Toyota, Hershey, Kimco among sellers in 'off' primary; recent deals mostly better in secondary

By Aleesia Forni and Andrea Heisinger

New York, May 14 - Toyota Motor Credit Corp., Hershey Co., Kimco Realty Corp. and American Honda Finance Corp. were among the companies pricing investment-grade bonds in Tuesday's session.

Toyota sold $1.5 billion of three-year notes in two parts. The size was increased from $1 billion, a source said.

The sale included $750 million of three-year floating-rate notes and $750 million of three-year bonds.

Demand on the floaters was "north of $1.3 billion," a syndicate source said, while the fixed-rate notes saw "north of $1.65 [billion]."

Chocolate maker Hershey priced $250 million of 10-year bonds while Kimco Realty sold $350 million of 10-year paper.

American Honda brought a $500 million of one-year floaters sold under Rule 144A and Regulation S. Terms were not available at press time.

NStar Electric Co. tapped the market for $200 million of three-year floating-rate debentures.

A split-rated $444.54 million offering of class A and B pass-through certificates was sold by Hawaiian Airlines, Inc.

In the preferred stock market, Qwest Corp. priced $750 million of 40-year senior notes at par of $25.

A market source remarked late in the day that the market was "off," as were Treasury yields on the long bond.

"Equities were up but otherwise a little soft," the source added.

The Markit CDX Series 20 North American Investment Grade index was unchanged on Tuesday at a spread of 73 basis points.

Tuesday's investment-grade secondary market saw the recent issues from Covidien International Finance SA, Consumers Energy Co. and AGL Capital Corp. trading mixed during Tuesday's session, according to a trader.

"I think [the market] is just sort of taking in all these new deals," one source said of secondary market's reaction to the recently packed primary.

Covidien's notes traded 5 bps better on the day, while AGL Capital's notes were quoted 4 bps wider.

Meanwhile, Consumers Energy saw its new 30-year bonds trading 3 bps better compared to its new issue spread.

Investment-grade bank and brokerage credit default swaps costs declined on Tuesday.

Bank of America's CDS costs were 3 bps tighter at 89 bps bid, 92 bps offered. Citi's CDS costs were 1 bp tighter at 87 bps bid, 90 bps offered. J.P. Morgan's CDS costs declined 1 bp to 76 bps bid, 79 bps offered. Wells Fargo's CDS costs also tightened 1 bp to 61 bps bid, 64 bps offered.

Merrill Lynch's CDS costs were 2 bps tighter at 83 bps bid, 93 bps offered. Morgan Stanley's CDS costs declined 2 bps to 117 bps bid, 120 bps offered. Goldman Sachs' CDS costs were also 2 bps tighter at 103 bps bid, 106 bps offered.

Toyota's $1.5 billion

Toyota Motor Credit sold an upsized $1.5 billion of three-year medium-term notes (Aa3/AA-/) in two tranches, a market source said.

The size was initially at $1 billion.

A $750 million tranche of three-year floating-rate notes priced at par to yield Libor plus 29 bps.

The second part was $750 million of 0.8% three-year notes sold at a spread of Treasuries plus 42 bps.

BNP Paribas Securities Corp., Citigroup Global Markets Inc. and RBS Securities Inc. were bookrunners.

The funding arm of Toyota is based in Torrance, Calif.

Kimco upsizes

Kimco Realty priced an upsized $350 million of 3.125% 10-year notes (Baa1/BBB+/BBB+) at a spread of 125 bps over Treasuries, a market source said.

The size was increased from $300 million.

Bookrunners were J.P. Morgan Securities LLC, Barclays, Morgan Stanley & Co. LLC and RBC Capital Markets LLC.

Proceeds are being used for general corporate purposes, including to reduce borrowings under a revolving credit facility maturing in Oct. 2015, replace debt under a $100 million maturity of 6.125% senior notes due in Jan. 2013 and prefund near-term maturities.

Kimco was last in the U.S. bond market with a $300 million offering of notes due 2018 on Aug. 25, 2010.

The real estate investment trust for neighborhood and community shopping centers is based in New Hyde Park, N.Y.

Hershey prices

Hershey priced a $250 million sale of 2.625% 10-year notes (A2/A/) to yield Treasuries plus 72 bps, a market source said.

BofA Merrill Lynch, UBS Securities LLC, JPMorgan and RBC were bookrunners.

Proceeds are being used for general corporate purposes.

Hershey was last in the U.S. bond market with a $250 million sale of five-year notes on Nov. 8, 2011.

The maker of chocolate and confectionery products is based in Hershey, Pa.

NStar's floaters

NStar Electric sold $200 million of three-year floating-rate debentures (A2/A-/A+) at par to yield Libor plus 24 bps, according to an FWP filing with the Securities and Exchange Commission.

Barclays and RBC were on the books.

Proceeds will be used to repay a portion of outstanding short-term debt and for general corporate purposes.

NStar was last in the bond market with a $400 million offering of 10-year notes on Oct. 9, 2012.

The electric utility is a subsidiary of Boston-based Northeast Utilities.

Hawaiian's pass through

Hawaiian Airlines priced $444.54 million of pass-through certificates in two tranches, according to an FWP filing with the Securities and Exchange Commission.

The sale included $328.26 million of 3.9% class A certificates (Ba1/BBB+/A-) with a maturity of July 15, 2027 and final distribution of Jan. 15, 2026. There is an initial average life of nine years.

There was also $116.28 million of 4.95% class B certificates (B1/BB-/BB) with a maturity of July 15, 2023 and final distribution of Jan. 15, 2022. The certificates have an initial average life of 6.9 years.

Both certificates priced at par.

Bookrunners were Citigroup, Goldman Sachs & Co. and Morgan Stanley.

Proceeds will be held in escrow and used to acquire equipment notes, to be issued by the airline and used to secure six new Airbus aircraft scheduled for delivery from November 2013 to October 2014.

The commercial airline is based in Honolulu.

Qwest's $25-par

Qwest was in the market with an upsized $750 million sale of 6.125% $25-par 40-year senior notes (Baa3/BBB-/BBB-), a market source said.

The size was increased from $250 million.

The shares had initial talk in the 6.25% to 6.375% range, which was later revised to the 6.125% area.

Bookrunners were BofA Merrill Lynch, Morgan Stanley, UBS and Wells Fargo Securities LLC.

Proceeds are being used to provide a portion of funds to retire at maturity $750 million of floating-rate notes.

The integrated communications company is based in Monroe, La.

Covidien firms

Covidien International Finance's recent $750 million 2.95% notes were quoted at 101 bps bid, 98 bps offered on Tuesday.

The company sold the 10-year senior notes to yield Treasuries plus 105 bps on Monday.

The Luxembourg-based maker of health-care products for clinical and home settings has its U.S. base in Mansfield, Mass.

AGL notes widen

In other secondary action, AGL Capital's $500 million of 4.4% 30-year senior notes traded at 128 bps bid, 125 bps offered.

The notes also sold on Monday at Treasuries plus 130 bps.

The energy services holding company is based in Atlanta.

Consumers Energy trades better

The secondary market also saw Consumers Energy's $425 million of 3.95% 30-year first mortgage bonds trade 3 bps better at 82 bps bid, 80 bps offered.

The notes sold on Monday to yield Treasuries plus 85 basis points.

The natural gas and electric subsidiary of CMS Energy Corp. is based in Jackson, Mich.

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