Enbridge Energy, Kommuninvest price; AT&T paper mixed; Verizon soft; Duke Energy tight

By Aleesia Forni and Cristal Cody

Virginia Beach, Oct. 1 – Enbridge Energy Partners LP and Kommuninvest entered the investment-grade primary market on Thursday during a softer session for the market as primary activity fell short of expectations.

The session’s new issues pushed the week’s total supply to roughly $27 billion, so far falling just short of what was predicted to be around a $30 billion week.

Coming on the heels of Wednesday’s blowout $14.6 billion nine-part transaction from Hewlett-Packard Enterprise Co. that garnered around $30 billion of orders, sources had remarked on the potential for a solid showing of issuers to hit the primary market on Thursday.

However, following a sour performance of Hewlett-Packard’s bonds in the secondary, with tranches widening by more than 10 basis points, and continued volatile conditions, market sentiment was decidedly weaker.

“Thought today could be busier,” one source noted, referencing a number of deals in the current pipeline and the initial strong reception to Hewlett-Packard’s offering.

The source also noted “a few” potential issuers that decided to postpone their respective deals in light of Hewett-Packard’s behemoth bond offering during Wednesday’s session.

In the Canadian primary market, Bank of Montreal priced a C$1.75 billion notes offering, according to a market source. BMO Nesbitt Burns Inc. was the bookrunner. Final pricing details were not available by press time.

In secondary trading on Thursday, AT&T Inc.’s bonds (/BBB+/A-) were mixed, with the short end tighter.

Verizon Communications Inc.’s 3.5% notes due 2024 traded 5 bps wider over the day.

In other trading, Duke Energy Progress Inc.’s $1.2 billion first mortgage bonds (Aa2/A/A+) were flat to 1 bp tighter and remain stronger than issuance.

The Markit CDX North American Investment Grade 25 index eased 2 bps to a spread of 95 bps, the widest range of the year.

Enbridge Energy taps market

Enbridge Energy Partners issued $1.6 billion of senior notes (Baa3/BBB) in tranches due 2020, 2025 and 2045 on Thursday, according to an informed source.

Priced was $500 million of 4.375% five-year notes at 99.464 with a yield of 4.495%. The issue sold at 312.5 bps over Treasuries.

A $500 million 5.875% tranche of 10-year notes sold with a Treasuries plus 387.5 bps spread. Pricing was at 99.654 to yield 5.921%.

A $600 million 7.375% 30-year tranche of bonds priced at 98.665 to yield 7.487%, or Treasuries plus 462.5 bps.

All three tranches came on top of price guidance.

Deutsche Bank Securities Inc., BNP Paribas Securities Corp., Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC are the joint bookrunners.

Proceeds will be used to repay a portion of outstanding commercial paper, to repay any credit facility borrowings that are outstanding, to fund a portion of a capital expansion project and the costs for unwinding certain interest hedging arrangements, for general partnership purposes or any combination of such purposes.

The energy transport and storage company is based in Houston.

Kommuninvest bond prices

Kommuninvest I Sverige priced on Thursday an upsized $1.25 billion issue of notes (Aaa/AAA) due 2018 at mid-swaps plus 23 bps, a market source said.

The notes were upsized from $1 billion and sold at the tight end of guidance set in the mid-swaps plus 25 bps area.

BofA Merrill Lynch, HSBC Securities, J.P. Morgan Securities LLC and RBS Securities Inc. were the bookrunners.

Full details of the offering were unavailable at press time.

Kommuninvest offers funding to municipalities of Sweden and is based in Orebro.

Toyota sells floaters

Also on Thursday, Toyota Motor Credit Corp. priced $1.5 billion of one-year floating-rate medium-term notes (Aa3/A-), series B, at par to yield Libor plus 20 bps on Thursday, according to an FWP filed with the Securities and Exchange Commission.

RBC Capital Markets LLC and Toyota Financial Services Securities USA Corp. are the agents.

Toyota Motor Credit is the Torrance, Calif.-based funding arm of auto manufacturer Toyota.

AT&T paper mixed

AT&T’s 3.4% notes due 2025 headed out 8 bps tighter at 192 bps bid on Thursday, 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 eased 3 bps in secondary trading to 245 bps bid.

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

The telecommunications company is based in Dallas.

Verizon notes widen

Verizon’s 3.5% notes due 2024 widened 5 bps to 165 bps bid, a market source said.

The company sold $2.5 billion of the notes (Baa1/BBB+/A-) on Oct. 22, 2014 at a spread of Treasuries plus 135 bps.

The telecommunications company is based in New York City.

Duke Energy remains strong

Duke Energy’s 3.25% notes due 2025 traded flat at 99 bps bid, according to a market source.

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

Duke Energy’s 4.2% bonds due 2045 firmed 1 bp to 118 bps bid on Thursday.

The bonds priced in a $700 million tranche in the Aug. 10 offering at Treasuries plus 130 bps.

Raleigh, N.C.-based Duke Energy Progress is an electricity distributor in North Carolina and South Carolina.

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