PNC Bank, New York Life, SLM hit market as EDF prepares hybrids; JPMorgan notes see tightening

By Aleesia Forni and Andrea Heisinger

New York, Jan. 23 - A small group of issuers from the financial sector was in the investment-grade market on Wednesday including PNC Bank NA and New York Life Global Funding.

PNC Bank tapped the market for $1.75 billion of bonds in three tranches, including one with a floating rate. The fixed-rate notes each sold tighter than initial guidance.

There was $350 million of floaters due 2014 sold by New York Life.

A $1.5 billion split-rated sale in tranches due 2023 and 2028 was done by SLM Corp.

The preferred stock market saw Southern California Edison Co.'s SCE Trust II sell $400 million of perpetual trust preferred securities.

Also, Electricite de France SA announced a sale of perpetual hybrid subordinated notes, with pricing to take place on Thursday morning.

Headlines on the House of Representatives voting to suspend the debt ceiling limit for three months hit in the afternoon, and a source said Treasuries were a "bit off" at the open as some waited to see what vote would come out of the House.

One source called the day "sleepy" and added that "this is what always happens between financials and other earnings. It's temporary."

Thursday could see another trickle of trades provided the tone holds at the open.

The secondary market saw JPMorgan Chase & Co.'s recent $2.75 billion 3.2% notes due 2023 firm 2 basis points compared to Tuesday's levels to 135 bps bid, 132 bps offered.

The notes sold at a spread of 133 bps over Treasuries on Jan. 17.

Investment-grade bank and brokerage credit default swap costs tightened on Wednesday.

Bank of America's CDS costs were 3 bps tighter at 113 bps bid, 117 bps offered. Citi's CDS costs were 4 bps tighter at 113 bps bid, 117 bps offered. JPMorgan's CDS costs were unchanged at 80 bps bid, 83 bps offered. Wells Fargo's CDS costs rose 1 bp to 70 bps bid, 74 bps offered.

Merrill Lynch's CDS costs were unchanged at 110 bps bid, 115 bps offered. Morgan Stanley's CDS costs declined 2 bps to 146 bps bid, 150 bps offered. Goldman Sachs' CDS costs firmed 2 bps to 135 bps bid, 139 bps offered.

PNC's three tranches

PNC Bank was in the market with a $1.75 billion offering of notes (A2/A-/) in three tranches, a source close to the trade said.

The sale included $250 million of three-year floating-rate senior bank notes sold at par to yield Libor plus 31 bps.

There was $750 million of 0.8% three-year senior bank notes priced at a spread of Treasuries plus 45 bps. The notes were initially talked in the 50 bps over Treasuries area.

Finally, a $750 million tranche of 2.95% 10-year subordinated notes sold at 117 bps over Treasuries. Initial whispers on the tranche were in the 125 bps area.

The bookrunners were Citigroup Global Markets Inc., Goldman Sachs & Co., Morgan Stanley & Co. LLC and PNC Capital Markets LLC.

The subsidiary of PNC Financial Services Group is based in Pittsburgh.

NY Life brings floaters

New York Life Global Funding priced a slightly upsized $350 million of floating-rate notes (Aaa/AA+/AAA) due 2014 at par to yield Libor flat, an informed source told Prospect News.

The size was increased from $300 million.

The 18-month notes were priced via Rule 144A and Regulation S.

Bank of America Merrill Lynch, Barclays and Jefferies & Co. were the bookrunners.

The unit of mutual insurance company New York Life Insurance Co. is based in New York.

SLM's $1.5 billion crossover

SLM priced $1.5 billion of split-rated medium-term notes (Ba1/BBB-/BBB-) in two maturities, a market source said.

The sale included a reopening of 3.875% series A notes due Sept. 10, 2015 to add $500 million. The notes were priced at a spread of Treasuries plus 236.2 bps.

Total issuance is $800 million including $300 million sold on Sept. 5 at par to yield Treasuries plus 356.4 bps.

A $1 billion tranche of new 5.5% 10-year notes priced at a spread of Treasuries plus 391.9 bps.

The bookrunners were Bank of America Merrill Lynch, Barclays and Deutsche Bank Securities Inc.

The provider of education loans is based in Newark, Del.

SoCal Edison's preferreds

Southern California Edison's SCE Trust II is selling $400 million of 5.1% trust preference cumulative perpetual securities.

Price talk is 5.125% to 5.25%, a trader said, seeing the proposed issue trading at $24.85 in the gray market as of midday. However, he noted that the deal had "come in a little bit, so I'd guess they are going to revise talk on that."

"But I think it's doing pretty well," he added.

Citigroup, Morgan Stanley, RBC Capital Markets LLC, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunners.

The company will list the trust preference shares on the New York Stock Exchange under the symbol "SCEPG."

SCE Trust II will use proceeds from the sale to purchase series G shares from Southern California Edison. Southern California Edison will then use the funds for general corporate purposes and to redeem other outstanding series of preference shares.

Southern California Edison is a Rosemead, Calif.-based subsidiary of Edison International Inc.

EDF plans hybrids

Electricite de France announced a benchmark size offering of perpetual hybrid subordinated notes (Aa3/A+/A+), an informed source told Prospect News.

Pricing is set for Thursday morning, the source later said.

The notes have a coupon that will reset every 10 years. There is a fixed rate prior to the first call opportunity in January 2023. Then there is a 25 bps step up from the initial spread to mid swaps in 2023 and a further 75 bps in 2043.

Price talk early Wednesday was in the high 5% area, a source said.

Pricing is being done under Rule 144A and Regulation S.

The global coordinators are HSBC Securities (USA) Inc., Citigroup and BNP Paribas Securities Corp.

The active bookrunners are Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, Goldman Sachs and Nomura Securities International Inc.

EDF priced a similar euro-denominated offering of notes on Tuesday.

The main electricity generation and distribution company in France is based in Paris.

KfW gives short bond terms

Germany's KfW sold $500 million of 0.211% notes due 2014 at par to yield 0.211%, according to an FWP filing with the Securities and Exchange Commission.

Pricing took place on Tuesday.

The bookrunner was Credit Suisse Securities (Europe) Ltd.

The German government-owned development bank is based in Frankfurt.

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