Cintas, Liberty Mutual, Disney among issuers, investor fatigue sets in; Google bonds mixed

By Andrea Heisinger and Cristal Cody

New York, May 18 - Walt Disney Co., Cintas Corp. No. 2 and Liberty Mutual Group, Inc. were among the companies on Wednesday adding to a huge amount of investment-grade bond volume for the week.

Liberty Mutual doubled the size of its sale to $600 million from $300 million, selling 10-year notes sold via Rule 144A. They priced at the tight end of guidance, a source said.

Norfolk Southern Corp. sold an upsized $400 million of 100-year bonds.

Cintas sold $500 million of guaranteed notes split evenly between maturities of 2016 and 2021.

There was a two-tranche sale from utility Alabama Power Co. The unit of Southern Co. sold $450 million of notes with maturities of 2021 and 2041.

Disney sold $500 million of 10-year notes in line with talk.

The latest in a string of financial names selling floating-rate notes was Wells Fargo & Co. The San Francisco-based company sold $500 million of five-year floaters in a self-led deal.

Norway's Eksportfinans ASA priced an upsized $1.25 billion of five-year global notes. The size increased from $1 billion after the deal went overnight from Tuesday.

Real estate investment trust for apartment communities UDR, Inc. sold an upsized $300 million of guaranteed seven-year notes.

There has been an intense amount of new issuance already this week, and because of that it is unlikely Thursday or Friday will have much for deals.

"Something could pop up, but I'm not hearing of anything big," said one syndicate source.

Another source who worked on several of Wednesday's deals said that "investors are exhausted" due to the more than $30 billion in bonds already priced for the week.

"There's been a lot of front loading," she said. "Given the supply we've had, it's going to slow significantly tomorrow."

In the secondary, investment-grade Trace volume fell more than 5% to $11.5 billion, according to a market source.

Secondary volumes were a "little bit slower than yesterday," one source said. "Most of the action was focused on what was out in the primary markets. What is trading out there seems to be off-the-run names like Google with their debut offering and Johnson & Johnson."

Google Inc.'s new 10-year notes stayed weaker in Wednesday's secondary trading, with the other two new tranches of three- and five-year notes mixed on the day, a source said.

"With the investment-grade markets a little bit stronger in the last few days, it is a bit of a surprise," the source said. "The indication here was that despite the fact Google is a new name with lots of demand, a lot of the bonds got put into flippers."

Bonds sold earlier from Disney, Alabama Power and Norfolk Southern traded stronger, traders said.

In other data, the Markit CDX Series 14 North American investment-grade index firmed 1 basis point to a spread of 89 bps, Markit Group Ltd. said.

Treasuries sold off on Wednesday, sending yields up after the release of the Federal Open Market Committee's minutes brought investors out in the market. The 10-year note yield jumped 7 bps to 3.18% and the 30-year bond yield also climbed 7 bps to 4.29%.

Liberty Mutual doubles amount

Liberty Mutual Group sold an upsized $600 million of 5% 10-year notes (Baa2/BBB-/BBB-) to yield Treasuries plus 210 bps, an informed source said.

The size was doubled from $300 million. The bonds came at the tight end of guidance in the 220 bps area, plus or minus 10 bps, the source said.

Bank of America Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes, including capital contributions to insurance subsidiaries.

The property and casualty insurance company is based in Boston.

Norfolk Southern's 100-years

Norfolk Southern sold an upsized $400 million of 6% 100-year senior notes (Baa1/BBB+/BBB) at a spread of Treasuries plus 175 bps, a source away from the sale said in early afternoon.

The size was increased from $250 million, showing there was demand for the unusual maturity.

Morgan Stanley & Co., Inc. ran the books.

Proceeds are going towards general corporate purposes.

The bonds, priced at par, were subsequently seen trading in the low 101 area.

Another source saw the bonds at 170 bps bid. A third trader saw the bonds tightening to 169 bps bid, 165 bps offered.

"Every so often in the last year or so, we've seen a couple of these 100-year bonds. The reality is that the rate is not all that different on a 100-year bond than the 30-year bond, it's easier to swallow that long maturity," one trader said.

The railroad freight transportation company is based in Norfolk, Va.

Alabama Power's $450 million

Alabama Power, a unit of the Southern Co., sold $450 million of notes (A2/A/A+) in two maturities, an informed source said.

The $200 million of 3.95% 10-year notes priced at a spread of Treasuries plus 82 bps. This was at the low end of guidance in the 85 bps area.

A second tranche was $250 million of 5.2% 30-year bonds priced at 95 bps over Treasuries spread. They also were priced at the tight end of talk in the 95 to 100 bps range.

Bookrunners for the 10-year notes were BNY Mellon Capital Markets LLC, Goldman Sachs & Co., J.P. Morgan Securities LLC and Scotia Capital (USA) Inc. Those for the 30-year bonds were Bank of America Merrill Lynch, Citigroup Global Markets Inc., Goldman Sachs and J.P. Morgan.

Proceeds will be used to redeem $100 million of 5.875% senior notes due Feb. 1, 2046, $200 million of 5.875% notes due March 15, 2046 and $150 million of 6.375% notes due June 15, 2046.

In the secondary market, the new notes due 2021 tightened to 81 bps bid, 77 bps offered, a trader said. The tranche of bonds due 2041 also firmed to 91 bps bid, 85 bps offered.

The utility is based in Birmingham, Ala.

Cintas offers $500 million

Cintas Corp. No. 2 priced $500 million of senior notes (A2/BBB+) in two tranches, according to an FWP filing with the Securities and Exchange Commission.

The $250 million of 2.85% five-year notes sold at a spread of Treasuries plus 100 bps.

A second part was $250 million of 4.3% 10-year notes priced at 115 bps over Treasuries.

Bookrunners were KeyBanc Capital Markets Inc. and J.P. Morgan Securities LLC.

The deal is guaranteed by Cintas Corp.

The uniform, document management and safety equipment company is based in Cincinnati.

Disney sells at talk

Walt Disney sold $500 million of 3.75% 10-year notes (A2/A/A) to yield Treasuries plus 60 bps, said a source who worked on the trade.

The bonds sold in line with talk in the 60 bps area.

Bookrunners were Bank of America Merrill Lynch, Citigroup Global Markets Inc. and RBS Securities Inc.

Proceeds are being used for general corporate purposes.

Disney's notes firmed 1 bp on the bid side to 59 bps bid, 57 bps offered in secondary trading, one trader said. Another trader saw the notes at 59 bps bid, 58 bps offered.

The media conglomerate is based in Burbank, Calif.

Eksportfinans upsizes

Eksportfinans sold an upsized $1.25 billion of 2.375% five-year global notes (Aa1/AA) at a spread of Treasuries plus 56 bps, or mid-swaps plus 33 bps, according to an FWP filing with the Securities and Exchange Commission.

The size was initially $1 billion when the sale was announced on Tuesday.

Bookrunners were Bank of America Merrill Lynch, Barclays Capital Inc., Citigroup Global Markets Inc. and Goldman Sachs & Co.

The funding agency for Norway's export industry is based in Oslo.

UDR prices seven-years

Real estate investment trust UDR sold an upsized $300 million of 4.25% seven-year medium-term notes (Baa2/BBB) to yield Treasuries plus 190 bps, a source close to the offering said.

The bonds priced at the tight end of guidance in the 195 bps area. The deal size was increased from $250 million.

The company "could have done more," a source said, referring to the amount. Investor demand was "over $1 billion," she said.

Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were bookrunners.

Proceeds are going to general corporate purposes.

The sale is guaranteed by Union Dominion Realty, LP.

The real estate investment trust specializing in apartment communities is based in Highlands Ranch, Colo.

Wells Fargo sells floaters

Wells Fargo & Co. sold $500 million of five-year medium-term floating-rate notes (A1/AA-/AA-) at par to yield three-month Libor plus 87.5 bps, according to a 424B2 filing with the SEC.

The sale was planned for Tuesday but delayed, a source said.

The agent was Wells Fargo Securities LLC.

The financial services company is based in San Francisco.

Google mixed

The 3.625% notes due 2021 that Google sold on Monday traded in the low 60 bps area on Wednesday, remaining wider than where it priced at 58 bps plus Treasuries, a source said. The 10-years had moved out 6 bps on Tuesday.

"It's still a little bit wider," the source noted of Wednesday's closing level.

Google sold a total of $3 billion of senior notes (Aa2/AA-) in three tranches on Monday, including 1.25% notes due 2014 at a spread of Treasuries plus 33 bps and 2.125% notes due 2016 at 43 bps over.

The three-year notes tightened 2 bps to 3 bps in trading and the five-year notes were flat at 43 bps.

The technology company is based in Mountain View, Calif.

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