Lloyds, Barclays, HSBC price during frenzied primary session; bank paper flat to softer

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 10 – The investment-grade bond market was flooded with new issues to open the week on Monday.

A group dominated by financial names brought $14 billion of paper to the primary during the session.

Lloyds Bank plc sold a $2 billion three-tranche offering of senior notes tighter than initial price thoughts.

A source noted strong demand for Barclays plc’s new $1.5 billion 30-year offering, which attracted an order book that was 2.8 times oversubscribed.

Also on Monday, HSBC Holdings plc sold $1.5 billion of subordinated notes at the tight end of guidance, while Duke Energy Progress Inc. priced an upsized $1.2 billion two-part new issue.

Simon Property Group LP, meantime, sold $1.1 billion of senior notes in five- and 10-year tranches.

American Water Capital Corp. and Paccar Financial Corp. each entered the primary market with two-part new issues.

The session also hosted new deals from Bank of New York Mellon, Discover Bank, Delta Air Lines Inc., Regency Centers LP and ING Bank.

In secondary trading, investment-grade bonds were mostly flat to modestly softer on the day, while market tone improved and credit spreads recovered some weakness, sources said.

Barclays’ existing 2.875% notes due 2020 were flat in the secondary market.

Goldman Sachs Group Inc.’s 3.5% notes due 2025 were unchanged over the session.

JPMorgan Chase & Co.’s 3.125% notes due 2025 traded 3 bps softer.

The Markit CDX North American Investment Grade index firmed 1 bp to a spread of 74 bps.

Lloyds three-parter prices

In primary happenings on Monday, Lloyds Bank priced a $2 billion three-tranche offering of senior notes (A1/A/A+) on Monday, according to a market source.

Included in the sale were $300 million of floating-rate notes due 2018 that priced to yield Libor plus 78 bps.

Also, $700 million of 2% notes due 2018 sold at 100 bps over Treasuries.

A third tranche was $1 billion of 2.7% notes due 2020 priced with a 110 bps spread over Treasuries.

The three- and five-year fixed-rate tranches priced tighter than price guidance.

BofA Merrill Lynch, Citigroup Global Markets Inc., Goldman Sachs & Co., Lloyds Securities LLC, Morgan Stanley & Co. LLC and RBC Capital Markets LLC are the bookrunners.

The notes are guaranteed by Lloyds Banking Group plc.

Proceeds will be used for general corporate purposes.

The retail bank is based in London.

Barclays sells 30-year paper

Barclays sold $1.5 billion of 5.25% 30-year senior notes (Baa3/BBB/A) at Treasuries plus 235 bps, according to a market source.

Pricing was at 99.76 to yield 5.266%.

The notes sold at the tight end of guidance set in the Treasuries plus 240 bps area. Initial price thoughts were set in the 250 bps area over Treasuries.

Barclays is the bookrunner.

Proceeds will be used for general corporate purposes.

The financial services company is based in London.

HSBC subordinated notes

HSBC Holdings sold $1.5 billion of subordinated notes (A2/A+) due 2025 at Treasuries plus 212 bps on Monday, according to a market source.

Pricing was at 99.18 to yield 4.352%.

The notes priced at the tight end of guidance set in the 215 bps area over Treasuries. Initially, the notes were talked in the range of 220 bps to 225 bps over Treasuries.

HSBC Securities (USA) Inc. is the bookrunner.

The bank plans to use the proceeds for general corporate purposes.

HSBC USA is a subsidiary of HSBC Holdings, a London-based banking and financial services group.

BNY does deal

Bank of New York Mellon priced $1.4 billion of notes (A1/A+/AA-) due Aug. 17, 2020 in fixed- and floating-rate tranches, a market source said.

The company issued a $300 million five-year floating-rate note at par to yield Libor plus 87 bps.

A $1.1 billion 2.6% five-year note sold at 100 bps over Treasuries. Pricing was at 99.953 to yield 2.61%.

Price guidance was in the Treasuries plus 105 bps area after having tightened from Treasuries plus 115 bps.

The bookrunners were BofA Merrill Lynch, Bank of New York Mellon, Barclays, J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

BNY Mellon is a New York-based financial services company.

Duke Energy upsizes

Also on Monday, Duke Energy Progress priced an upsized $1.2 billion two-part offering of first mortgage bonds (Aa2/A/A+) in tranches due 2025 and 2045, according to a market source and an FWP filed with the Securities and Exchange Commission.

The offering was upsized from a planned $1 billion.

There was $500 million of 3.25% 10-year notes priced at 99.695 to yield 3.286%, or Treasuries plus 105 bps.

The notes were talked in the range of Treasuries plus 115 bps to 120 bps.

Also priced was $700 million of 4.2% 30-year notes at 99.493 to yield 4.23%, or Treasuries plus 130 bps.

Pricing was tighter than talk, which was set at Treasuries plus 140 bps to 145 bps.

Credit Suisse Securities (USA) LLC, RBC Capital Markets LLC, SunTrust Robinson Humphrey Inc., UBS Securities LLC and Wells Fargo Securities LLC are the bookrunners.

Proceeds will be used to repay short-term debt under the company’s money-pool borrowing arrangement with Duke Energy Corp., to repay $400 million of 5.25% mortgage bonds due Dec. 15, 2015 and for general corporate purposes.

Raleigh, N.C.-based Duke Energy Progress generates and distributes electricity in North Carolina and South Carolina.

Simon Property two-parter

Simon Property Group sold $1.1 billion of senior notes (A2/A) in tranches due 2020 and 2025 on Monday, according to a market source and an FWP filed with the SEC.

A $500 million tranche of 2.5% five-year notes sold at 99.943 to yield 2.512%, or Treasuries plus 90 bps.

The notes were issued at the tight end of the Treasuries plus 95 bps area guidance following initial price thoughts in the low-100 bps area over Treasuries.

The company also sold $600 million of 3.5% 10-year notes at 99.354 to yield 3.577%. The issue sold with a spread of 135 bps over Treasuries.

Pricing was at the tight end of guidance set in the Treasuries plus 140 bps area after having tightened from the Treasuries plus mid- to high-140 bps area.

Citigroup, RBC Capital Markets and UBS Securities are the joint bookrunners.

Proceeds will be used to fund the redemption of all $366.6 million of 5.75% notes due 2015 and for general business purposes.

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

Discover Bank taps market

Discover Bank sold $1 billion of 2.6% bank notes (Baa3/BBB/BBB+) due 2018 on Monday with a spread of 155 bps over Treasuries, a market source said.

The notes sold at 99.938 to yield 2.618%.

Pricing was at the tight end of guidance set in the 160 bps area over Treasuries following initial talk in the 165 bps area over Treasuries.

Proceeds will be used for general corporate purposes.

Barclays, Credit Suisse Securities and Deutsche Bank Securities Inc. were the bookrunners.

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

American Water prices

The primary also hosted American Water Capital, which sold a $550 million two-part offering of senior notes (A3/A), according to a market source and an FWP filed with the SEC.

The offering included a $225 million tap of the company’s 3.4% senior notes due March 1, 2025 sold at Treasuries plus 120 bps. Pricing was at 99.667 to yield 3.441%.

Also, $325 million of 4.3% notes due Sept. 1, 2045 sold at 98.684 to yield 4.379% with a spread of Treasuries plus 145 bps.

The bookrunners are JPMorgan, MUFG, U.S. Bancorp Investments Inc., Wells Fargo Securities, Regions Securities LLC and Santander Investment Securities Inc.

Proceeds will be used to fund the redemption of certain long-term debt, for repayment of long-term debt of American Water’s operating subsidiaries and for repayment of other commercial paper.

The investor-owned water and wastewater utility company is based in Voorhees, N.J.

Paccar new issue

Paccar Financial priced $500 million of medium-term notes, series N, on Monday in two parts, according to FWP filings with the SEC.

The company issued $250 million of 1.75% three-year notes at 99.924 to yield 1.776%. The notes sold at Treasuries plus 70 bps.

There was also $250 million of 2.5% five-year notes priced at 99.907 to yield 2.52% with a 90 bps spread over Treasuries.

Bookrunners were JPMorgan, RBC Capital Markets, U.S. Bancorp and Wells Fargo Securities.

Paccar Financial is the Bellevue, Wash.-based financing arm of Paccar Inc.

Delta pass throughs price

Delta Air Lines sold an upsized $500 million of pass through trust certificates, series 2015-1, according to an FWP filed with the SEC.

There was $312,524,000 of 3.625% class AA pass through certificates (Aa3/AA) sold at par with a final expected distribution date of July 30, 2027.

A $69,449,000 issue of 3.875% class A pass through certificates (A1/A+) with a final expected distribution date of July 30, 2027 sold at par.

Finally, $118,027,000 of 4.25% class B pass through certificates sold at par with a final expected distribution date of July 30, 2023.

Morgan Stanley is the structuring agent and was joined by Credit Suisse Securities, Citigroup Global Markets and Goldman Sachs as joint lead bookrunners.

BNP Paribas Securities Corp., Credit Agricole Securities and Natixis are the passive bookrunners.

The proceeds will be used to acquire equipment notes for 15 Boeing 737-932ER aircraft delivered from September 2013 to February 2014.

Delta is a commercial airline based in Atlanta.

Regency offering

Regency Centers priced $250 million of 3.9% senior notes (Baa1/BBB/BBB) due Nov. 1, 2025 on Monday at Treasuries plus 175 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 99.264 to yield 3.989%.

The notes sold at the tight end of guidance set in the 180 bps area over Treasuries after having tightened from the 190 bps area over Treasuries.

JPMorgan, BofA Merrill Lynch, U.S. Bancorp and Wells Fargo Securities are the joint bookrunners.

Proceeds will be used to pay amounts outstanding on the company’s line of credit.

The notes will be guaranteed by Regency Centers Corp., a Jacksonville, Fla., real estate investment trust that owns retail shopping centers.

Barclays steady

Barclays’ 2.875% notes due 2020 traded flat on the day at 135 bps bid, according to a market source.

Barclays sold $1 billion of the notes (Baa3/BBB/A) on June 1 at Treasuries plus 142 bps.

The financial services company is based in London.

Goldman stable

Goldman Sachs’ 3.5% notes due 2025 were unchanged at 158 bps bid, a market source said.

Goldman sold $800 million of the notes (Baa1/A-/A) in a reopening on March 25 at Treasuries plus 145 bps.

The notes originally priced on Jan. 20, 2015 in a $1.7 billion offering at Treasuries plus 170 bps.

The financial services company is based in New York City.

JPMorgan soft

JPMorgan Chase’s 3.125% notes due 2025 eased 3 bps to 146 bps bid, according to a market source.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Jan. 16, 2015 at a spread of Treasuries plus 145 bps.

The financial services company is based in New York City.

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