Rockwell Collins, Time Warner, SLM price amidst positive tone; long bonds tighten

By Cristal Cody and Aleesia Forni

Virginia Beach, Dec. 11 - Following a relatively slow start to the week, the high-grade primary market saw a rush of new deals come to market on Wednesday.

Rockwell Collins hit the primary with $1.1 billion of senior notes sold in three parts during the session on Wednesday.

There was $300 million of three-year floaters sold at par to yield Libor plus 35 basis points.

There was also $400 million of 3.7% 10-year notes due 2023 priced at Treasuries plus 90 bps and $400 million of 4.8% 30-year notes priced at Treasuries plus 95 bps.

Time Warner Inc. brought to market a $1 billion issue of notes on Wednesday in two tranches, a market source said.

The company priced $500 million of 4.05% notes due 2023 at Treasuries plus 125 bps and $500 million of 5.25% notes due 2043 at a spread of Treasuries plus 148 bps.

SLM Corp. sold $1 billion of 4.875% notes due 2019 with a spread of Treasuries plus 352 bps.

There was also a $750 million three-part sale of senior notes priced by Cameron International Corp.

Cameron sold $250 million of 1.15% notes due 2016 at Treasuries plus 55 bps and $250 million of 4% notes due 2023 at Treasuries plus 120 bps.

There was also a $250 million sale of 5.125% 30-year notes priced with a spread of Treasuries plus 130 bps.

The session also saw Devon Energy Corp. sell $2.25 billion of notes, though full details were not available at press time.

In other market news, Fannie Mae announced that it would forgo its issuance of Benchmark Notes.

In the preferred stock market, Wells Fargo & Co. sold $750 million of 6.625% series R class A fixed-to-floating-rate noncumulative perpetual preferred stock, market sources said.

The Canadian investment-grade primary market stayed quiet on Wednesday, and the pipeline "feels already in holiday mode," a syndicate source said. "It doesn't feel like the market is ready for anything. Frequent issuers like a bank could show up."

"Another busy day" of issuance is expected for Thursday, a syndicate source said on Wednesday.

However, with roughly $10 billion of supply priced so far this week, it is unlikely that new issuance will reach predictions of a $20 billion week.

In the secondary market, new issues remain the most actively traded, an investment-grade market source said.

Time Warner's new tranches of 10-year and 30-year notes came too late in the session to see much activity in the secondary market, a trader said.

"Too early," the trader said.

Devon Energy's two tranches of notes were "not going anywhere," a trader at another desk said.

SLM's 5.5-year notes saw some aftermarket activity, traders said.

New long bonds saw stronger performance into the session close, with the 30-year tranches from Cameron International and Rockwell Collins both tighter.

Rockwell three-parter

Rockwell Collins sold $1.1 billion of senior notes (A3/A/A) in three tranches during the session on Wednesday, a market source said.

The deal included $300 million of floating-rate notes due 2016 priced at par to yield Libor plus 35 bps.

There was also $400 million of 3.7% notes due 2023 priced at 99.71 to yield 3.735%, or Treasuries plus 90 bps.

Finally, $400 million of 4.8% notes due 2043 were sold with a spread of Treasuries plus 95 bps, or 99.59, to yield 4.826%.

All three tranches were sold at the tight end of talk.

Rockwell Collins 3.7% notes due 2023 traded at 89 bps bid, 84 bps offered into the close, a trader said. The 4.8% bonds due 2043 firmed to 93 bps bid, 91 bps offered.

Citigroup Global Markets Inc., BofA Merrill Lynch, J.P. Morgan Securities LLC and Wells Fargo Securities LLC are the joint bookrunners.

Proceeds will be used to finance the acquisition of Arinc Inc.

Rockwell is a communications and aviation electronics company based in Cedar Rapids, Iowa.

Time Warner prices $1 billion

Time Warner priced a $1 billion two-part issue of notes on Wednesday, according to a market source and an FWP filed with the Securities and Exchange Commission.

The sale included $500 million of 4.05% notes due 2023 at 99.699 to yield 4.087%, or Treasuries plus 125 bps.

Pricing was on top of talk.

A $500 million tranche of 5.25% notes due 2043 was sold with a spread of Treasuries 148 bps, or 99.941, to yield 5.354%.

The notes priced at the tight end of talk.

Proceeds will be used for general corporate purposes.

Citigroup Global Markets, Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC and RBS Securities Inc. are the joint bookrunners.

The media and entertainment company is based in New York City.

SLM prices tight

SLM priced a $1 billion issue of 4.875% 5.5-year medium-term notes (Ba1/BBB-/BB+), series A, at 99.405 to yield 5%, according to market sources.

The notes sold at a spread of Treasuries plus 352 bps.

Pricing was at the tight end of talk.

SLM's 5.5-year notes traded at 99 3/8 bid, 99 5/8 offered, a trader said. A trader at another desk saw the notes at 99.5 bid, 99.75 offered in the secondary market.

Barclays, Deutsche Bank Securities and JPMorgan were the joint bookrunners.

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

Cameron new issue

Cameron International brought to market a $750 million issue of senior notes (Baa1/BBB+/) in three tranches, according to a market source and an FWP filed with the SEC.

The sale included $250 million of 1.15% senior notes due 2016 with a spread of Treasuries plus 55 bps, or 99.982, to yield 1.156%.

There was also $250 million of 4% notes due 2023 priced at Treasuries plus 120 bps.

Pricing was at 99.641 to yield 4.044%.

A $250 million issue of 5.125% notes due 2043 sold with a spread of Treasuries plus 130 bps.

The notes sold at 99.092 to yield 5.185%.

Cameron International's 1.15% notes due 2016 traded at 54 bps bid, while the tranche of 4% notes due 2023 eased to 121 bps bid, 116 bps offered, a trader said. The 5.125% bonds due 2043 headed out better at 127 bps bid, 125 bps offered.

JPMorgan, Credit Suisse Securities (USA) LLC, Citigroup Global Markets, Morgan Stanley and RBS Securities were the joint bookrunners.

Proceeds will be used to repurchase shares of the company's common stock and for general corporate purposes, which may include the repayment at maturity of its $250 million floating-rate senior notes due June 2, 2014.

The oil and gas pressure control and compression company is based in Houston.

Fannie Mae passes

Fannie Mae announced that it will not use its Dec. 11 Benchmark Notes announcement date this month.

According to a press release, the company may pass on any schedule issuance date.

The government-backed mortgage lender is based in Washington, D.C.

Wells Fargo prices preferreds

Wells Fargo priced a $750 million offering of 6.625% series R class A fixed-to-floating-rate noncumulative perpetual preferred stock (expected ratings: Baa3/BBB+/BBB) on Wednesday, according to market sources.

The preferreds will be issued as depositary shares representing a 1/1,000th interest.

Wells Fargo Securities is the bookrunner.

When declared, dividends will be payable on the 15th day of March, June, September and December, beginning March 15. The dividend will be fixed through March 15, 2024, at which time it will float at Libor plus 369 bps.

The preferreds become redeemable on or after March 15, 2024 at par plus accrued dividends. The company also has an option to redeem the preferreds in whole prior to that date in the case of a regulatory capital treatment event.

The San Francisco-based bank will apply to list the new series of preferreds on the New York Stock Exchange under the ticker symbol "WFCPR."

Proceeds will be used for general corporate purposes.

Bank/brokerage CDS costs rise

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

Bank of America Corp.'s CDS costs eased 3 bps to 83 bps bid, 87 bps offered. Citigroup Inc.'s CDS costs rose 2 bps to 77 bps bid, 81 bps offered. JPMorgan Chase & Co.'s CDS costs eased 2 bps to 73 bps bid, 77 bps offered. Wells Fargo's CDS costs eased 2 bps to 44 bps bid, 48 bps offered.

Merrill Lynch's CDS costs widened 3 bps to 85 bps bid, 91 bps offered. Morgan Stanley's CDS costs eased 3 bps to 95 bps bid, 99 bps offered. Goldman Sachs Group, Inc.'s CDS costs widened 3 bps to 100 bps bid, 104 bps offered.

Paul Deckelman and Paul A. Harris contributed to this review.

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