Lowe's, Telefonica, EIB, International Finance among deals; Apache, Devon step out in secondary

By Andrea Heisinger and Cristal Cody

New York, April 12 - Lowe's Cos. Inc., Telefonica Emisiones SAU, European Investment Bank, International Finance Corp. and American Honda Finance Corp. each priced bonds on Monday, making it a solid start to the week.

Another sale came from Discover Bank, which priced a split-rated offering.

The deals from EIB and International Finance both priced early in the day. EIB sold $3 billion of five-year global notes, while IFC priced $2 billion of five-year notes following a roadshow.

Home improvement store chain Lowe's offered $1 billion of bonds, split evenly between 10-year-and 30-year tranches.

Vehicle leasing and financing company American Honda Finance priced $150 million of one-year floating-rate notes somewhat under the radar late in the day. They were priced via Rule 144A.

A $500 million deal of split-rated subordinated bank notes was priced by Discover Bank. The issuer of Discover Card is planning to use the proceeds to help repay money from the Temporary Asset Relief Program.

The tone in the investment-grade sector didn't react much to the bailout of Greece that was announced by the European Union on Sunday. One source said that was because it "wasn't a big surprise."

First-quarter earnings season began on Monday, with upbeat results expected from many of the big names reporting.

"We were golden today," a source said of the feel in the investment-grade market.

Moving into the secondary, the new offering from Lowe's steadily tightened in trading, according to sources. In other new offerings from the primary, Discover's notes also were stronger in trading, a source said.

Also in the secondary, flat to light trading was seen Monday in the outstanding investment-grade notes from Apache Corp. and Devon Energy Corp. after the companies announced a deal, according to traders.

Elsewhere on Monday, the CDX Series 14 North American high-grade index tightened 2 bps to a mid bid-asked spread level of 84 bps, according to a source.

Overall Trace volume rose about 14% from Friday but was still under the $10 billion line at about $9.3 billion, a source said.

"Volume seems low," a source said.

Meanwhile, U.S. Treasuries tightened overall on Monday.

For example, the yield on the 10-year benchmark Treasury note firmed to 3.84% from 3.88%, and the yield on the 30-year Treasury bond tightened 4 bps to 4.70%.

Lowe's sells two tranches

Lowe's sold $1 billion of senior unsecured notes (A1/A/A+) in two tranches late in the afternoon, a market source away from the sale said.

The $500 million of 4.625% 10-year notes priced at a spread of Treasuries plus 80 bps.

A $500 million tranche of 5.8% 30-year bonds sold at Treasuries plus 110 bps.

Bookrunners were Bank of America Merrill Lynch, J.P. Morgan Securities and SunTrust Robinson Humphrey.

Proceeds are going to repay $500 million of 8.25% notes due June 1 at maturity, with the balance going to general corporate purposes.

The home improvement store chain is based in Mooresville, N.C.

Spain's Telefonica prices $3.5 billion

Telecommunications company Telefonica Emisiones sold $3.5 billion of senior unsecured notes (Baa1/A-/A-) in three tranches late in the day, an informed source said.

The $1.2 billion of 2.582% three-year notes priced at 95 bps over Treasuries spread.

The $900 million of 3.729% five-year notes sold at a spread of Treasuries plus 115 bps.

A third tranche was $1.4 billion of 5.134% 10-year notes priced at 130 bps over Treasuries.

All of the notes are guaranteed by parent company Telefonica SA.

Bank of America Merrill Lynch, Credit Suisse Securities, J.P. Morgan Securities and UBS Investment Bank were bookrunners.

Proceeds will be deposited with parent company Telefonica and used for general corporate purposes.

The issuer is based in Madrid, Spain.

New deals flow to primary

The two previous weeks' slow pace was somewhat forgotten on Monday as a healthy number of new deals came to the market.

"The market felt good off the top [of the day]," one syndicate source who worked on one of the day's deals said.

That led to large sales from Telefonica Emisiones and Lowe's, followed by the sovereign deals.

Ongoing fears in past weeks over the fate of Greece were stifled by news of a bailout loan offered with a 5% interest rate.

Although it was highly anticipated, the news helped some issuers off the fence.

More deals are expected for Tuesday, as long as market conditions hold.

Two sovereigns price deals

At the start of the first-quarter earnings season for many American companies, some issuers from abroad took advantage of the high-grade market.

The European Investment Bank offered $3 billion of 1.875% three-year global notes (Aaa/AAA/AAA) early in the day at a spread of 30 bps over Treasuries.

It's probable this sale was done due to the European Union's announcement of a bailout package for Greece on Sunday that totals about $40 billion, a source said.

Barclays Capital, Goldman Sachs & Co. and RBC Capital Markets were bookrunners.

The lender to the European Union is based in Kirchberg, Luxembourg.

International Finance priced $2 billion of 2.75% five-year global notes (Aaa/AAA) at Treasuries plus 15.9 bps, a market source said.

The sale was announced a week earlier on April 5 and priced following a road show.

Deutsche Bank Securities, HSBC Securities and UBS Investment Bank ran the books.

The lender to the private sector in developing countries is based in Washington, D.C.

Discover sells split-rated deal

Discover Bank sold an upsized $500 million of split-rated 7% 10-year subordinated bank notes (Ba1/BBB-/BBB-) late in the day to yield Treasuries plus 325 bps, a market source said.

The sale was initially planned with a size of $350 million, the source said.

Barclays Capital, Goldman Sachs & Co. and J.P. Morgan Securities ran the books.

Proceeds are being used to help redeem $1.2 billion in preferred stock that was issued to the U.S. Treasury under the Troubled Asset Relief Program.

The issuer of Discover credit cards is based in Chicago.

American Honda Finance offers floaters

American Honda Finance priced $150 million of one-year senior unsecured floating-rate notes late in the day at par to yield one-month Libor plus 3 bps, a market source said.

They were sold under Rule 144A.

Bookrunner was Deutsche Bank Securities.

The U.S. leasing and financing arm for Honda Financial Services is based in Torrance, Calif.

Hyundai prices $500 million

A $500 million sale of notes from Hyundai Motor Co. was priced on the emerging markets side of the high-grade market on Monday. The 4.5% five-year notes (Baa3/BBB-) priced at Treasuries plus 197.5 bps. This was at the tight end of guidance in the 205 bps area, with a margin of plus or minus 7.5 bps, a source said.

Bookrunners were Bank of America Merrill Lynch, Barclays Capital, Citigroup Global Markets and Goldman Sachs & Co.

The car maker is based in Seoul, South Korea.

Lowe's strong in secondary

The $1 billion of new 10- and 30-year notes from Lowe's on Monday was quoted as firming more and more toward the market close, according to traders.

The notes due 2020, which priced at Treasuries plus 80 bps, were seen "earlier" at 77 bps bid, 69 bps offered, according to a trader.

Near the close, the notes firmed to 73 bps bid, 65 bps offered, according to one trader.

And by the close, the notes were even "tighter" at 68 bps bid, 64 bps offered, a trader said.

In addition, Lowe's also priced bonds due 2040 on Monday at Treasuries plus 110 bps.

The bonds on release to the secondary quickly firmed to 106 bps bid, 103 bps offered, a source said.

Later, the bonds were seen by a trader at 104 bps bid, 100 bps offered.

Following the pattern of the 10-year notes, the 30-year bonds moved even tighter at the close to 99 bps, a trader said.

Discover tighter

Also in trading, Discover Bank's new 7% subordinated notes due 2020 were seen firmer, according to a source.

The notes priced at Treasuries plus 325 bps and were quoted later in the day 6 bps tighter at 319 bps.

Apache, Devon flat despite deal

Little was seen Monday in trading in debt from Apache and Devon Energy after the companies announced a deal, sources said.

Apache said it will buy Devon's oil and gas assets on the U.S. Gulf of Mexico Shelf for $1.05 billion.

"Nothing on Devon or Apache," one trader said. "Based on Trace, not much traded."

Apache's outstanding debt includes 6% notes due 2013 and 6.9% notes due 2018, while Devon has 5.625% senior notes due 2014 and 6.3% senior notes due 2019 outstanding.

Apache said it will fund the acquisition primarily from existing cash balances and with commercial paper. The company said it has hedged a portion of the production for three years using swaps and collars to protect the economics of the transaction, which is effective Jan. 1.

Houston-based Apache develops and produces natural gas, crude oil and natural gas liquids.

Oklahoma City-based Devon develops and produces natural gas and oil, process natural gas and transports oil, gas and natural gas liquids.

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