Cigna, KKR upsize; Noble meets demand; QVC pulls deal; Southwestern mixed; Exxon Mobil soft

By Aleesia Forni and Cristal Cody

Virginia Beach, March 11 – Issuers were met with varied reactions to new deals coming to market on Wednesday, as Cigna Corp., KKR & Co. LP and Omega Healthcare Investors, Inc. priced upsized offerings, while QVC Inc. was forced to pull its planned new issue.

Canada was also in the market on Wednesday with a $3.5 billion offering of bonds sold at the tight end of talk.

The three tranches of Noble Energy Inc.’s new $1.1 billion three-part deal sold between 43 basis points to 56 bps tight of the mid-point of initial guidance.

The session also saw Air Canada and Federal Realty Investment Trust bring new deals to market.

Elsewhere on Wednesday, QVC cited current market conditions for its withdrawal of a planned add-on to its 5.95% senior notes due March 15, 2043, according to a release.

Instead, the West Chester, Pa.-based television network plans to use cash on hand and funds borrowed under its senior secured credit facility to proceed with the redemption of its 7.375% senior secured notes due 2020.

In total, the session hosted $7.93 billion of issuance. This figure pushes the week’s total supply to more than $39.9 billion.

High-grade bonds headed out mostly flat over the day, sources said.

The Markit CDX North American Investment Grade series 23 index was unchanged at a spread of 65 bps.

Southwestern Energy Co.’s senior notes (Baa3/BBB-/) were mixed in the secondary market, with the short-dated tranches trading stronger.

Exxon Mobil Corp.’s senior notes (Aaa/AAA/) priced a week ago traded 2 bps to 5 bps weaker than issuance.

Microsoft Corp.’s bonds (Aaa/AAA/) improved modestly on the long end.

Canada prices tight

Canada priced a $3.5 billion issue of 1.125% bonds (Aaa/AAA/AAA/) on Wednesday at Treasuries plus 9 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes priced at the tight end of talk set in the 10 bps area over Treasuries.

Pricing was at 99.783 to yield 1.199%.

BNP Paribas Securities Corp., BofA Merrill Lynch, RBC Capital Markets, LLC, Scotia Capital (USA) Inc. and TD Securities (USA) LLC were the bookrunners.

Proceeds will be added to Canada’s official foreign exchange reserves.

Noble three-parter

Noble Energy sold a $1.1 billion three-part offering of senior notes (Baa3/BBB/) on Wednesday in tranches due 2018, 2025 and 2045, according to a market source and an FWP filing with the SEC.

The sale included $250 million of 4% three-year notes priced at 99.787 to yield 4.076%, or Treasuries plus 300 bps.

Initial guidance was set at 350 bps to 362.5 bps over Treasuries.

A $450 million tranche of 5.95% 10-year notes priced at 99.72 to yield 5.987%, or Treasuries plus 387.5 bps.

Initial talk was set at Treasuries plus 425 bps to 437.5 bps.

Finally, $400 million of 6.95% 30-year bonds sold at 98.63 to yield 7.06%, or Treasuries plus 437.5 bps.

The notes were initially talked at 475 bps to 487.5 bps over Treasuries.

Barclays, Citigroup Global Markets Inc., HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC were the joint bookrunners.

The notes were guaranteed by Noble Corp.

Noble Energy plans to transfer proceeds from the offering to Noble Corp., which will use them to repay debt under its revolving credit facilities and commercial paper program and for general corporate purposes.

The crude oil and natural gas exploration and production company is based in Houston.

Air Canada equipment certificates

Air Canada sold a $1,031,390,000 three-tranche issue of enhanced equipment trust certificates on Wednesday, according to a market source and a company release.

The company priced $667,370,000 of 3.6% certificates, series 2015-1, class A (A/A/) at par with a final expected distribution date of March 15, 2027.

There was also $182,010,000 of 3.875% certificates, series 2015-1, class B (BBB/BBB-) at par with a final expected distribution date of March 15, 2023.

Finally, it sold $182,010,000 of 5% certificates, series 2015-1, class C (BB-/BB) at par with a final expected distribution date of March 15, 2020.

Each class of certificates will represent an interest in a related pass-through trust, with the proceeds to be used to acquire equipment notes to be issued by Air Canada and secured by one Boeing 787-8 aircraft delivered in January 2015 and eight new Boeing 787-9 aircraft, which are currently scheduled for delivery from July 2015 to March 2016.

The bookrunners were Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, Citigroup Global Markets, Deutsche Bank Securities Inc. and TD Securities.

The Montreal-based airline plans to use the proceeds for general corporate purposes and to pay fees and expenses related to the offering, and will use the proceeds from the sale of the other equipment notes to finance the acquisition of the eight new Boeing 787-9 aircraft.

Cigna offering

Cigna priced an upsized $900 million of 3.25% senior notes due 2025 on Wednesday at 115 bps over Treasuries, according to a market source and an FWP filed with the SEC.

The offering was upsized from $750 million.

The notes (Baa1/A/BBB+) sold at the tight end of talk set at Treasuries plus 115 bps to 120 bps.

Pricing was at 99.938 to yield 3.257%.

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

Proceeds will be used to redeem all of the company’s 2.75% senior notes due 2016 and 8.5% senior notes due 2019 and for general corporate purposes.

Cigna is a Bloomfield, Conn.-based health service company.

Omega upsizes

Omega Healthcare Investors priced an upsized $700 million issue (Ba1/BBB-/BBB-) of 4.5% senior notes due 2027 on Wednesday at Treasuries plus 255 bps, a market source said.

Pricing was at 98.546 to yield 4.659%.

The notes sold at the tight end of guidance set in the 260 bps area over Treasuries. Initial guidance was set in the 270 bps area over Treasuries.

BofA Merrill Lynch, Credit Agricole, JPMorgan and RBC Capital Markets were the bookrunners.

Proceeds from the issue will be used for general corporate purposes, which may include the repayment of Aviv REIT, Inc. debt in connection with the merger with Aviv, as well as the repayment of future maturities on Omega Healthcare Investors debt and/or future acquisitions.

Omega is a Hunt Valley, Md.-based real estate investment trust investing in and providing financing to the long-term care industry.

KKR adds on

KKR Group Finance Co. III LLC was also in the market on Wednesday with an upsized new issue.

The company sold a $500 million add-on to its existing 5.125% senior notes due June 1, 2044 on Wednesday with a spread of Treasuries plus 237.5 bps, according to a source away from the trade.

The notes (A/A/) priced at the tight end of initial guidance set at 237.5 bps to 250 bps.

Pricing was at 101.062 to yield 5.054%.

The original $500 million issue was sold with a spread of 180 bps on May 21, 2014.

Citigroup Global Markets, Goldman Sachs & Co. and Morgan Stanley were bookrunners for the Rule 144A and Regulation S.

KKR intends to use the proceeds from the offering for general corporate purposes, including to fund acquisitions and investments.

There is a guarantee by New York City-based parent company KKR & Co. LP, along with subsidiaries KKR Management Holdings LP, KKR Fund Holdings LP and KKR International Holdings LP.

Federal Realty taps bonds

Federal Realty Investment Trust sold a $200 million add-on to its existing 4.5% senior notes due Dec. 1, 2044 at 150 bps over Treasuries, according to a market source.

Pricing was at 105.379 to yield 4.179%.

The notes sold at the tight end of talk set in the Treasuries plus 155 bps area.

The original $250 million issue priced on Nov. 10 at 148 bps over Treasuries.

Wells Fargo Securities, BofA Merrill Lynch and Deutsche Bank Securities were the bookrunners.

The company intends to use the net proceeds from this offering to redeem all of its outstanding 6.2% notes due 2017 and for general corporate purposes. Proceeds may also be used to temporarily repay amounts outstanding under the company’s revolving credit facility.

The real estate investment trust for retail and mixed-use buildings is based in Rockville, Md.

NIB on deck

In forward calendar news, Nordic Investment Bank set price talk on Wednesday for a $1 billion offering of three-year notes, a market source said.

Price talk is set in the mid-swaps minus 7 bps area.

Citigroup Global Markets, Deutsche Bank Securities, Nomura Securities Co. Ltd. and TD Securities are on the books.

The financier for five Nordic countries is based in Helsinki, Finland.

Southwestern Energy mixed

Southwestern Energy’s 4.05% notes due 2020 firmed 8 bps to 184 bps bid, according to a market source.

The company sold $850 million of the notes on Jan. 20 at 278 bps plus Treasuries.

Southwestern Energy's 4.95% notes due 2025 widened 5 bps to 265 bps bid, the source said.

The company sold $1 billion of the notes at 318 bps plus Treasuries in the January offering.

The independent natural gas and oil company is based in Houston.

Exxon Mobil soft

Exxon Mobil’s 1.912% notes due 2020 eased 1 bp to 32 bps bid in afternoon trading, a market source said.

The company sold $1.15 billion of the notes on March 3 at Treasuries plus 30 bps.

Exxon Mobil’s 2.709% notes due 2025 traded flat at 63 bps bid, the source said.

Exxon Mobil sold $1.75 billion of the 10-year notes at Treasuries plus 58 bps in the March 3 deal.

The oil and gas company is based in Irving, Texas.

Microsoft long bonds firm

Microsoft’s 2.7% notes due 2025 headed out about 3 bps weaker on the day at 63 bps bid, according to a market source.

Microsoft sold $2.25 billion of the notes on Feb. 9 at a spread of Treasuries plus 75 bps.

Microsoft’s 4% bonds due 2055 firmed 1 bp to 144 bps bid, the source said.

Microsoft sold $2.25 billion of the bonds in the February sale at 153 bps plus Treasuries.

The computer software company is based in Redmond, Wash.

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