Celgene prices $4.5 billion; Senior Housing sells notes; high-grade credit spreads soften

By Cristal Cody

Tupelo, Miss., Feb. 8 – A handful of high-grade issuers tapped the primary market on Thursday as credit spreads widened amid continued volatility in equities.

The Federal Home Loan Bank System came early in the session and priced $3 billion of two-year global notes.

Celgene Corp. priced $4.5 billion of senior notes in four tranches during the session.

Senior Housing Properties Trust sold $500 million of 10-year senior notes.

Also, Municipality Finance plc priced a $250 million tap of its senior floating-rate notes due Feb. 7, 2020 on Thursday.

The Dow Jones industrial average dropped more than 1,000 points, or 4.15%, on the day.

The Markit CDX North American Investment Grade 29 index widened about 6 basis points to close at a spread of 61 bps.

Investment-grade bond spreads have been mostly softer on the volatility in stocks, with spreads in the one- to three-year part of the curve widening 2 bps on Wednesday, on top of a 3 bps to 7 bps widening on Tuesday on heavy selling pressure, according to a BofA Merrill Lynch analysts’ note released on Thursday.

“The $2.3 [billion] jump in dealer inventories of 1-3 year paper over the last two days shows that this spread widening is driven by investor selling,” the analysts said. “We continue to look for wider spreads in the front-end of the curve.”

Celgene sells four tranches

Celgene priced a $4.5 billion four-tranche offering of senior notes (Baa2/BBB+/) on Thursday to help fund its acquisition of Juno Therapeutics, Inc., according to an FWP filing with the Securities and Exchange Commission.

The company sold $500 million of 2.875% three-year notes at 99.954 to yield 2.891% and a spread of Treasuries plus 60 bps.

Celgene priced $1 billion of 3.25% five-year notes at 99.758 to yield 3.303%, or a Treasuries plus 75 bps spread.

The company brought $1.5 billion of 3.9% 10-year notes at 99.656 to yield 3.942%. The bonds priced with a spread of 110 bps over Treasuries.

In the final tranche, Celgene sold $1.5 billion of 4.55% 30-year notes at 99.40 to yield 4.587%. The bonds priced with a spread of Treasuries plus 145 bps.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, BofA Merrill Lynch and HSBC Securities (USA) Inc. were the bookrunners.

If the deal is terminated or does not close by Nov. 20, 2018, Celgene is required to redeem the notes at 101.

The global biopharmaceutical company is based in Summit, N.J.

Senior Housing prices

Senior Housing Properties Trust priced $500 million of 4.75% 10-year senior notes (Baa3/BBB-/) in its offering at a spread of 210 bps over Treasuries, according to an FWP filing with the SEC.

The notes priced at 98.312 to yield 4.966%.

BBVA Securities Inc., Mizuho Securities USA Inc., RBC Capital Markets, LLC, UBS Securities LLC and Wells Fargo Securities LLC were the bookrunners.

Proceeds will be used to reduce debt under the company’s revolving credit facility.

Based in Newton, Mass., the real estate investment trust owns senior living communities, medical office buildings and wellness centers throughout the United States.

IG funds extend gains

Investment-grade corporate funds posted their sixth straight gain for the year so far this week, and their 21st consecutive weekly gain following a rare two straight weekly losses back in September, according to a Prospect News analysis of fund-flow statistics generated by AMG Data Services Inc.

The Arcata, Calif.-based unit of Thomson Reuters Corp’ s Lipper analytics division indicated that the funds saw a net inflow of $4.73 billion during the reporting week ended Wednesday, versus last week’s $2.2 billion cash gain.

This week’s inflow was the biggest so far this year, eclipsing the previous mark of almost $4.19 billion during the Jan. 10 week, and was one of the largest weekly inflows ever recorded for the IG funds.

This week s inflow establishes an estimated year-to-date net inflow figure of $18.88 billion, a sixth consecutive new peak for the year so far, up from last week s $14.75 billion.

Last year ended with an estimated $117.35 billion net inflow total for the year, the 14th consecutive new 2017 cumulative peak level, the analysis indicated.

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