Word emerges on pricing of Disney tranches; deal deluge continues; HP, MPLX, Georgia Power, Unum price

By Rebecca Melvin

New York, Sept. 4 – Issuance in the investment-grade debt market continued at a strong pace on Wednesday with no fewer than 14 issuers announcing deals in the first couple hours of the session.

The market reopened on Tuesday following the Labor Day holiday with a record number of issuers hitting the tape. There had not been as heavy a day in terms of number of deals in a single session for four years.

On Wednesday, several multi-billion-dollar deals were announced to have priced.

Word emerged on Walt Disney Co.’s $7 billion of notes (A2/A/A) that priced in six parts on Tuesday.

There were floating-rate notes in two tranches and fixed-rate notes in four tranches.

The company sold $500 million of two-year floaters at Libor plus 25 basis points at par.

Disney priced $500 million of three-year floaters at Libor plus 39 bps at par.

The company priced $500 million of 1.65% three-year notes at a spread of Treasuries plus 35 bps. These notes priced at 99.783 to yield 1.725%.

There was $1.5 billion of 1.75% five-year notes priced at a spread of Treasuries plus 50 bps. These notes priced at 99.592 to yield 1.836%.

The company sold $2 billion of 2% 10-year notes at a spread of Treasuries plus 70 bps. These notes priced at 98.517 to yield 2.166%.

Disney priced $2 billion of 2.75% 30-year notes at a spread of Treasuries plus 95 bps. These notes priced at 96.775 to yield 2.912%.

Hewlett Packard Enterprise Co. priced $1.5 billion of senior notes in two tranches.

The $500 million tranche of 18-month floating-rate notes priced at Libor plus 68 bps.

A $1 billion tranche of 2.25% fixed-rate notes due April 1, 2023 was sold at a spread of Treasuries plus 90 bps. The notes priced at 99.979 to yield 2.256%.

HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and Mizuho Securities USA LLC were the bookrunners.

The Palo Alto, Calif., technology company intends to repay its $1.1 billion 2.1% notes due 2019, to fund the acquisition of Cray Inc. along with the proceeds from an expected offering of asset-backed notes, and for general corporate purposes.

MPLX LP priced $2 billion in two tranches of floating-rate senior notes. The company sold $1 billion of two-year floating-rate notes with a coupon of Libor plus 90 bps and a $1 billion tranche of three-year floating-rate notes was sold at Libor plus 110 bps.

Both tranches priced at par.

Citigroup Global Markets Inc., Barclays, RBC Capital Markets, LLC, BNP Paribas Securities Corp., Goldman Sachs & Co. LLC, Scotia Capital (USA) Inc., U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC were the bookrunners.

Proceeds will be used to repay wholly owned subsidiary Andeavor Logistics LP’s $500 million of 5.5% notes that mature in October.

The company may also use a portion of the proceeds to repay part of its revolving credit facility debt and/or amounts owed under the intercompany loan with Marathon Petroleum Corp.

MPLX is a Findlay, Ohio-based owner, operator and developer of crude oil pipeline and midstream assets in the United States.

Georgia Power Co. priced a dual trancher for $750 million of notes in total.

The utility company priced $400 million 2.2% series 2019B senior notes due Sept. 15, 2024 at 99.92 to yield 2.217%, or a spread of 90 bps over U.S. Treasuries. These notes feature a make-whole call until Aug. 15, 2024, and then a par call.

The company also priced $350 million of 2.65% series 2019B senior notes due Sept. 15, 2029 to yield 2.664%, or a spread of 120 bps over Treasuries. These notes have a make-whole call until June 15, 2029, and then a par call.

J.P. Morgan Securities LLC, Mizuho Securities USA Inc., MUFG, PNC Capital Markets LLC and SunTrust Robinson Humphrey Inc. are the bookrunners.

Proceeds will be used to repay commercial paper and for general corporate purposes.

Georgia Power is an Atlanta-based electric utility company.

Chattanooga, Tenn.-based employee benefits company Unum Group priced $450 million of 4.5% 30-year senior notes (Baa2/BBB/BBB) on Wednesday at 99.115 to yield 4.501% and a spread of 255 bps over Treasuries, according to an FWP filing with the Securities and Exchange Commission.

BofA Securities Inc., Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc. and Wells Fargo Securities LLC were the joint bookrunners.

Proceeds will be used for a $300 million cash tender offer for Provident Financing Trust I’s $226.5 million of 7.405% capital securities due 2038, the company’s $48.78 million of 7.19% senior notes due 2028, its $165,844,000 of 6.75% senior notes due 2028 and its $350 million of 3% senior notes due 2028; and for general corporate purposes.

In addition to Hewlett Packard, fellow tech giant Apple Inc. announced a deal early Wednesday. Apple was planning to offer up five fixed-rate tranches due in 2022, 2024, 2026, 2029 and 2049.

The corporate issuer lineup for Wednesday also included Coca Cola Co., Anthem Inc., Amphenol Corp., KeyCorp, Simon Property Group LP, MPLX LP, Enable Midstream Partners, LP and Highwoods Realty LP.

The investment-grade bond market is expected to see $120 billion to $130 billion of supply in September, including $35 billion to $45 billion this week as the pace typically accelerates right out the gates after Labor Day, according to a global research note from BofA Merrill Lynch released on Tuesday.

Spreads should rally in September, according to the research note, as “investors relearn that supply will likely not crush the markets.”

September is seasonally the busiest month of the year for supply in the IG market. The change in corporate behavior has shifted issuance away from supporting re-leveraging activities toward refinancing in the currently low-interest-rate environment.

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