Duke Energy, Kimco Realty tap market; RBS, FMS in pipeline; bonds mixed; credit spreads flat

By Cristal Cody

Eureka Springs, Ark., Aug. 9 – New high-grade bond issuance on Tuesday included deals from Duke Energy Corp. and Kimco Realty Corp.

Duke Energy sold $3.75 billion of senior notes in three tranches.

Kimco Realty priced $500 million of 10-year notes.

General Dynamics Corp., Bank of New York Mellon Corp. and Old Line Bancshares, Inc. also were expected to price new bonds.

Also on Tuesday, Royal Bank of Scotland Group plc kicked off a round of investor meetings in New York and London ahead of an offering of perpetual subordinated contingent convertible additional tier 1 capital notes.

In addition, FMS Wertmanagement joined the deal pipeline with an offering of notes.

The Markit CDX North American Investment Grade index ended the session flat at a spread of 71 basis points.

In the secondary market, Archer-Daniels-Midland Co.’s new $1 billion offering of 2.5% notes due 2026 improved 5 bps.

Boston Properties LP’s 2.75% senior notes due 2026 were unchanged from issuance in early secondary trading.

Duke prices $3.75 billion

Duke Energy sold $3.75 billion of senior notes due Sept. 1, 2021, Sept. 1, 2026 and Sept. 1, 2046 (Baa1/BBB+/BBB+) on Tuesday, according to a market source and an FWP filing with the Securities and Exchange Commission.

The company sold $750 million of 1.8% five-year notes at 99.99 to yield 1.802% and a spread of 70 bps over Treasuries. The notes priced on the tight side of guidance of 75 bps area.

Duke Energy priced $1.5 billion of 2.65% 10-year notes at 99.692 to yield 2.685%. The notes priced with a spread of 115 bps plus Treasuries. The notes priced on the tight side of guidance in the 120 bps area.

The company sold $1.5 billion of 3.75% 30-year notes at 99.944 to yield 3.753% and a spread of 150 bps over Treasuries, on the tight side of guidance of 155 bps area.

Barclays, Credit Suisse Securities (USA) LLC, Mizuho Securities USA Inc., MUFG and UBS Securities LLC were the bookrunners.

Proceeds will be used to fund a portion of costs in connection with the company’s acquisition of Piedmont Natural Gas Co., Inc. The 2021 notes have a par call date of Aug. 1, 2021, the 2026 notes have a par call date of June 1, 2026, and the 2046 notes have a par call date of March 1, 2046.

The diversified energy company is based in Charlotte, N.C.

Kimco sells $500 million

Kimco Realty priced $500 million of 2.8% 10-year notes on Tuesday at 99.169 to yield 2.895%, according to an FWP filing with the SEC.

The notes (Baa1/BBB+) priced with a spread of 135 bps over Treasuries.

Barclays, J.P. Morgan Securities LLC, USB Securities, Deutsche Bank Securities Inc., BofA Merrill Lynch and Wells Fargo Securities, LLC were the bookrunners.

Proceeds will be used to fund the previously announced redemption of $290.9 million of outstanding 5.7% senior notes due May 1, 2017. Any remaining proceeds will be used for general corporate purposes, including to pre-fund 2017 debt maturities, including $137.2 million outstanding of 6.32% mortgage debt.

Kimco is a real estate investment trust for shopping centers based in New Hyde Park, N.Y.

RBS holds investor meetings

RBS kicked off a round of investor meetings on Tuesday in New York and London as the company prepares to price perpetual subordinated contingent convertible additional tier 1 capital notes, according to a market source.

The notes do not have a maturity date and are callable after five years and every five years thereafter, according to filings with the SEC.

RBS also is considering an additional perpetual 10-year non-callable tranche.

RBS is the global coordinator and lead manager. Joint bookrunners are Citigroup Global Markets Inc., Deutsche Bank, JPMorgan and UBS Investment Bank.

Proceeds will be used for general corporate purposes.

RBS is a banking and financial services company based in Edinburgh.

FMS offers notes

FMS Wertmanagement intends to price an offering of notes, according to a 424B5 filing with the SEC.

The bookrunners are BofA Merrill Lynch, Citigroup, JPMorgan and RBC Capital Markets, LLC.

Proceeds will be used to refinance existing liabilities in order to replace maturing, short-term money market instruments with long-term funding. Any remaining proceeds will be for general corporate purposes.

Munchen, Germany-based FMS Wertmanagement is a German state-owned wind down agency.

ADM improves

Archer-Daniels-Midland’s 2.5% notes due 2026 were seen early Tuesday 5 bps better than issuance at 90 bps offered, according to a market source.

Archer-Daniels-Midland sold $1 billion of the notes (A2/A/A) on Monday at 95 bps plus Treasuries.

The Chicago-based company processes agricultural commodities and manufactures food and feed ingredients.

Boston Properties unchanged

Boston Properties’ 2.75% notes due 2026 were flat in early secondary trading at 125 bps area, a market source said.

Boston Properties sold $1 billion of the notes (Baa2/A-/BBB+) on Monday at a spread of 125 bps over Treasuries.

The Boston-based company operates real estate investment trust Boston Properties, Inc.

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