Westpac, BPCE price as session's supply tops $10 billion; Simon, ONE Gas firm; spreads widen

By Cristal Cody and Aleesia Forni

Virginia Beach, Jan. 13 - Westpac Banking Corp., Simon Property Group LP and ONE Gas Inc. were among the day's issuers bringing more than $10 billion of supply to the high-grade market.

Australia's Westpac came to market with a $1.5 billion issue of five-year senior notes in fixed-rate and floating-rate tranches.

The sale included $250 million of five-year floaters at par to yield Libor plus 61 basis points, and $1.25 billion of 2.25% five-year notes was priced to yield Treasuries plus 70 bps.

Meanwhile, Simon Property brought a $1.2 billion issue of senior notes in five- and 10-year tranches.

The company sold $600 million of 2.2% five-year notes at Treasuries plus 65 bps.

There was also a $600 million issue of 3.75% notes due 2024 priced at 100 bps over Treasuries.

ONE Gas hit the session's primary with a $1.2 billion three-part issue of notes.

There was $300 million of 2.07% notes due 2019 priced at Treasuries plus 48 bps.

A second tranche was $300 million of 3.61% 10-year notes sold with a spread of Treasuries plus 88 bps, while a $600 million tranche of 4.685% notes due 2044 sold at Treasuries plus 88 bps.

France's BPCE SA also came to market during the session, selling $1.5 billion of 5.15% 10-year tier 2 notes at 235 bps over Treasuries, according to a market source.

There was also a new issue from Electricite de France SA sold on Monday, though details were not available at press time.

Last week's supply was dominated by financial issuers, and sources are expecting this week to be more of the same.

Financials including J.P. Morgan, Wells Fargo and Citigroup are announcing earnings this week, one market source noted, which could lead them to bring new deals to the primary soon after.

The source added that he continues to expect high-grade supply to come in "close to $25 billion" for the week.

Investment-grade bonds opened the session slightly wider and stayed weak over the day, according to market sources.

The Markit CDX North American Investment Grade series 21 index eased 2 bps to a spread of 66 bps on Monday.

New issues traded flat to slightly tighter, according to market sources.

Simon Property Group's two tranches of notes firmed 1 bp, traders said.

ONE Gas' three-part offering tightened modestly in aftermarket trading.

Electricite de France's new bonds due 2044 traded at 125 bps offered, a trader said.

The issue from Westpac priced late in the day and was not seen in the secondary market.

"Too early," one trader said.

Westpac brings five-years

Westpac Banking (Aa2/AA-/) priced a two-part $1.5 billion issue of five-year senior notes in fixed-rate and floating-rate tranches, according to a 424B5 filed with the Securities and Exchange Commission.

Westpac priced $250 million of five-year floaters at par to yield Libor plus 61 bps.

A $1.25 billion tranche of 2.25% five-year notes was priced at 99.864 to yield 2.279%, or Treasuries plus 70 bps.

BofA Merrill Lynch, Citigroup Global Markets Inc. and Goldman Sachs & Co. are the joint bookrunners.

Proceeds will be used for general corporate purposes.

Westpac was last in the U.S. bond market with a $1.4 billion sale of five-year senior notes (Aa2/AA-/) priced in two tranches on July 24.

There was $650 million of five-year floating-rate notes sold to yield Libor plus 74 bps and $750 million of 2.25% five-year notes priced with a spread of Treasuries plus 93 bps.

The banking organization is based in Sydney, Australia.

BPCE sells sub notes

France's BPCE priced $1.5 billion of 5.15% tier 2 subordinated notes due July 21, 2024 at 235 bps over Treasuries, according to a market source.

HSBC Securities Inc., ING Financial Markets LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Natixis Securities were the joint bookrunners for the Rule 144A and Regulation S deal.

The financial services company is based in Paris.

Simon Property new issue

Simon Property Group priced $1.2 billion of senior notes (A2/A/) in tranches due 2019 and 2024 on Monday, according to a market source and two separate FWP filings with the SEC.

The sale included $600 million of 2.2% five-year notes priced at 99.81 to yield 2.24%, or Treasuries plus 65 bps.

A second tranche was $600 million of 3.75% notes due 2024 sold with a spread of 100 bps plus Treasuries.

Pricing was at 99.379 to yield 3.825%.

Simon Property Group's 2.22% notes due 2019 tightened to 63 bps bid, 60 bps offered, a trader said. Another trader saw the notes late in the day at 63 bps bid, 62 bps offered.

The 3.75% notes due 2024 firmed to 99 bps bid, 97 bps offered, a trader said. The notes headed out late afternoon at 98 bps bid, another trader said.

Citigroup Global Markets, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Morgan Stanley, BBVA Securities Inc., RBC Capital Markets LLC, SunTrust Robinson Humphrey Inc. and U.S. Bancorp Investments Inc. were the joint bookrunners.

Co-managers were BB&T Capital Markets, PNC Capital Markets LLC and SMBC Nikko Securities America, Inc.

Proceeds will be used to repay borrowings under the company's $4 billion credit facility incurred in connection with its repayment of a mortgage on its Sawgrass Mills property and for general corporate purposes.

The real estate investment trust for retail properties is based in Indianapolis.

ONE Gas three-parter

ONE Gas priced a $1.2 billion three-part issue of notes on Monday, according to a company release and a market source.

The sale included $300 million of 2.07% notes due 2019 priced at par, or Treasuries plus 48 bps, and $300 million of 3.61% 10-year notes also priced at par to yield Treasuries plus 88 bps.

There was also $600 million of 4.685% notes due 2044 priced at 99.99 to yield 4.658%.

The issue priced with a spread of Treasuries plus 88 bps.

All three tranches priced at the tight end of talk.

ONE Gas' 2.07% notes due 2019 firmed to 44 bps offered, a trader said.

The tranche of 3.61% notes due 2024 was not immediately active in the secondary market. The 4.658% notes due 2044 firmed to 87 bps bid, 83 bps offered, the trader said.

Bookrunners were BofA Merrill Lynch, JPMorgan, Morgan Stanley and RBS Securities Inc.

ONE Gas is a wholly owned subsidiary of Oneok Inc., a Tulsa, Okla.-based natural gas company.

Bank/brokerage CDS costs widen

Investment-grade bank and brokerage CDS prices widened on Monday, according to a market source.

Bank of America Corp.'s CDS costs eased 1 bp to 77 bps bid, 81 bps offered. Citigroup Inc.'s CDS costs rose 2 bps to 69 bps bid, 72 bps offered. JPMorgan Chase & Co.'s CDS costs widened 2 bps to 68 bps bid, 71 bps offered. Wells Fargo & Co.'s CDS costs rose 2 bps to 39 bps bid, 42 bps offered.

Merrill Lynch's CDS costs widened 2 bps to 80 bps bid, 86 bps offered. Morgan Stanley's CDS costs eased 1 bp to 87 bps bid, 91 bps offered. Goldman Sachs Group, Inc.'s CDS costs rose 1 bp to 90 bps bid, 94 bps offered.

Paul Deckelman contributed to this review.

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