Precision Castparts, Estee Lauder price; Shell tightens; Exxon, ConocoPhillips wider

By Aleesia Forni and Cristal Cody

Virginia Beach, June 1 – The investment-grade bond market was showing signs of fatigue on Monday following the $159.47 billion of new paper priced during the month of May.

Tranches of Precision Castparts Corp.’s $2 billion four-part new issue of notes sold between 5 basis points tight to 5 bps wide of initial talk.

The deal attracted around $2.9 billion of orders.

Meantime, Estee Lauder Cos. Inc. was forced to widen price thoughts by 10 bps, ultimately issuing its $300 million of 30-year bonds at a spread of 155 bps over Treasuries.

Marathon Oil Corp. sold a $2 billion three-part note offering, while Starbucks Corp. priced $850 million in two tranches.

Also on Monday, Barclays plc priced a $1 billion five-year note in line with initial price thoughts after scrapping plans for an additional five-year floating-rate tranche.

The session also hosted new deals from TTX Co. and Discover Bank.

Despite the market’s rocky session, sources are expecting primary activity to continue on Tuesday.

Landwirtschaftliche Rentenbank is slated to price a benchmark offering of 10-year notes in the session ahead, setting price talk for the planned offering in the area of mid-swaps plus 10 bps.

Around $25 billion of paper is predicted to price during June’s opening week.

Energy bonds were mixed in secondary trading on Monday.

Shell International Finance BV’s 2.125% notes due 2020 tightened 4 bps.

Exxon Mobil Corp.’s 2.709% notes due 2025 edged 1 bp wider over the day.

ConocoPhillips Co.’s senior notes (A1/A/) traded flat to 1 bp weaker.

Southwestern Energy Co.’s 4.95% senior notes due 2025 were unchanged.

The Markit CDX North American Investment Grade series 23 index was unchanged at a spread of 64 bps.

Precision Castparts new issue

Precision Castparts priced $2 billion of senior notes (A2/A-/) in tranches due 2020, 2025, 2035 and 2045, according to a market source and an FWP filed with the Securities and Exchange Commission.

The company sold $550 million of 2.25% five-year notes at 99.99 to yield 2.252%, or Treasuries plus 70 bps.

There was also $850 million of 3.25% 10-year notes sold at 99.796 to yield 3.274%. The notes priced with a spread of Treasuries plus 110 bps.

A $275 million tranche of 4.2% 20-year notes sold at 99.397 to yield 4.245%, or Treasuries plus 130 bps.

Finally, $325 million of 4.375% 30-year notes priced at 99.668 to yield 4.395% with a spread of Treasuries plus 145 bps.

BofA Merrill Lynch, Citigroup Global Markets Inc., Mizuho Securities, MUFG, U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC are the bookrunners.

Proceeds will be used to pay down commercial paper, to pay $500 million of 0.7% senior notes due December 2015 and for general corporate purposes, which may include acquisitions and share repurchases.

The metal component and industrial products manufacturer for the aerospace industry is based in Portland, Ore.

Marathon Oil prices tight

Also on Monday, Marathon Oil sold $2 billion of senior notes (Baa1/BBB/) in three maturities, according to an informed source and an FWP filed with the SEC.

There was $600 million of 2.7% five-year notes sold at 99.783 to yield 2.747% with a spread of Treasuries plus 120 bps.

A $900 million 3.85% 10-year note priced at 99.771 to yield 3.878%, or Treasuries plus 170 bps.

Finally, $500 million of 5.2% 30-year bonds sold at 99.941 to yield 5.204% with a spread of Treasuries plus 225 bps.

All three tranches sold at the tight end of price guidance.

J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Citigroup Global Markets, Scotia Capital (USA) Inc. and Mizuho Securities are the bookrunners.

The company plans to use $1 billion of the proceeds to repay its 0.9% senior notes due Nov. 1, 2015 and for general corporate purposes.

The international energy company for oil sands mining and gas exploration and production is based in Houston.

Discover sells $1.25 billion

Discover Bank priced $1.25 billion of 3.1% senior bank notes (Baa3/BBB/BBB+) due June 4, 2020 on Monday at Treasuries plus 155 bps, a markets source said.

The notes were guided in the Treasuries plus 160 bps area having firmed from initial talk set in the Treasuries plus 165 bps area.

Pricing was at 99.977 to yield 3.105%.

Proceeds will be used for general corporate purposes.

The bookrunners were BofA Merrill Lynch, Citigroup Global Markets and JPMorgan.

Discover Bank is the Chicago-based issuer of the Discover credit card and unit of Discover Financial Services.

Barclays five-year notes

In other primary happenings, Barclays sold $1 billion of 2.875% five-year senior notes (Baa3/BBB/A) on Monday at Treasuries plus 142 bps, according to an informed source.

The notes were talked in the Treasuries plus 145 bps area, adjusted from initial talk set in the low- to mid-140 bps area over Treasuries.

Plans for a five-year floating-rate note were dropped following the deal’s announcement.

Barclays is the bookrunner.

Proceeds will be used for general corporate purposes.

The financial services company is based in London.

Starbucks offering

Starbucks sold $850 million of senior notes (A3/A-/) in tranches due 2022 and 2045 on Monday, according to a market source and a 424B3 filing with the Securities and Exchange Commission.

The company priced a $500 million issue of 2.7% notes due 2022 at 99.981 to yield 2.703%, or Treasuries plus 78 bps.

Pricing was at the tight end of the Treasuries plus 80 bps area guidance having tightened from initial talk set in the Treasuries plus 95 bps area.

A $350 million 4.3% note due 2045 sold at 99.598 to yield 4.324% with a spread of Treasuries plus 138 bps.

The notes priced at the tight end of guidance set in the Treasuries plus 140 bps area. Initial talk was set in the Treasuries plus 150 bps area.

BofA Merrill Lynch, Citigroup Global Markets and Morgan Stanley are the joint bookrunners.

The company plans to use proceeds from the offering for general corporate purposes, including the redemption, repurchase or other acquisition of its $550 million of 6.25% senior notes due 2017 and possibly the repurchase of common stock under an ongoing share repurchase program, business expansion, payment of cash dividends on common stock or the financing of possible acquisitions.

Starbucks is a Seattle-based coffee company.

Estee Lauder prices wide

Estee Lauder was in the market on Monday with $300 million of 4.375% senior notes (A2/A+/) due 2045 priced at Treasuries plus 155 bps, according to a market source.

The notes sold at 97.999 to yield 4.497%.

Pricing was wide of initial price thoughts set in the 145 bps area over Treasuries.

Citigroup Global Markets and Goldman Sachs & Co. were the active bookrunners. BofA Merrill Lynch and JPMorgan were the passive bookrunners.

Proceeds will be used for general corporate purposes, which may include repayment of outstanding commercial paper and other debt, acquisitions, working capital, capital expenditures and repurchases of common stock.

New York-based Estee Lauder is a manufacturer and marketer of skin care, makeup, fragrance and hair-care products.

TTX senior notes

The session also saw TTX price a $300 million issue of 2.6% senior notes (Baa1/A+/A-) due June 15, 2020 with a spread of Treasuries plus 105 bps, according to a market source.

Pricing was at 99.995 to yield 2.601%.

Proceeds will be used for general corporate purposes.

Citigroup Global Markets, JPMorgan and Wells Fargo Securities were the bookrunners.

The railroad freight company is based in Chicago.

Rentenbank talk

Landwirtschaftliche Rentenbank set price talk on Monday for a planned benchmark offering of notes due 2025 in the area of mid-swaps plus 10 bps, according to an informed source and a filing with the SEC.

The issue (Aaa/AAA/AAA) is expected to price on Tuesday.

BofA Merrill Lynch, Credit Suisse, Deutsche Bank Securities Inc., HSBC Securities and RBC Capital Markets LLC are managing the sale.

Proceeds will be used to finance lending activities, including the refinancing of existing liabilities.

The German development agency for agribusiness is based in Frankfurt.

Shell improves

Shell International Finance’s 2.125% notes due 2020 firmed 4 bps to 57 bps bid on Monday, a market source said.

Shell sold $2 billion of the five-year notes (A1/AA/) on May 6 at a spread of Treasuries plus 60 bps.

The company is a subsidiary of the Hague, the Netherlands-based Royal Dutch Shell plc.

Exxon Mobil weaker

Exxon Mobil’s 2.709% notes due 2025 eased 1 bp to 69 bps bid in the secondary market, a source said.

Exxon Mobil sold $1.75 billion of the notes (Aaa/AAA/) on March 3 at Treasuries plus 58 bps.

The oil and gas company is based in Irving, Texas.

ConocoPhillips mixed

ConocoPhillips’ 2.2% notes due 2020 eased 1 bp to 67 bps bid, according to a market source.

The company sold $500 million of the notes on May 13 at 65 bps plus Treasuries.

The company’s 3.35% notes due 2025 were unchanged on the day at 115 bps bid.

ConocoPhillips sold $500 million of the 10-year notes in the May 13 offering at Treasuries plus 110 bps.

The energy company is based in Houston.

Southwestern Energy flat

Southwestern Energy’s 4.95% notes due 2025 traded flat at 239 bps bid, according to a market source.

Southwestern Energy sold $1 billion of the notes (Baa3/BBB-/) on Jan. 20 at Treasuries plus 318 bps.

The independent natural gas and oil company is based in Houston.

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