepared for the Federal Reserve's meeting on monetary policy on Tuesday.

"Treasuries traded up, but I heard volume was very, very light," a source said.

Yields on the longer end of the curve fell on the day.

The yield on the benchmark 10-year note fell 4 bps to 2.7%. The yield on the 30-year bond dropped 3 bps to 3.87%.

Du Pont upsizes to $2 billion

Chemical company E.I. du Pont de Nemours priced an upsized $2 billion of notes (A2/A/A) in three tranches, said a source who worked on the sale.

The size was initially at $1.1 billion, with $300 million of five-years, $500 million of 10-years and $300 million of 30-year bonds expected.

A $500 million tranche of 1.95% notes due 2016 priced at a spread of Treasuries plus 72 bps. This was at the tight end of price talk in the 75 bps area.

The $1 billion tranche of 3.625% notes due 2021 priced at 93 bps over Treasuries. This was at the tight end of guidance in the 95 bps area.

The third tranche was $500 million of 4.9% bonds due 2041 sold at a spread of Treasuries plus 112.5 bps. This was also at the tight end of price talk in the 115 bps area.

Bookrunners were Goldman Sachs & Co. and Morgan Stanley & Co. Inc.

Proceeds are going to pay down commercial paper issued to fund a pension plan contribution and to redeem outstanding 5% notes due Jan. 15, 2013 and 5.875% notes due Jan. 15, 2014.

All three tranches firmed in the secondary, according to traders.

The notes due 2016 tightened after pricing at 72 bps over Treasuries to 71 bps bid, 68 bps offered. Later in the day, the notes traded at 71 bps bid, 69 bps offered.

The tranche of notes due 2021 firmed from pricing at 93 bps over Treasuries to 92 bps bid, 89 bps offered and moved out on the offer side late to 93 bps bid, 91 bps offered, the traders said.

The final tranche of bonds due 2041 priced at Treasuries plus 112.5 bps and firmed to 112 bps bid, 109 bps offered.

The issuer is based in Wilmington, Delaware.

Anglo American two tranches

Mining company Anglo American Capital sold $1.25 billion of senior unsecured notes (Baa1/BBB/BBB+) in two tranches, said a source who worked on the trade.

The $750 million of 2.15% three-year notes priced at a spread of 145 bps over Treasuries. The notes were talked in the 150 bps area in the morning with a margin of plus or minus 5 bps and priced at the tight end of that.

The second tranche was $500 million of 4.45% 10-year notes that sold at Treasuries plus 175 bps. That was at the tight end of guidance in the 180 bps area, with a margin of plus or minus 5 bps.

The deal was priced under Rule 144A.

Bank of America Merrill Lynch and Barclays Capital Inc. were active bookrunners.

Proceeds are being used for general corporate purposes.

The issuer is based in London.

New bonds in demand

Some of the day's sales were upsized, and most saw their books oversubscribed as investors continued to look for high-grade paper.

The market has mostly been stable in recent weeks and because of that, issuance hasn't let up. This week is expected to finally see something of a slowdown in comparison to the two previous weeks that had more than $30 billion of new issues apiece.

"Deals are being absorbed and there's minimum new issue premium," one syndicate source said. "The market is strong."

Both the Du Pont and MassMutual deals were upsized and priced at the tight end of guidance.

"Most of the deals were out with guidance early, and the order books were oversubscribed early on," a source said.

TransCanada sells $1 billion

TransCanada Pipelines sold $1 billion of 3.8% 10-year senior notes (A3/A-) at a spread of Treasuries plus 112.5 bps, a source who worked on the deal said.

Bookrunners were Citigroup Global Markets and J.P. Morgan Securities.

Proceeds are going to partially fund capital projects, for general corporate purposes and to reduce short-term debt of the corporation and its affiliates.

TransCanada's notes narrowed in secondary trading, according to sources.

The notes traded tighter at 111 bps bid, 108 bps offered soon after pricing, a trader said.

Late in the day, the notes firmed 1 bp on the bid side to 110 bps bid, 108 bps offered, a source said.

The natural gas transporter is based in Calgary, Canada.

Canadian Pacific's notes

Canadian Pacific Railway sold $350 million of 4.45% senior unsecured notes due 2023 (Baa3/BBB) to yield a spread of Treasuries plus 178 bps, a market source away from the sale said.

Morgan Stanley & Co. Inc. and Bank of America Merrill Lynch ran the books.

Proceeds are going to fund a voluntary pre-payment of future pension contributions to a Canadian defined benefit pension plan.

In late-afternoon secondary trading, the notes firmed to 175 bps bid, 171 bps offered, a trader said.

The rail transport company is based in Calgary, Canada.

MassMutual unit's $700 million

MassMutual Global Funding sold an upsized $700 million of notes (Aa2/AA+/AA+) in two tranches, a source away from the sale said.

The $300 million of three-year floating-rate notes priced at par to yield Libor plus 50 bps. The size of the tranche was increased from $275 million.

The second tranche was $400 million of 2.3% five-year fixed-rate notes priced at a spread of Treasuries plus 90 bps.

The tranches were priced under Rule 144A and Regulation S.

Credit Suisse Securities, Jeffries Securities and Morgan Stanley & Co. Inc. were bookrunners.

The funding arm of Massachusetts Mutual Life Insurance Co. is based in Springfield, Mass.

Georgia Power upsizes

Georgia Power sold an upsized $500 million of 1.3% three-year series 2010D senior unsecured notes (A3/A/A+) to yield a spread of 60 bps over Treasuries, according to an FWP filing with the Securities and Exchange Commission.

The notes were priced at the tight end of talk in the range of 60 to 62 bps. The size was increased from $350 million.

Bookrunners were Bank of America Merrill Lynch, Barclays Capital Inc. and Mizuho Securities USA Inc.

Proceeds will be used by the for the proposed repurchase of all or a portion of:

• $114.31 million of outstanding Development Authority of Burke County Pollution Control Revenue Bonds due Jan. 1, 2049;

• $40 million of outstanding Development Authority of Monroe County Pollution Control Revenue Bonds due Jan. 1, 2049;

• $173 million of the outstanding Development Authority of Bartow County (Georgia) Pollution Control Revenue Bonds due Dec. 1, 2032;

• $89.2 million of the outstanding Development Authority of Monroe County Pollution Control Revenue Bonds due Oct. 1, 2048; and

• $46 million of the outstanding Development Authority of Burke County Pollution Control Revenue Bonds due Oct. 1, 2032.

Any remainder will be used for other general corporate purposes, including the company's continuous construction program.

No secondary activity was seen late afternoon in Georgia Power's new notes, according to a source.

The utility subsidiary of the Southern Co. is based in Atlanta.

NAB prices $1 billion

National Australia Bank priced $1 billion of 2.75% five-year notes (Aa1/AA/AA) in the 144A private placement market at Treasuries plus 137 bps, a source away from the deal said.

Bank of America Merrill Lynch, HSBC Securities, National Australia Bank and RBC Capital Markets were bookrunners.

In the secondary market, the new debt tightened to 136 bps bid, 134 bps offered, a trader said.

The financial services company is based in Melbourne.

HSBC USA 10-years

HSBC USA sold $750 million of 5% 10-year subordinated notes (A2/A+) late in the day at a spread of 240 bps over Treasuries, a market source away from the deal said.

Bookrunner was HSBC Securities.

Proceeds are being used for general corporate purposes, including investments in and advancements to subsidiaries and financing future acquisitions of financial institutions.

The U.S. branch of financial services company HSBC is based in New York City.

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