Amgen monster deal, Carpenter, Kilroy among those in volatile primary; Amgen long bonds wider

By Andrea Heisinger and Cristal Cody

New York, June 27 - There was a busier calendar expected for the week, and Monday didn't disappoint with a large sale from Amgen Inc. and two other companies.

Amgen priced $3 billion of notes in three parts and is planning to use the proceeds for general corporate purposes. This was one of the largest corporate deals to price in recent months in the high-grade market as volatile conditions kept many out of the market.

Also in the market were Carpenter Technology Corp., Kilroy Realty LP and TTX Co.

Carpenter priced $250 million of 10-year notes to repay notes due in August. Kilroy Realty sold $250 million of seven-year notes in a deal guaranteed by parent company Kilroy Realty Corp.

The smallest sale of the day came from TTX. The railroad freight car company reopened two notes due 2021 and 2040 to add $200 million.

The market tone wasn't any less volatile than it has been in recent weeks, but companies opted to price paper at higher spreads and concessions.

"Equities are up and Treasuries are down," a source said when asked whether spreads were higher on the day's new deals. "Kind of crazy. It's definitely a cautious tone. Investors are cautious."

There should be some clarity and perhaps a drop in volatility as a vote on austerity measures in Greece takes place on Wednesday. There is little new issuance expected that day.

"I would say tomorrow is a viable day," a syndicate source said. "I would expect another flurry of activity."

Overall, the primary is living day to day as the tone is assessed each morning and headlines can send issuers and investors running for other markets.

"We just don't know what tomorrow will bring, or the next day, or the next day," the syndicate source said. "There aren't really any rallies, it's so volatile."

Trading volume rose and bond spreads mostly tightened on Monday, informed bond sources said.

The Markit CDX Series 15 North American investment-grade index firmed 1 basis point to a spread of 100 bps, according to Markit Group Ltd.

Overall trading volume rose 15% to about $9.5 billion on Monday.

Amgen's short-dated notes traded tighter in the secondary market, while the tranche of long bonds widened on the bid side, a trader said.

In other trading, Belgium brewery Anheuser-Busch InBev Worldwide Inc.'s 4.95% notes due 2014 widened to 80 bps on Monday from 65 bps over Treasuries on Friday, an informed bond source said.

Treasuries were lower with yields up across the curve after French banks agreed to give Greece more time to repay its debt. The 10-year Treasury note yield rose 7 basis points to 2.93%. The 30-year bond yield closed at 4.29% from 4.19%.

Amgen sells $3 billion

Biotechnology company Amgen sold $3 billion of senior notes (A3/A+/A-) in three tranches, said a source close to the sale.

"They're a single A [rated] company so they can come in and get a deal this size done," a source away from the offering said.

The $750 million of 2.3% five-year notes priced at a spread of Treasuries plus 90 bps. The notes were talked in the 95 bps area and priced at the low end of that guidance.

A second tranche was $1 billion of 4.1%10-year notes priced at a spread of 120 bps over Treasuries. The notes priced at the tight end of guidance in the 125 bps area.

The company also priced $1.25 billion of 5.65% notes due 2042 at Treasuries plus 140 bps. This tranche was sold at the tight end of talk in the 145 bps area.

All of the tranches had a plus or minus 5 bps margin on price guidance.

Bookrunners were Bank of America Merrill Lynch, Barclays Capital Inc. and Morgan Stanley & Co., Inc.

Proceeds are being used for general corporate purposes, including working capital, capital expenditures and debt service requirements, and to repay outstanding debt, repurchase common stock, pay quarterly stock dividends, and other business initiatives, including acquisitions and licensing activities.

Amgen last priced bonds in a $1.5 billion deal in two maturities on Sept. 13, 2010. The 3.45% 10-year notes from that sale were priced at 77 bps over Treasuries, and a tranche of 4.95% 31-year notes sold at 117 bps over Treasuries.

In secondary trading, Amgen's notes due 2016 were seen at 88 bps bid soon after pricing, according to a trader.

The tranche of notes due 2021 tightened to 118 bps bid, while the 31-year bonds widened on the bid side to 142 bps bid, 137 bps offered.

The issuer is based in Thousand Oaks, Calif.

Kilroy upsizes

Kilroy Realty priced an upsized $325 million of 4.8% seven-year notes (Baa3/BBB-) at a spread of 265 bps over Treasuries, a source close to the deal said.

The sale size was initially $250 million, a source said. The notes priced at the tight end of guidance in the 270 bps area.

There was about $700 million in demand on the books, the source said. A seven-year maturity was decided because it "fit the maturity profile" of the company, he said.

Bookrunners were Bank of America Merrill Lynch, Barclays Capital Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

Proceeds are being used for general corporate purposes, including the acquisition of properties or repayment of outstanding debt, encompassing borrowings under an unsecured revolving credit facility.

The deal is guaranteed by parent company and real estate investment trust Kilroy Realty Corp., based in Los Angeles.

Carpenter's 10-years

Carpenter Technology sold $250 million of 5.2% 10-year senior notes (Baa3/BBB) to yield 230 bps over Treasuries, according to an FWP filing with the Securities and Exchange Commission.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC were bookrunners.

Proceeds will be used to repay $100 million of 7.625% series C medium-term notes due in August, and the remainder will be used for general corporate purposes.

The developer, manufacturer and distributor of stainless steel and alloy metals is based in Reading, Penn.

TTX reopens two notes

TTX reopened two notes (Baa1/A+) to add $200 million, a market source said.

The company reopened its 4.4% notes due 2021 to add $125 million. The notes priced at Treasuries plus 130 bps.

This brings the total to $275 million, including $150 million priced on April 26 at 108 bps over Treasuries.

A second tranche was a reopening of 5.875% bonds due 2040 to add $75 million. These notes priced at a spread of 150 bps over Treasuries.

Total issuance is $225 million, including $150 million priced on Nov. 18, 2010 at Treasuries plus 162.5 bps.

Bookrunners were Bank of America Merrill Lynch and Credit Suisse Securities (USA) LLC.

The railroad freight company is based in Chicago.

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