Dentsply sells debut debt; Coke Enterprises, Southern among others pricing; Coke notes widen

By Andrea Heisinger and Cristal Cody

New York, Aug. 16 - Tuesday's offerings included well-known names such as Coca-Cola Enterprises, Inc. The bottling part of the soft drink maker priced $500 million of notes evenly split between five-year and 10-year maturities.

The day's largest corporate offering came from newcomer Dentsply International Inc. at $1 billion in an upsized three tranches. A two-year floating-rate note was added to the planned five- and 10-year fixed-rate tranches. The dental products company was in the market to fund a portion of an acquisition.

Utilities continued their debt-selling streak as Southern Co. and Oglethorpe Power Corp. priced paper. Southern priced $500 million of five-year senior notes at the tight end of guidance, and Oglethorpe priced $300 million of first mortgage bonds due 2050.

Bermuda-based Nabors Industries Inc. priced an upsized $700 million of 10-year notes via Rule 144A and Regulation S. The deal size was increased from $500 million on investor demand.

A sale of five-year notes from FLIR Systems, Inc. that was announced on Monday priced after being downsized to $250 million from $350 million.

There was a sovereign sale from the International Bank for Reconstruction and Development. The lender to developing countries priced $3.25 billion of five-year notes early in the day.

Terms were given for a $1 billion, three-part deal priced late on Tuesday by Canada's Kinross Gold Corp.

The tone soured throughout the day due to continuing unease coming out of Europe and its banking sector, and issuance could slow on Wednesday.

"We got a lot done today," said one source who worked on a couple of Tuesday's offerings.

"People wanted to get funding done while [the window was] open."

Companies such as Coca-Cola paid hefty new issue premiums - as some names had on Monday - but did so because investors were eager to buy new bonds.

"The market opened kind of iffy today," a source who worked on the Dentsply offering said. "I think some people were skeptical of the market and what was going to happen."

The uneasy tone left a few issuers on the fence, and they could price on Wednesday if the market opens OK, the source said.

Overall trading volume jumped nearly 40% to more than $13 billion on Tuesday.

The new bonds from Kinross Gold and Coca-Cola's new five-year notes traded wider, while IBRD's five-year notes firmed in the secondary market, traders said.

The Markit CDX Series 16 North American Investment Grade index was 3 basis points wider on Tuesday at a spread of 113 bps.

Treasuries were stronger, sending yields down across the bond curve. The 10-year note yield fell to 2.22% from 2.3%. The 30-year bond yield dropped 10 bps to 3.67%.

Dentsply's debut deal

Dentsply International priced a reallocated $1 billion of senior notes (Baa2/BBB+) in three tranches late in the day, said a source close to the sale.

This was the first bond sale for the company, the source said. The sale got off to a slow start as "people were doing their credit work," the source said, but the "book got built quite a bit" after that as it built momentum and the floating-rate tranche was added.

There was about $2.5 billion total on the books.

A $250 million tranche of two-year floating-rate notes was added on reverse inquiry. Those notes priced at par to yield Libor plus 150 bps. They sold at the low end of guidance in the Libor plus 150 bps to 155 bps range.

A $300 million tranche of 2.75% five-year notes was priced at a spread of Treasuries plus 185 bps. They were sold at the tight end of talk in the 190 bps area, plus or minus 5 bps.

The third part was $450 million of 4.125%10-year notes sold at a spread of 195 bps over Treasuries. The tranche sold at the low end of guidance in the 200 bps area.

Active bookrunners were Citigroup Global Markets Inc., Morgan Stanley & Co. LLC and Wells Fargo Securities LLC.

Proceeds are being used to fund a portion of the $1.79 billion purchase price for the acquisition of Astra Tech International, AB.

There is a mandatory redemption at 101 if the acquisition is not completed by March 21, 2012. The notes feature a change-of-control put at 101.

The professional dental product designer, developer and manufacturer is based in York, Pa.

Nabors upsizes

Nabors Industries priced an upsized $700 million of 4.625% 10-year senior notes (Baa2/BBB/BBB+) to yield 245 bps over Treasuries, an informed source said.

They were priced at the tight end of talk in the 250 bps area, plus or minus 5 bps. The deal size was increased from $500 million.

Citigroup was the bookrunner.

The deal was done under Rule 144A and Regulation S.

Proceeds are being used to refinance borrowings under credit facilities.

Nabors' last debt sale was $700 million of 5% 10-year notes on Sept. 8, 2010, which priced at 235 bps over Treasuries.

The land drilling and well servicing rigs operator is based in Hamilton, Bermuda.

Coke's $500 million deal

Coca-Cola Enterprises sold $500 million of notes (A3/BBB/BBB+) split evenly between two tranches, according to a market source and an FWP filing with the Securities and Exchange Commission.

The $250 million of 2% five-year notes was priced at a spread of Treasuries plus 110 bps.

A $250 million tranche of 3.25% 10-year notes was sold at 130 bps over Treasuries.

The bookrunners were Barclays Capital Inc., Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc.

Proceeds are being used for general corporate purposes, including share repurchases, refinancing of commercial paper and debt repayment.

Coca-Cola Enterprises last sold debt in a $400 million deal in two tranches on Feb. 15. The 4.5% 10-year notes from that sale were sold at 93 bps, suggesting the company paid a sizeable new issue premium for the new paper.

Coca-Cola's notes due 2016 widened to 115 bps bid in secondary trading, a source said.

The tranche of notes due 2021 traded wrapped around their issue price at 130 bps closing out the day, a trader said.

The soft drink bottler is based in Atlanta.

Southern's five-year

Southern priced $500 million of 1.95% five-year notes (Baa1/A-/A) to yield Treasuries plus 105 bps, according to a market source.

They were priced at the tight end of guidance in the 110 bps area.

The bookrunners were Bank of America Merrill Lynch, Citigroup and Wells Fargo.

Proceeds are being used to repay a portion of short-term debt and for general corporate purposes.

The notes traded in the secondary market in the late afternoon at 105 bps bid, 102 bps offered, a trader said.

The utility is based in Atlanta.

Oglethorpe sells long bonds

Oglethorpe Power sold $300 million of 5.25% first mortgage bonds, series 2011A, (Baa1/A/A) due 2050 to yield Treasuries plus 163 bps, according to an FWP filing with the SEC.

Goldman Sachs & Co. and J.P. Morgan Securities LLC were the bookrunners.

Senior co-managers were Bank of America Merrill Lynch, Mitsubishi UFJ Securities (USA) Inc., RBC Capital Markets LLC and Wells Fargo.

Co-managers were BMO Capital Markets, Fifth Third Securities, Mizuho Securities USA Inc., SunTrust Robinson Humphrey Inc. and U.S. Bancorp Investments Inc.

Proceeds are being used to finance a portion of costs associated with the participation in two additional nuclear units, to redeem outstanding short-term debt and for general corporate purposes.

The electric membership corporation is based in Tucker, Ga.

FLIR downsizes deal

FLIR Systems offered a downsized $250 million of 3.75% five-year senior notes to yield 3.75%, according to an FWP filing with the SEC.

The sale was announced early Monday with a size talked at $350 million.

The notes (Baa3/BBB-) were sold at 99.999 with a spread of Treasuries plus 281.3 bps.

Bank of America Merrill Lynch and Barclays Capital were the bookrunners.

Proceeds are being used for general corporate purposes, including working capital, investments in or extension of credit to subsidiaries, capital expenditures, acquisitions and stock repurchases.

The sensor and thermal imaging company is based in Wilsonville, Ore.

IBRD sells global notes

The International Bank for Reconstruction and Development sold $3.25 billion of 1% five-year global notes on Tuesday at a spread of 22.75 bps over Treasuries, a source away from the sale said.

The notes (Aaa/AAA) were priced at 99.084 to yield 1.187%. They are non-callable.

The bookrunners were Barclays Capital, Deutsche Bank, HSBC Securities (USA) Inc. and JPMorgan.

In the secondary market, the notes due 2016 tightened to 19 bps offered, a trader said.

The member of the World Bank provides loans to developing countries and is based in Washington, D.C.

Kinross gives terms

Canada's Kinross Gold priced $1 billion of senior notes (Baa3/BBB-/BBB-) in three parts, according to a press release and a market source.

The $250 million tranche of 3.625% five-year notes was priced at a spread of Treasuries plus 270 bps.

A $500 million tranche of 5.125% 10-year notes sold at a spread of 290 bps over Treasuries.

The third part was $250 million of 6.875% 30-year bonds priced at 315 bps over Treasuries.

The deal was done under Rule 144A and Regulation S.

The bookrunners were Bank of America Merrill Lynch, Morgan Stanley and UBS Securities LLC.

Proceeds are being used for general corporate purposes including funding capital expenditures.

The sale is guaranteed by Kinross' wholly owned subsidiaries.

In the secondary market, trading was seen on Tuesday in the new bonds priced on Monday. The five-year notes widened to 271 bps early in the morning, a trader said. Another trader saw the notes late in the afternoon wider at 275 bps bid, 265 bps offered.

The 10-year notes firmed to 288 bps bid in morning trading but widened to 295 bps bid, 285 bps offered, the traders said.

The tranche of 30-year bonds had firmed to 310 bps, but going into the close, another trader saw the bonds weaker at 325 bps bid, 312 bps offered.

The mining and gold ore processing company is based in Toronto.

Bank/brokerage CDS costs rise

A junk trader said that CDS costs to protect holders of bank paper from a default were anywhere from 3 bps to 8 bps higher, indicating lessened confidence in the sector.

Brokerage firm/investment bank CDS costs rose 5 bps to 8 bps higher.

Paul Deckelman contributed to this review

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