Goldman, Franklin Resources upsize; Bank of America, Microsoft stable; credit spreads widen

By Aleesia Forni and Cristal Cody

Virginia Beach, March 25 – Goldman Sachs Group Inc. and Franklin Resources Inc. were able to price deals amidst the softer tone on Wednesday, as weaker economic data and investor fatigue took its toll on the market

The Commerce Department reported that February’s durable goods fell more than expected by 1.4%.

This, coupled with the investment-grade market’s continued indigestion following the onslaught of supply seen so far this month, kept a lid on issuance during the session.

Still, both Franklin Resources and Goldman Sachs were able to upsize their respective new deals.

Goldman garnered an order book that was more than three times oversubscribed for its $1.5 billion two-part add-on and sold both tranches at the tight end of guidance.

Franklin sold its $400 million 10-year offering around 17.5 basis points tight of initial talk.

After remaining flat in the first two sessions of the week, credit spreads widened on Wednesday.

The Markit CDX North American Investment Grade series 23 index eased 2 bps to a spread of 65 bps.

High-grade bonds traded mostly flat to softer over the session.

Bank of America Corp.’s 4% notes due 2025 were unchanged in secondary trading.

JPMorgan Chase & Co.’s 3.125% notes due 2025 eased 4 bps.

Apple Inc.’s 2.5% notes due 2025 headed out flat.

Microsoft Corp.’s 2.7% notes due 2025 were unchanged on the day.

Goldman two-part add-on

Goldman Sachs tapped Wednesday’s market to price a $1.5 billion two-part add-on to its existing senior notes (Baa1/A-/A) due April 23, 2020 and Jan. 23, 2025, according to an informed source.

The deal was upped from initial size thoughts of $1 billion.

The sale included a $700 million add-on to the company’s 2.6% notes due 2020 priced at Treasuries plus 112 bps.

The notes sold at 100.322 to yield 2.531%.

The original $1 billion tranche of notes sold at 135 bps over Treasuries on Jan. 20.

There was also an $800 million tap of its 3.5% notes due 2025 sold at 145 bps over Treasuries.

Pricing was at 101.014 to yield 3.375%.

The initial $1.7 billion issue of notes priced at 170 bps over Treasuries on Jan. 20.

Both tranches sold at the tight end of price guidance.

Goldman Sachs & Co. was the bookrunner.

Proceeds will be used for general corporate purposes.

The financial services company is based in New York City.

Franklin upsizes

Franklin Resources was also in the market with an upsized offering, pricing $400 million of 2.85% 10-year notes (A1/AA-/) with a spread of Treasuries plus 95 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

Pricing was at 99.827 to yield 2.87%.

The issue was upsized from a planned $300 million.

The notes sold at the tight end of guidance set in the area of Treasuries plus 100 bps, tightened from talk in the Treasuries plus 112.5 bps area.

BofA Merrill Lynch, Morgan Stanley & Co. LLC and Citigroup Global Markets Inc. were the bookrunners.

Proceeds will be used to pay down the company’s outstanding 3.125% notes due May 2015, and any remainder will be used for general corporate purposes.

The holding company for investment managers Franklin Templeton Investments is based in San Mateo, Calif.

Bank of America flat

Bank of America’s 4% notes due 2025 were unchanged at 202 bps bid, a market source said.

The company sold $2.5 billion of the notes (Baa2/A-/A) on Jan. 16 at Treasuries plus 225 bps.

The financial services company is based in Charlotte, N.C.

JPMorgan soft

JPMorgan Chase’s 3.125% notes due 2025 eased 4 bps to 129 bps bid in the secondary market, a source said.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Jan. 16 at a spread of Treasuries plus 145 bps.

The financial services company is based in New York City.

Apple unchanged

Apple’s 2.5% notes due 2025 were flat at 85 bps bid, according to a market source.

Apple sold $1.5 billion of the notes (Aa1/AA+/) on Feb. 2 at Treasuries plus 85 bps.

The computer and mobile communications device company is based in Cupertino, Calif.

Microsoft stable

Microsoft’s 2.7% notes due 2025 were quoted flat on Wednesday at 74 bps bid, according to a market source.

Microsoft sold $2.25 billion of the notes (Aaa/AAA/) on Feb. 9 at Treasuries plus 75 bps.

The computer software company is based in Redmond, Wash.

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