PepsiCo, Kohl’s, Santander Holdings do deals; PepsiCo soft; McDonald’s firms

By Aleesia Forni and Cristal Cody

Virginia Beach, July 14 – PepsiCo Inc. led a flood of issuance for the high-grade market on Tuesday, pricing $3.25 billion of notes.

Tranches of the five-part offering sold around 10 basis points tight of talk, and the deal attracted an order book that was more than two times oversubscribed.

Sumitomo Mitsui Banking Corp. sold its $3 billion four-part issue at the tight end of price guidance, and JPMorgan Chase & Co. priced a $2.5 billion 10-year senior holding company note.

Meantime, Kohl’s Corp. and Santander Holdings USA Inc. were each in the primary with $1.1 billion offerings.

The session also hosted new deals from Export Development Canada, European Investment Bank, the Canadian Imperial Bank of Commerce and Nationwide Building Society.

In total, the investment-grade primary market hosted $17.4 billion of new issuance on Tuesday, bringing the week’s supply so far to $32.4 billion in only two sessions.

TransCanada Pipelines Ltd. tapped the market on Tuesday with a C$750 million offering of 3.3% 10-year medium-term note debentures (A3/A-/DBRS: A) at 99.873 to yield 3.315%, or a spread of 165 bps over the interpolated Government of Canada bond curve.

Canadian primary activity may stay light for the immediate near-term, depending on response to the Bank of Canada’s policy rate decision on Wednesday, according to market sources.

“I don’t expect to see much with the concessions we’re seeing,” one source said. “Marketing doesn’t seem to be all that receptive right now. All-in yields are still pretty good.”

In the secondary market, PepsiCo’s existing 2.75% senior notes due 2025 were weaker than where they came in April.

In other trading, McDonald’s Corp.’s senior notes (A3/A-/BBB+) traded about 1 bp better over the day but wider than issuance.

The Markit CDX North American Investment Grade series 23 index firmed 1 bp to a spread of 67 bps on Tuesday.

The CDX index has ranged from a low spread of 60.4 bps to a high spread of 76.4 bps over the past 12 months, according to a Barclays Bank plc report.

PepsiCo offering

PepsiCo Inc. priced on Tuesday $3.25 billion of senior notes (A1/A/A) in five tranches, an informed source said.

The sale included a $650 million 1.125% three-year note sold at 99.968 to yield 1.141%, or Treasuries plus 50 bps.

Also priced was $600 million of three-year floating-rate notes at Libor plus 25 bps.

The company sold $800 million of 3.1% seven-year notes at 99.981 to yield 3.103%. The notes sold with a spread of 100 bps over Treasuries.

A $700 million tranche of 3.5% 10-year notes priced at 99.532 to yield 3.556%, or Treasuries plus 115 bps.

Finally, $500 million of 4.6% 30-year bonds sold with a spread of 140 bps over Treasuries. Pricing was at 99.645 to yield 4.622%.

All tranches sold at the tight end of price guidance.

The bookrunners for the offering are Goldman Sachs & Co., HSBC Securities and J.P. Morgan Securities LLC.

Proceeds will be used for general corporate purposes, including the repayment of commercial paper.

PepsiCo is a Purchase, N.Y.-based global food and beverage company.

SMBC four-tranche offer

Sumitomo Mitsui Banking priced $3 billion of senior notes (A1/A+) in four tranches on Tuesday, according to a market source.

There was $500 million of floating-rate notes due 2018 priced at par to yield Libor plus 74 bps.

The company also sold a $1 billion 1.95% note due 2018 at 99.933 to yield 1.973%, or Treasuries plus 95 bps.

Pricing was at the tight end of guidance set in the Treasuries plus 100 bps area, tightened from revised talk in the Treasuries plus 105 bps area.

A $1 billion 2.65% note due 2020 sold at 99.986 to yield 2.653%.

The issue sold with a spread of 100 bps over Treasuries, at the tight end of guidance set in the Treasuries plus 105 bps area, which was tightened from revised talk in the Treasuries plus low-115 bps area.

Also priced was $500 million of 3.65% notes due 2025 with a spread of Treasuries plus 130 bps. Pricing was at 99.635 to yield 3.694%.

The notes sold at the tight end of guidance and revised initial talk set in the Treasuries plus 135 bps area.

Bookrunners are Goldman Sachs Barclays and SMBC Nikko.

Sumitomo Mitsui is a Tokyo-based financial services company.

EIB prices in line

In other new issue happenings, the European Investment Bank priced $3 billion of 2.25% seven-year global notes (Aaa/AAA/AAA) in line with talk at mid-swaps plus 16 bps, according to a market source.

Barclays, Deutsche Bank Securities Inc. and TD Securities are the bookrunners.

The lender for the European Union is based in Kirchberg, Luxembourg.

JPMorgan holdco notes

JPMorgan Chase priced $2.5 billion of 3.9% 10-year senior holding company notes (A3/A/A+) on Tuesday at Treasuries plus 155 bps, according to an informed source.

The notes sold on top of talk and at the tight end of initial guidance set in the 160 bps area over Treasuries.

Pricing was at 99.624 to yield 3.946%.

JPMorgan was the bookrunner.

Proceeds will be used for general corporate purposes.

The financial services company is based in New York City.

CIBC new issue

Also on Tuesday, the Canadian Imperial Bank of Commerce sold a $1.2 billion 2.25% five-year covered bond (Aaa//AAA) with a spread of 47 bps over mid-swaps, according to a market source.

Initial price thoughts were set in the high-40 bps area over mid-swaps.

Pricing was at 99.986 to yield 2.253%.

The bookrunners for the Rule 144A and Regulation S sale were CIBC World Markets Corp., Citigroup Global Markets Inc., HSBC Securities and JPMorgan.

CIBC is a Toronto-based diversified financial institution.

Kohl’s two-parter

Kohl’s priced $1.1 billion of senior notes (Baa1/BBB/BBB+) on Tuesday in tranches due 2025 and 2045, according to a market source and an FWP filed with the Securities and Exchange Commission.

There was $650 million of 4.25% 10-year notes priced at 99.976 to yield 4.253%, or Treasuries plus 185 bps.

A $450 million tranche of 5.55% 30-year bonds sold at 99.681 to yield 5.572% with a spread of Treasuries plus 235 bps.

Goldman Sachs, U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC are the joint bookrunners.

Kohl’s plans to use the proceeds to fund a tender offer and for general corporate purposes.

The department store chain is based in Menomonee Falls, Wis.

Santander new issue

Santander Holdings USA priced $1.1 billion of 4.5% 10-year senior notes (Baa2/BBB) with a spread of 210 bps over Treasuries on Tuesday, according to an FWP filed with the SEC.

Pricing was at 99.96 to yield 4.505%.

Proceeds will be used for general corporate purposes.

Barclays, JPMorgan and Santander Investment Securities Inc. are the bookrunners.

Boston-based Santander Holdings USA is the parent company of Sovereign Bank. It is a subsidiary of Spain’s Banco Santander, SA.

Nationwide prices tight

The session also saw Nationwide Building Society price $1 billion of 3.9% notes (A1/A/) due 2025 at 155 bps over Treasuries, according to a market source.

Pricing was at the tight end of guidance set in the 160 bps area over Treasuries. Initial guidance was set in the range of 165 bps to 170 bps over Treasuries.

The bookrunners for the Rule 144A and Regulation S deal were BofA Merrill Lynch, Barclays, Deutsche Bank Securities and JPMorgan.

The company is based in Swindon, England.

EDC global notes

Export Development Canada priced $1 billion of 1.75% five-year global notes (Aaa/AAA) on Tuesday at mid-swaps flat, according to a market source and an FWP filed with the SEC.

The notes sold in line with guidance, which had firmed from initial talk in the mid-swaps plus 2 bps area.

Pricing was at 99.81 to yield 1.79%.

BofA Merrill Lynch, Citigroup Global Markets, JPMorgan and TD Securities are the joint bookrunners.

Proceeds will be used for general corporate purposes.

The government-backed agency for exporters is based in Ottawa.

PepsiCo eases

PepsiCo’s 2.75% notes due 2025 eased 1 bp to 97 bps bid in secondary trading on Tuesday, according to a market source.

The company sold $1 billion of the notes (A1/A-/A) on April 27 at a spread of Treasuries plus 87 bps.

PepsiCo is a Purchase, N.Y.-based global food and beverage company.

McDonald’s firms

McDonald’s 2.2% notes due 2020 traded about 1 bp tighter at 79 bps bid during the session, a market source said.

The company sold $700 million of the notes on May 18 at Treasuries plus 70 bps.

The tranche of 4.6% notes due 2045 firmed 1 bp to 164 bps bid on Tuesday.

McDonald’s sold $600 million of the notes on May 18 at Treasuries plus 155 bps.

The fast food chain is based in Oak Brook, Ill.

Bank/brokerage CDS costs flat

Investment-grade bank and brokerage CDS prices were mostly flat on Tuesday, according to a market source.

Bank of America Corp.’s CDS costs were flat at 71 bps bid, 74 bps offered. Citigroup Inc.’s CDS costs were also flat at 79 bps bid, 82 bps offered. JPMorgan Chase’s CDS costs were declined 2 bps to 67 bps bid, 70 bps offered. Wells Fargo & Co.’s CDS costs were flat at 50 bps bid, 53 bps offered.

Merrill Lynch’s CDS costs remained at 73 bps bid, 75 bps offered. Morgan Stanley’s CDS costs ended flat at 79 bps bid, 82 bps offered. Goldman Sachs Group, Inc.’s CDS costs flat at 86 bps bid, 89 bps offered.

Stephanie N. Rotondo contributed to this review.

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