Packed primary sees Celgene, JPMorgan price; Xerox upsizes; DirecTV, AT&T better

By Cristal Cody and Aleesia Forni

Virginia Beach, May 6 - A rush of new deals hit the primary market on Tuesday during a solid session for the high-grade bond market.

Celgene Corp., JPMorgan Chase & Co., Eastman Chemical Co., Southern California Edison Co. and Xerox Corp. all took advantage of the issuance momentum ahead of Federal Reserve chairwoman Janet Yellen's testimony before the Joint Economic Committee of Congress on Wednesday.

The largest trade of the session came from Celgene, which sold $2.5 billion of senior notes in five-, 10- and 30-year tranches, a market source said.

Celgene priced a $500 million issue of 2.25% five-year notes with a spread of Treasuries plus 63 basis points and a $1 billion tranche of 3.625% 10-year notes at Treasuries plus 108 bps.

The company also sold $1 billion of 4.625% 30-year bonds at Treasuries plus 128 bps.

All three tranches of the deal sold at the tight end of price talk.

Also during Tuesday's session, JPMorgan Chase sold $2 billion of 3.625% 10-year notes with a spread of Treasuries plus 110 bps, an informed source said.

Xerox brought an upsized $700 million two-part offering of senior notes to market in six- and 10-year tranches, a market source said.

The company sold a $400 million tranche of 2.8% notes due 2020 at Treasuries plus 113 bps and a $300 million tranche of 3.8% 10-year notes at Treasuries plus 125 bps.

Both tranches of the company's new issue sold at the tight end of talk.

The session also saw Eastman Chemical price a $500 million issue of 4.65% senior notes due Oct. 15, 2044 at Treasuries plus 135 bps, according to a market source.

Mead Johnson Nutrition Co. sold a $500 million issue of 4.6% 30-year senior notes at the tight end of talk on Tuesday at 127 bps over Treasuries.

Southern California Edison issued $400 million of 1.125% three-year first and refunding mortgage bonds on Tuesday.

The bonds sold with a spread of Treasuries plus 25 bps.

There was also a new deal from DTE Energy Co. The company sold an upsized $350 million of 3.5% 10-year senior notes at Treasuries plus 92 bps.

Northern States Power Co. came to market with a $300 million offering of 4.125% 30-year first mortgage bonds.

The issue sold with a spread of 77 bps over Treasuries, at the tight end of the Treasuries plus 80 bps area talk.

Also on Tuesday, National Rural Utilities Cooperative Finance Corp. priced $250 million of three-year floating-rate notes at par to yield Libor plus 25 bps, according to an FWP filed with the Securities and Exchange Commission.

The session also saw Union Pacific Railroad Co. bring an offering of pass-through certificates to market, though details of the sale were unavailable at press time.

Nearly $11 billion of investment-grade paper has priced as of Tuesday, and the pace of issuance is unlikely to slow heading into Wednesday's session.

One market source said he is expecting "another day like today tomorrow," adding that the week's volumes could surpass earlier expectations of $20 billion.

Investment-grade bonds ended the day mostly flat to slightly weaker, according to market sources.

The Markit CDX North American Investment Grade series 22 index eased 2 bps to a spread of 66 bps.

In the secondary market, the 4.45% senior notes due 2024 that DirecTV Holdings LLC and DirecTV Financing Co. priced in March continued to trade higher on a potential acquisition by AT&T Inc., according to a market source.

AT&T's 3.9% senior notes due 2024 were stronger over the session, a market source said.

Celgene brings $2.5 billion

Celgene priced $2.5 billion of senior notes (Baa2/BBB+/) in tranches due 2019, 2024 and 2044, according to a market source.

The sale included $500 million of 2.25% five-year notes priced at 99.751 to yield 2.303%, or Treasuries plus 63 bps.

A second tranche was $1 billion of 3.625% 10-year notes, which sold with a spread of Treasuries plus 108 bps.

Pricing was at 99.659 to yield 3.666%.

There was also $1 billion of 4.625% 30-year bonds priced at 99.646 to yield 4.647%.

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

BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and Morgan Stanley & Co. LLC were the joint bookrunners.

The company plans to use the proceeds for general corporate purposes, which may include further development of its clinical and pre-clinical programs, capital expenditures, general corporate development activities, meeting working capital needs, share repurchases of its common stock and repayment of some or all of its outstanding commercial paper.

Celgene is a Summit, N.J.-based biopharmaceutical company.

JPMorgan issues 10-years

JPMorgan Chase priced $2 billion of 3.625% 10-year senior notes (A3/A/A+) at Treasuries plus 110 bps, an informed source said on Tuesday.

J.P. Morgan Securities LLC was the bookrunner.

The financial services company is based in New York City.

Xerox upsizes

Xerox priced an upsized $700 million two-part offering of senior notes (Baa2/BBB/BBB) in tranches due 2020 and 2024, according to a source away from the trade.

The issue was upsized from $600 million.

A $400 million tranche of 2.8% six-year notes sold at 99.956 to yield 2.808%, or Treasuries plus 113 bps.

There was also $300 million of 3.8% 10-year notes, which priced with a spread of Treasuries plus 125 bps.

Pricing was at 99.669 to yield 3.84%.

Both tranches sold at the tight end of talk.

BNP Paribas Securities Corp., Citigroup Global Markets Inc., Credit Suisse Securities and UBS Securities LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes.

The maker of office machines is based in Norwalk, Conn.

Eastman mortgage bonds

Eastman Chemical sold $500 million of 4.65% senior notes (Baa2/BBB/BBB) due Oct. 15, 2044 with a spread of Treasuries plus 135 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 98.943 to yield 4.716%.

BofA Merrill Lynch, JPMorgan and Wells Fargo Securities LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes, which may include working capital, capital expenditures and the repayment of debt.

The company may also use proceeds to acquire or invest in businesses, products and technologies that are complementary to its current business.

Eastman is a global chemical company based in Kingsport, Tenn.

Mead Johnson's $500 million

Mead Johnson Nutrition priced $500 million of 4.6% 30-year senior notes on Tuesday at 127 bps over Treasuries, according to a market source and a 424B5 filed with the SEC.

Pricing was at the tight end of talk.

The notes (Baa1/BBB/) sold at 99.465 to yield 4.633%.

Citigroup Global Markets, Goldman Sachs, JPMorgan and Morgan Stanley were the joint bookrunners.

Proceeds will be used to redeem the company's $500 million 3.5% notes due Nov. 1, 2014.

Mead Johnson is a Glenview, Ill.-based pediatric nutrition company.

SoCal Edison three-year bonds

Southern California Edison sold $400 million of 1.125% first and refunding mortgage bonds (Aa3/A/A+), series 2014B, due 2017 with a spread of Treasuries plus 25 bps, according to an FWP filed with the SEC.

The notes sold at 99.968 to yield 1.136%.

Barclays, Mitsubishi UFJ Securities (USA) Inc. and CastleOak Securities LP were the joint bookrunners.

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

The electric utility is based in Rosemead, Calif.

DTE issues 10-years

DTE Energy priced an upsized $350 million of 3.5% senior notes, series C, due 2024 with a spread of Treasuries plus 92 bps, according to a market source and an FWP filed with the SEC on Tuesday.

Pricing was at 99.914 to yield 3.51%.

JPMorgan, BofA Merrill Lynch, UBS Securities and RBS Securities Inc. were the joint bookrunners.

The co-managers were Comerica Securities, Fifth Third Securities Inc. and Huntington Investment Co.

Proceeds will be used to repay $300 million of the company's 7.625% senior notes due May 15, 2014 and for general corporate purposes.

DTE is a Detroit-based utility involved in the development and management of energy-related businesses and services nationwide.

Northern States prices tight

Northern States Power priced $300 million of 4.125% first mortgage bonds (Aa3/A/A+) due May 15, 2044 at 77 bps over Treasuries, according to a market source and an FWP filed with the SEC.

Pricing was at 99.709 to yield 4.142%.

The mortgage bonds sold at the tight end of talk, which was set in the area of Treasuries plus 80 bps.

Bookrunners were BMO Capital Markets Corp., JPMorgan, KeyBanc Capital Markets LLC and Mizuho Securities USA Inc.

Proceeds will be used to repay short-term debt borrowings and for general corporate purposes.

Northern States last sold bonds in a $400 million sale of 10-year bonds on May 13, 2013. The 2.6% first mortgage bonds priced with a spread of Treasuries plus 70 bps.

The electric and natural gas utility is based in Minneapolis.

National Rural prices floaters

National Rural Utilities Cooperative Finance sold $250 million of floating-rate senior notes (A2/A/) due 2017 at par to yield Libor plus 25 bps on Tuesday, according to an FWP filed with the SEC.

RBC Capital Markets LLC was the sole bookrunner.

The market lender for electric cooperatives is based in Herndon, Va.

DirecTV up

DirecTV's 4.45% notes due 2024 traded better on Tuesday at 103.46 from 102.97 on Monday, according to a market source.

The bonds are up from where the paper traded a week ago at 101.32.

DirecTV sold $1.25 billion of the 10-year notes (Baa2/BBB/) on March 17 at 99.63 to yield 4.496%.

The digital entertainment company is based in El Segundo, Calif.

AT&T higher

AT&T's 3.9% notes due 2024 rose to 102.18 on Tuesday, up from 101.92 in the previous session, according to a market source.

The notes traded a week ago at 100.81.

AT&T sold $1 billion of the 10-year notes (A3/A- /A) on March 5 at 99.696 to yield 3.937%.

The telecommunications company is based in Dallas.

Bank/brokerage CDS mostly flat

Investment-grade bank and brokerage CDS prices were mostly unchanged, according to a market source.

Bank of America Corp.'s CDS costs were flat at 65 bps bid, 68 bps offered. Citigroup Inc.'s CDS costs ended unchanged at 69 bps bid, 72 bps offered. JPMorgan Chase's CDS costs closed flat at 53 bps bid, 56 bps offered. Wells Fargo & Co.'s CDS costs were unchanged at 35 bps bid, 38 bps offered.

Merrill Lynch's CDS costs ended flat at 70 bps bid, 74 bps offered. Morgan Stanley's CDS costs were unchanged at 71 bps bid, 74 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 1 bp to 82 bps bid, 85 bps offered.

Paul Deckelman contributed to this review.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.