Marsh & McLennan, Jefferies, General Mills price; Marsh covenants spark concerns; CDX softens

By Cristal Cody

Eureka Springs, Ark., Jan. 9 – High-grade pricing action remained strong on Monday with robust supply expected over the remainder of the second week of the new year.

About $25 billion to $35 billion of deal volume is forecast for the week.

Marsh & McLennan Cos., Inc. sold $1 billion of fixed-rate senior notes in two parts on Monday.

The company’s offering raised red flags for one covenant watch group.

“Marsh & McLennan is in the market today with a new offering that has a variant on the new horrible ‘no premium on default’ language that first appeared in the Rackspace offering in October, then the ServiceMaster and EP Energy offerings in November, and rolling into high grade with FedEx in January,” according to a release from Covenant Review, an independent credit research firm. “This terrible language will vastly embolden issuers to consider breaching covenants, and lead to more risk for bondholders and fewer premium redemptions.”

Covenant Review said it “urges investors to reject this deal unless this no premium language is deleted. If investors do not act, then this language will quickly continue to spread with terrible consequences.”

In other pricing action on Monday, Dominion Resources, Inc. sold $800 million in a two-part notes offering.

Jefferies Group LLC tapped the primary market with a $750 million 10-year senior note sale.

General Mills, Inc. sold $750 million of 10-year notes.

CBOE Holdings Inc. brought $650 million of 10-year senior notes to market on Monday.

Also, CenterPoint Energy Houston Electric, LLC raised $300 million from an offering of 10-year general mortgage bonds.

The Markit CDX North American Investment Grade index eased about 1 basis point to close at a spread of 65 bps.

In the secondary market, Societe Generale SA’s 4% senior non-preferred notes due 2027, which priced on Thursday, improved from Friday.

Marsh & McLennan prices

Marsh & McLennan sold $1 billion of fixed-rate senior notes (Baa1/A-/) in two tranches on Monday, according to an FWP filing with the Securities and Exchange Commission.

The company priced $500 million of 2.75% notes due Jan. 30, 2022 at 99.863 to yield 2.779% and a spread of 90 bps over Treasuries.

The $500 million tranche of 4.35% 30-year notes priced at 99.366 to yield 4.388%, or Treasuries plus 140 bps.

BofA Merrill Lynch, Deutsche Bank Securities Inc., ANZ Securities and U.S. Bancorp Investments Inc. were the bookrunners for the five-year notes.

BofA Merrill Lynch, Deutsche Bank, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the bookrunners for the 30-year notes.

Proceeds will be used for general corporate purposes.

The professional services firm is based in New York.

Dominion brings two tranches

Dominion Resources priced $800 million of notes (Baa2/BBB/BBB+) in two parts on Monday, according to an FWP filing with the SEC.

The company sold $400 million of 1.875% 2017 series A notes due Jan. 15, 2019 at 99.931 to yield 1.91%. The notes priced with a spread of 72 bps over Treasuries.

Dominion Resources priced $400 million of 2.75% 2017 series B notes due Jan. 15, 2022 at 99.856 to yield 2.781%, or 90 bps over Treasuries.

Barclays, Citigroup Global Markets Inc. and UBS Securities LLC were the bookrunners.

Proceeds will be used for general corporate purposes, including to partly fund the company’s merger with Questar.

Dominion Resources is a Richmond, Va.-based energy producer and transporter.

Jefferies prices $750 million

Jefferies Group sold $750 million of 4.85% 10-year senior notes (Baa3/BBB-/BBB-) on Monday with a spread of 255 bps plus Treasuries, according to an FWP filing with the SEC.

Jefferies LLC was the bookrunner.

Proceeds will be used for general corporate purposes.

Jefferies is an investment bank based in New York.

General Mills sells notes

General Mills sold $750 million of 3.2% 10-year notes (A3/BBB+/BBB+) at 99.58 to yield 3.249% on Monday, according to an FWP filing with the SEC.

The notes due Feb. 10, 2027 priced with a spread of 87.5 bps over Treasuries.

Barclays, Citigroup and Deutsche Bank were the bookrunners.

Proceeds will be used to repay a portion of the company’s 5.7% notes due Feb. 15, 2017.

The maker of consumer food products is based in Minneapolis.

CBOE Holdings prints

CBOE Holdings sold $650 million of 3.65% 10-year senior notes on Monday at 99.759 to yield 3.679% according to an FWP filing with the SEC.

The notes due Jan. 12, 2027 (Baa1/BBB+/) priced with a spread of 130 bps over Treasuries.

BofA Merrill Lynch, Morgan Stanley, Citigroup and JPMorgan were the lead managers.

Proceeds will be used in part to fund the company’s acquisition of Bats Global Markets, Inc., including the repayment of Bats’ debt, and for general corporate purposes. If the acquisition is not completed on or before Oct. 23, 2017, CBOE will be required to redeem the notes in a special mandatory redemption. The merger is expected to close in the first half of 2017.

Chicago’s CBOE Holdings is the holding company for Chicago Board Options Exchange, Inc., CBOE Futures Exchange, LLC, C2 Options Exchange, Inc. and other subsidiaries.

CenterPoint taps market

CenterPoint Energy Houston Electric sold $300 million of 3% series AA 10-year general mortgage bonds with a spread of 70 bps over Treasuries on Monday, according to an FWP filing with the SEC on Monday.

The bonds due Feb. 1, 2027 (A1/A/A) priced at 99.346 to yield 3.076%.

Mizuho Securities USA Inc., Regions Securities LLC and U.S. Bancorp Investments Inc. were the bookrunners.

Proceeds will be used for general limited liability company purposes.

CenterPoint Energy is a Houston-based electricity transmitter and distributor.

Societe Generale firms

Societe Generale’s 4% senior non-preferred notes due 2027 were seen tighter in secondary trading early Monday at 168 bps offered, according to a market source.

The notes traded on Friday at 177 bps bid, 174 bps offered.

The company sold $600 million of the 10-year notes (Baa3/A/A) on Thursday at a spread of 173 bps over Treasuries.

Societe Generale is a Paris-based banking and financial services company.

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