CBA, Union Pacific, NIKE among issuers; Duke Energy mixed; Xerox soft; AT&T firms

By Aleesia Forni and Cristal Cody

Virginia Beach, Oct. 26 – Commonwealth Bank of Australia, Union Pacific Corp., NIKE Inc., Stryker Corp. and Capital One Financial Corp. were among an array of issuers entering Monday’s high-grade primary market, nearly all of them receiving a strong reception and pricing at the tight end of talk or tighter.

Australia’s CBA, which sold the day’s largest deal, priced all three tranches of its $2.25 billion trade at the tight end of talk.

Capital One’s offering sold around 27 basis points tight of guidance, while NIKE’s new $1 billion issue came around 17 bps inside initial price thoughts.

And in a deal that carried over from last week, First Horizon National Corp. offered $500 million of five-year notes.

The session also saw Allied World Assurance Co. Holdings, Ltd. price a single $500 million 10-year tranche of notes after the company scrapped plans for an additional 30-year piece in the only deal priced during the session to face some pushback from investors.

Still, one source noted that the market’s tone continued to show signs of improvement on Monday, leading him to believe that the session ahead could host another heavy bout of issuance.

Another source pointed to tightening spreads in the secondary market and opined that the primary will continue to see a steady amount of supply ahead of the late-year holidays.

The session saw $7.6 billion of new paper price, and sources are calling for around a $20 billion week, with a pause expected mid-week for the Federal Open Market Committee’s Wednesday rate decision.

In the secondary, Duke Energy Progress Inc.’s first mortgage bonds (Aa2/A/A+) headed out flat to 4 bps tighter in the secondary market after parent company Duke Energy Corp. announced it will acquire Piedmont Natural Gas Co., Inc. for $4.9 billion in cash and the assumption of $1.8 billion of debt.

In other secondary trading, Xerox Corp.’s 3.5% senior notes due 2020 edged 1 bp wider after the company reported a third quarter loss and weaker-than-expected revenue results.

AT&T Inc.’s bonds (/BBB+/A-) traded 5 bps to 6 bps better over the day.

The Markit CDX North American Investment Grade 25 index eased 1 bp to close at a spread of 78 bps on Monday.

CBA prices

Commonwealth Bank of Australia priced a $2.25 billion three-part senior notes offering (Aa2/AA-) on Monday, according to a market source.

There was $750 million of 1.75% three-year notes sold with an 85 bp spread over Treasuries. The notes were issued at a price of 99.924 to yield 1.776%.

Pricing came at the tight end of the Treasuries plus 90 bps area guidance following talk set in the Treasuries plus 100 bps area.

Meanwhile, a $500 million three-year floater sold at par to yield Libor plus 79 bps. The tranche was talked at the three-year fixed-rate tranche’s Libor equivalent.

A $1 billion 2.4% five-year piece sold at 99.916 to yield 2.418%, or Treasuries plus 103 bps.

The notes were guided in the Treasuries plus 105 bps area and initially talked at the Treasuries plus 115 bps area.

The bookrunners are CBA, Citigroup Global Markets Inc., Goldman Sachs & Co. and J.P. Morgan Securities LLC.

The banking and financial services company is based in Sydney, Australia.

Capital One prices inside talk

Capital One Financial sold $1.5 billion of 4.2% subordinated notes (Baa1/BBB-/BBB+) due Oct. 29, 2025 during Monday’s session at a 215 bp spread over Treasuries, according to a market source.

The notes sold at 99.992 to yield 4.201%.

Pricing came at the tight end of talk.

Bookrunners are Citigroup Global Markets Inc., Credit Suisse Securities, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Capital One.

Proceeds will be used for general corporate purposes.

The financial services company is based in McLean, Va.

Union Pacific three-parter

Also on Monday, Union Pacific priced $1.1 billion of senior notes (A3/A) in three tranches during Monday’s session, according to a market source and three separate FWP filings with the Securities and Exchange Commission.

The sale included a $200 million tap of the company’s existing 3.25% notes due Aug. 15, 2025 priced at 100.956 to yield 3.012%, or Treasuries plus 95 basis points.

The original $300 million issue priced at Treasuries plus 100 bps on June 16.

There was also $500 million of 4.05% notes due 2045 priced at 120 bps over Treasuries. The issue sold at 99.533 to yield 4.077%.

A $400 million 4.375% tranche due 2065 sold at 96.043 to yield 4.577% with a spread of Treasuries plus 170 bps.

All three tranches sold at the tight end of price guidance.

Barclays, BofA Merrill Lynch, Citigroup Global Markets Inc. and Credit Suisse Securities are the joint bookrunners.

Proceeds from the offering will be used for general corporate purposes, including the repurchase of common stock.

The railroad transportation company is based in Omaha, Neb.

NIKE prices tight

NIKE priced $1 billion of 3.875% senior notes (A1/AA-/) due Nov. 1, 2045 on Monday at Treasuries plus 107 basis points, according to an informed source and a FWP filing with the Securities and Exchange Commission.

Pricing was at 99.07 to yield 3.928%.

The issue came at the tight end of the Treasuries plus 110 bps area talk, following initial price thoughts in the area of Treasuries plus 125 bps.

BofA Merrill Lynch, Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. are the bookrunners.

The Beaverton, Ore.-based sports footwear and apparel company will use proceeds for general corporate purposes.

Allied drops tranche

Meantime, Allied World Assurance sold $500 million of 4.35% 10-year senior notes (Baa1/BBB+/BBB+) with a spread of 230 bps over Treasuries on Monday, according to a market source, after dropping a planned 30-year tranche of notes.

Pricing was at 99.952 to yield 4.356%.

The notes were issued at the tight end of the Treasuries plus 235 bps area guidance.

The 30-year tranche of notes was dropped prior to the deal’s launch and was talked at Treasuries plus 287.5 bps.

Barclays, Credit Suisse Securities, Citigroup Global Markets Inc. and Wells Fargo Securities LLC were the bookrunners.

Proceeds will be used for the repayment at maturity of the company’s $500 million of 7.5% senior notes due Aug. 1, 2016 and for general corporate purposes, which may include the repurchase of outstanding common shares, payment of dividends to shareholders or funding of potential acquisitions.

The notes are guaranteed by Allied World Assurance Co. Holding AG.

The insurance and reinsurance company is based in Bermuda.

Stryker new issue

Stryker sold $750 million of 3.375% senior notes due Nov. 1, 2025 at Treasuries plus 132 basis points, according to a market source and a FWP filing with the Securities and Exchange Commission.

Pricing was at 99.991 to yield 3.376%.

The notes (A3/A+) were talked in the area of 135 bps over Treasuries, having firmed from initial talk in the Treasuries plus 150 bps to 155 bps range.

Barclays, Citigroup Global Markets Inc. and Goldman Sachs & Co. are the bookrunners.

Proceeds will be used to pay $200 million of commercial paper at its maturity and for working capital and other general corporate purposes.

Stryker is a medical technology company based in Kalamazoo, Mich.

First Horizon offer

The session also hosted First Horizon National, which priced $500 million of 3.5% senior notes (Baa3//BBB-) due Dec. 15, 2020 at Treasuries plus 215 bps, according to an FWP filing with the Securities and Exchange Commission.

Pricing was at 99.758 to yield 3.551%.

The deal was announced on Friday.

Morgan Stanley & Co. LLC, Barclays, Goldman Sachs & Co. and FTN Financial Securities Corp. are the bookrunners.

Proceeds will be used to repay the company’s outstanding 5.375% senior notes due Dec. 15, 2015.

First Horizon National is the bank holding company for First Tennessee Bank NA and based in Memphis.

Duke Energy mixed

Duke Energy Progress’ 3.25% notes due 2025 were unchanged on the day at 90 bps bid, according to a market source.

The company sold $500 million of the notes on Aug. 10 at a spread of Treasuries plus 105 bps.

Duke Energy’s 4.2% bonds due 2045 tightened 4 bps to head out at 115 bps bid in secondary trading.

Duke Energy priced $700 million of the bonds in the Aug. 10 sale at Treasuries plus 130 bps.

The Raleigh, N.C.-based company is an electricity distributor in North Carolina and South Carolina.

Xerox softens

Xerox’s 3.5% senior notes due 2020 traded 1 bp weaker on Monday at 205 bps bid, according to a market source.

The company sold $400 million of the notes (Baa2/BBB/BBB) on Aug. 17 at a spread of Treasuries plus 212.5 bps.

The maker of office machines is based in Norwalk, Conn.

AT&T stronger

AT&T’s 3.4% notes due 2025 were quoted 5 bps tighter at 161 bps bid in secondary trading, a market source said.

The company sold $5 billion of the notes on April 23 at a spread of 150 bps over Treasuries.

AT&T’s 4.75% bonds due 2046 tightened 6 bps to 242 bps bid on Monday.

AT&T sold $3.5 billion of the bonds in the April 23 offering at 215 bps plus Treasuries.

The telecommunications company is based in Dallas.

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