UBS, HSBC, Credit Suisse issue bonds; Microsoft tightens; telecom bonds mostly weak

By Aleesia Forni and Cristal Cody

Virginia Beach, March 23 – UBS AG, Stamford Branch, HSBC Holdings plc and Credit Suisse Group AG were among the names pricing bonds on Monday to kick off the week for the investment-grade bond market.

UBS issued the session’s largest new deal, pricing $4.85 billion of bonds in four tranches.

HSBC Holdings was in the market with a $2.25 billion issue of subordinated contingent convertible perpetual tier 1 securities sold at the tight end of price guidance.

The London-based bank’s new deal “went great,” a market source said, garnering around $16 billion of orders.

Credit Suisse attracted an order book that was more than 2.5 times oversubscribed for its new $4 billion offering of senior holdco notes.

Southwestern Electric Power Co., Potash Corp. of Saskatchewan Inc. and Kimco Realty Corp. were also in the day’s primary with new bond offerings.

VeriSign Inc. joined the forward calendar, announcing price talk for a planned $400 million split-rated offering of 10-year senior notes.

In total, $12.35 billion of new issuance hit the primary market during the session.

Sources are calling for around $25 billion to $30 billion of supply for the week.

Bonds in the investment-grade market were mixed during the session, sources said.

Microsoft Corp.’s 2.7% notes due 2025 tightened 5 basis points in secondary trading.

Apple Inc.’s 2.5% notes due 2025 traded 2 bps softer.

Verizon Communications Inc.’s bonds (Baa1/BBB+/A-) were 1 bp better to 3 bps weaker in the secondary market.

AT&T Inc.’s 3.9% notes due 2024 eased 6 bps over the day.

UBS four-parter

UBS AG, Stamford Branch was in Monday’s market with a $4.85 billion four-tranche issue of senior bank notes (A2/A/A), a market source said.

The sale included $600 million of 18-month floating-rate notes priced at par to yield Libor plus 50 bps.

The notes sold on top of guidance, which was revised from initial talk set in the 50 bps area over Libor.

A second tranche was $1 billion of three-year floating-rate notes priced at par to yield Libor plus 70 bps.

There was also $2.5 billion of 1.8% three-year notes sold at 99.869 to yield 1.845%, or Treasuries plus 92 bps.

The notes sold at the tight end of guidance set in the 95 bps area over Treasuries. Initial talk was set in the 100 bps area over Treasuries.

Finally, $750 million of 2.35% five-year notes sold at 99.977 to yield 2.355%, or Treasuries plus 97 bps.

Pricing was at the tight end of guidance set in the area of 100 bps over Treasuries, which was unchanged from initial talk.

UBS Securities LLC was the bookrunner.

The financial services company is based in Basel and Zurich, Switzerland.

Credit Suisse new issue

In other primary happenings on Monday, Credit Suisse Group Funding (Guernsey) Ltd. priced $4 billion of senior notes (A2/BBB+/A) on Monday in tranches due 2020 and 2025, according to a market source.

The deal attracted a $10.25 billion book.

The notes are guaranteed by Credit Suisse Group AG.

The sale included a $1.5 billion tranche of 2.75% five-year notes priced at 99.949 to yield 2.761%, or Treasuries plus 137.5 bps.

Pricing was on top of guidance, which firmed from initial talk set in the Treasuries plus 145 bps area.

A $2.5 billion tranche of 3.75% 10-year notes priced at 99.76 to yield 3.779%, or Treasuries plus 187.5 bps.

The notes sold on top of guidance. Initial talk was set in the area of 195 bps over Treasuries.

Proceeds from the offering will be used for general corporate purposes.

Credit Suisse Securities (USA) LLC was the bookrunner.

The financial services company is based in Zurich.

HSBC CoCo

HSBC Holdings priced a $2.25 billion issue of 6.375% subordinated contingent convertible perpetual tier 1 securities at par, according to a market source and an FWP filed with the Securities and Exchange Commission.

Guidance was set in the 6.5% area, tightening from initial talk set in the 6.625% area.

Pricing was at 446 bps over Treasuries, or mid-swaps plus 436.8 bps.

The notes (Baa3//BBB) become callable on March 30, 2025 and every five years thereafter.

HSBC Securities (USA) Inc. is the bookrunner.

The London-based banking institution plans to use the proceeds from the offering for general corporate purposes.

Potash offering

Potash Corp. of Saskatchewan sold $500 million of 3% senior notes due April 1, 2025 during Monday’s session at the tight end of talk with a spread of Treasuries plus 115 bps, according to a market source and an FWP filed with the SEC.

The notes (A3/A-/) priced at 99.52 to yield 3.056%.

Pricing was at the tight end of the Treasuries plus 115 bps to 120 bps guidance. Initial talk was set at 125 bps to 130 bps over Treasuries.

BofA Merrill Lynch, Goldman Sachs & Co., RBC Capital Markets LLC and HSBC Securities were the joint bookrunners.

Proceeds will be used for general corporate purposes, which may include the redemption of $500 million of Potash's 3.75% notes maturing on Sept. 30, 2015.

Potash is a fertilizer and related industrial and feed products company based in Saskatoon, Sask.

Southwestern prices tight

Meanwhile, Southwestern Electric Power priced $400 million of senior notes, series J, (Baa2/BBB/) due April 1, 2045 on Monday with a spread of 145 bps over Treasuries, according to an FWP filed with the SEC.

Pricing was at 99.108 to yield 3.951%.

The notes sold at the tight end of the 145 bps to 150 bps over Treasuries guidance, tightened from initial talk set in the Treasuries plus 155 bps area.

The bookrunners were Mizuho Securities (USA) Inc., UBS Securities, Citigroup Global Markets Inc. and Scotia Capital (USA) Inc.

Proceeds will be used for funding the company’s construction program and for other general corporate purposes relating to the company’s utility business.

The utility subsidiary of American Electric Power Co. is based in Columbus, Ohio.

Kimco senior notes

Kimco Realty sold $350 million of 4.25% 30-year senior notes (Baa1/BBB+/) on Monday with a spread of 180 bps over Treasuries, according to a market source and an FWP filing with the SEC.

Pricing was at 98.945 to yield 4.313%.

The notes priced at the tight end of guidance set in the 185 bps area over Treasuries.

The bookrunners were BofA Merrill Lynch, Barclays, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and RBC Capital Markets.

Proceeds will be used for general corporate purposes, including the pre-funding of near-term maturities and to partially reduce borrowings under its revolving credit facility maturing in March 2018.

The real estate investment trust for neighborhood and community shopping centers is based in New Hyde Park, N.Y.

VeriSign sets talk

VeriSign's $400 million split-rated offering of 10-year non-callable senior notes (Baa3/BB+) is in the market with initial yield guidance of 5.5%, according to a market source.

The Rule 144A and Regulation S with registration rights notes were shopped on a Monday morning conference call with investors and are expected to price Tuesday.

JPMorgan, BofA Merrill Lynch and US Bancorp are the joint bookrunners. BB&T is the co-manager.

The notes come with investment-grade covenants.

They feature a par call three months prior to maturity, but are otherwise non-callable.

Proceeds will be used for general corporate purposes, including the repurchase of shares under its share repurchase program.

VeriSign is an internet infrastructure services provider based in Reston, Va.

Microsoft tightens

Microsoft’s 2.7% notes due 2025 firmed 5 bps to 73 bps bid in secondary trading over the day, a source said.

Microsoft sold $2.25 billion of the notes (Aaa/AAA/) on Feb. 9 at a spread of Treasuries plus 75 bps.

The computer software company is based in Redmond, Wash.

Apple eases

Apple’s 2.5% notes due 2025 eased 2 bps to 84 bps bid on Monday, according to a market source.

Apple sold $1.5 billion of the notes (Aa1/AA+/) on Feb. 2 at Treasuries plus 85 bps.

The computer and mobile communications device company is based in Cupertino, Calif.

Verizon mixed

Verizon’s 3.5% notes due 2024 firmed 1 bp to 136 bps bid, according to a market source.

The notes priced in a $2.5 billion offering on Oct. 22 at Treasuries plus 135 bps.

Verizon’s 4.15% notes due 2024 eased 3 bps on Monday to 141 bps bid, the source said.

Verizon sold $1.25 billion of the notes on March 10, 2014 at Treasuries plus 140 bps.

The telecommunications company is based in New York City.

AT&T weaker

AT&T’s 3.9% notes due 2024 (Baa1/BBB+/A-) widened 6 bps to 141 bps bid on Monday, a source said.

AT&T sold $1 billion of the notes on March 5, 2014 at Treasuries plus 125 bps.

The telecommunications company is based in Dallas.

Bank/broker CDS costs lower

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

Bank of America Corp.’s CDS costs were down 2 bps to 64 bps bid, 67 bps offered. Citigroup Inc.’s CDS costs were flat at 74 bps bid, 78 bps offered. JPMorgan Chase & Co.’s CDS costs fell 1 bp to 63 bps bid, 66 bps offered. Wells Fargo & Co.’s CDS costs were unchanged at 41 bps bid, 45 bps offered.

Merrill Lynch’s CDS costs were 1 bp lower at 70 bps bid, 74 bps offered. Morgan Stanley’s CDS costs fell 1 bp to 74 bps bid, 78 bps offered. Goldman Sachs Group, Inc.’s CDS costs were 1 bp lower at 84 bps bid, 88 bps offered.

Paul Deckelman and Paul A. Harris contributed to this review.

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