Norfolk Southern sells $1.5 billion; SoCal Edison upsizes deal; Ryder System prices

By Cristal Cody

Tupelo, Miss., July 30 – Norfolk Southern Corp., Southern California Edison Co. and Ryder System, Inc. tapped the investment-grade primary market on Monday.

Norfolk Southern priced a $1.5 billion four-tranche offering of senior notes that included a 100-year bond. The notes came on the tight side of guidance and better than initial talk.

Southern California Edison upsized its issuance of new and reopened first and refunding mortgage bonds to $850 million from $700 million, a source said.

Ryder System placed $300 million of three-year medium-term notes during the session.

About $15 billion to as much as $25 billion of new supply is expected this week, according to market sources. About $60 billion to $70 billion of volume is forecast for August.

Industrial supply is expected to pick up soon as companies exit blackout periods following earnings releases, according to a BofA Merrill Lynch note released on Monday.

The current week has seen an average of $23 billion of weekly issuance from 2011 through 2017, including an average of $16 billion of industrial bonds and $7 billion of financial paper, the note said.

Investor focus this week centers on central bank meetings with the Federal Reserve, Bank of England and Bank of Japan. The Federal Open Market Committee kicks off its two-day meeting on Tuesday. Market sources do not expect a U.S. rate hike.

The Markit CDX North American Investment Grade 30 index softened about 1 basis point over the day to a spread of 59 bps.

Norfolk sells four tranches

Norfolk Southern priced $1.5 billion of senior notes (Baa1/BBB+) in four tranches on Monday, including a 100-year bond, according to a market source and an FWP filing with the Securities and Exchange Commission.

The company sold $300 million of 3.65% seven-year notes at 99.786 to yield 3.685% and a spread of Treasuries plus 75 bps.

Norfolk Southern priced $400 million of 3.8% 10-year notes at 99.778 to yield 3.827%, or a Treasuries plus 85 bps spread.

The company also priced a $200 million reopening of its 4.15% notes due Feb. 28, 2048 at 98.157, plus $3.55 million in accrued interest from Feb. 28, 2018, to yield 4.26% and a spread of 115 bps over Treasuries.

Norfolk Southern first sold $500 million of the notes on Feb. 13 at 99.541 to yield 4.177%, or a spread of 105 bps over Treasuries. The total outstanding now is $700 million.

In the final tranche, the company sold $600 million of 5.1% 100-year bonds at 99.806 to yield 5.11%. The bonds priced with a spread of Treasuries plus 200 bps.

The tranches all came better than initial talk and on the tight side of guidance.

BofA Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC were the bookrunners.

The freight railroad company is based in Norfolk, Va.

Southern Edison prices

Southern California Edison priced $850 million of new and reopened first and refunding mortgage bonds (Aa3/A/A+) on Monday, according to FWP filings with the SEC.

The company sold $300 million of new 3.7% seven-year bonds at 99.786 to yield 3.735%, or a spread of Treasuries plus 80 bps.

Southern California Edison priced a $550 million reopening of its 4.125% first and refunding mortgage bonds due March 1, 2048 at 96.144 to yield 4.358%, or a Treasuries plus 125 bps spread.

The company previously sold $350 million of the notes in a reopening on May 30 at 96.829 to yield 4.315% and a Treasuries plus 130 bps spread.

Southern Californian Edison first sold $400 million of the bonds on Feb. 28 at 99.812 to yield 4.136%, or a spread of Treasuries plus 100 bps.

The total outstanding now is $1.3 billion.

Citigroup Global Markets Inc., Morgan Stanley, MUFG, Wells Fargo, TD Securities (USA) LLC and U.S. Bancorp Investments Inc. were the bookrunners.

Southern California Edison is an electric utility company based in Rosemead, Calif.

Ryder sells notes

Ryder System priced $300 million of 3.5% three-year medium-term notes (Baa1/BBB+/A-) on Monday at 99.961 and a spread of 75 bps over Treasuries, according to a market source and a 424B3 filing with the SEC.

The notes were initially talked to price in the Treasuries plus 95 bps area, with guidance later tightened to the Treasuries plus 80 bps area, plus or minus 5 bps.

Lloyds Securities Inc., Morgan Stanley, MUFG, U.S. Bancorp and Wells Fargo were the bookrunners.

Ryder System is a Miami-based truck rental and fleet management company.

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