Tesco, Scripps, National Fuel Gas, Pacific G&E, AGCO among deals; Tesco bonds widen 2 bps

By Andrea Heisinger and Cristal Cody

New York, Nov. 28 - The high-grade bond market came back to life on Monday as issuers that had to sit on the sidelines due to dismal market tone before Thanksgiving were given go calls.

Several names sold mostly small amounts of bonds, including Tesco plc, Scripps Networks Interactive, Inc., National Fuel Gas Co. and Pacific Gas & Electric Co.

The largest deal of the day came from British retail and grocery chain Tesco, which priced $1 billion of notes in three- and five-year tranches. The sale was done privately.

Scripps Networks Interactive priced $500 million of five-year paper at the tight end of guidance.

One of two natural gas names in the market, Pacific Gas & Electric priced $250 million of 30-year paper.

The other was National Fuel Gas, which sold an upsized $500 million of 10-year notes. The size was initially $350 million.

A sale was announced by Canadian Pacific Railway Co. Sources could not confirm whether the 10- and 30-year notes had priced.

There also was a split-rated deal announced by AGCO Corp. The $300 million private sale of 10-year notes priced at par to yield 5 7/8%.

The market tone was good enough for companies to jump into the market as of mid-morning.

"Some of them were held from last week or were on the sidelines," a source who worked on one of the day's sales said.

A few more names are eyeing the primary for Tuesday, although as one market source said, "We're not expecting anything major - probably more small ones."

A syndicate source said that "we have a couple that will look" at the market on Tuesday morning, provided no negative headlines from Europe or elsewhere come through overnight.

Overall trading volume stayed low at just under $9 billion on Monday.

In the secondary market, Tesco's two tranches traded about 2 basis points wider, a source said.

The new issues from National Fuel Gas and Pacific Gas & Electric were seen better in trading.

Investment-grade bank and brokerage credit default swaps costs declined over the day, showing improved investor sentiment toward the financial sector, a trader said.

Bank CDS costs traded down 15 bps to 30 bps, while brokerage CDS costs were down 35 bps across the board.

The Markit CDX Series 17 North American high-grade index ended the day at a spread of 141 basis points.

Treasuries closed little changed after losses early Monday. The 10-year note yield rose 1 bp to 1.97%. The 30-year bond yield also ended 1 bp higher at 2.93%.

Tesco's $1 billion deal

Tesco priced $1 billion of senior notes (A3/A-/A-) in two parts, an informed source said.

The $500 million of 2% three-year notes were sold at a spread of Treasuries plus 165 bps. The tranche was sold at the tight end of guidance in the 170 bps area.

A $500 million tranche of 2.7% five-year notes was priced at 180 bps over Treasuries. These notes priced at the tight end of talk in the 185 bps area.

There was about $2.75 billion on the books for the trade, the informed source said.

Bookrunners were Bank of America Merrill Lynch, Barclays Capital Inc., Citigroup Global Markets Inc. and Deutsche Bank Securities Inc.

The deal was done under Rule 144A and Regulation S.

Tesco last priced debt in a $2 billion sale of 10- and 30-year notes on Oct. 29, 2007.

In the secondary market, Tesco's three-year notes traded wider at 167 bps bid, 162 bps offered, a trader said.

The five-year notes were seen 2 bps wider in the secondary at 182 bps bid late afternoon.

The grocery and retail chain is based in Cheshunt, England.

Scripps prices five-years

Scripps Networks Interactive sold $500 million of 2.7% five-year notes (Baa1/A-) to yield Treasuries plus 180 bps, an informed source said.

They were sold at the tight end of talk in the 175 to 180 bps range.

J.P. Morgan Securities LLC and Wells Fargo Securities LLC were active bookrunners.

The proceeds are being used for general corporate purposes, including strategic acquisitions or equity investments, repurchase of common equity, working capital and capital expenditures and repayment of principal under a credit facility.

The TV and internet content company is based in Cincinnati, Ohio.

National Fuel upsizes

National Fuel Gas priced an upsized $500 million of 4.9% 10-year notes (Baa1/BBB/BBB+) to yield Treasuries plus 295 bps, a source close to the trade said.

The deal size was increased from $350 million.

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

The proceeds will be used for general corporate purposes, including reducing short-term debt used to refund $150 million of 6.7% notes due in November.

In the secondary market, the notes due 2021 firmed to 288 bps offered, a trader said.

The interstate natural gas and transmission company is based in Williamsville, N.Y.

Pacific G&E's long bond

Pacific Gas & Electric priced $250 million of 4.5% 30-year bonds (A3/BBB+) to yield 160 bps over Treasuries, a source away from the deal said.

BNP Paribas Securities Corp., Bank of America Merrill Lynch and UBS Securities LLC were bookrunners.

The proceeds are being used for general corporate purposes, including repayment of a portion of commercial paper.

The bonds traded tighter at 155 bps early afternoon, a trader said.

Another trader saw the bonds due 2041 at 160 bps bid, 158 bps offered.

The electric and natural gas company is based in San Francisco.

Canadian Pacific deal

Canadian Pacific Railway announced it would price $500 million of notes (Baa3/BBB-) in two tranches, according to a supplemental filing with the Securities and Exchange Commission.

Sources could not confirm whether the deal had priced as of late Monday.

The company plans to price 10- and 30-year notes.

J.P. Morgan Securities LLC is bookrunner and lead manager is TD Securities (USA) LLC.

The proceeds will be used to fund a voluntary prepayment of future pension contributions to the Canadian defined benefit pension plan.

The railroad operator is based in Calgary.

AGCO prices split-rated deal

AGCO priced on Monday a quick-to-market $300 million issue of 10-year notes at par to yield 5 7/8%, according to market sources.

The notes (Ba1/BBB-/) are being sold under Rule 144A and Regulation S.

Bookrunners are J.P. Morgan Securities LLC, Mitsubishi UFJ Securities (USA) Inc., Rabobank Securities and SunTrust Robinson Humphrey Inc.

The deal was transacted on the investment-grade desk.

The proceeds will be used to partly fund the $940 million acquisition of GSI Holdings.

The maker of farm implements is based in Duluth, Ga.

Paul Deckelman and Paul Harris contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.