Primary activity resumes with GM, Scotiabank, BMO deals; Monsanto firms; energy bonds tighten

By Aleesia Forni and Cristal Cody

Virginia Beach, April 7 – The investment-grade bond market sprung back to life on Tuesday, with $7.25 billion of new paper pricing from companies including General Motors Financial Co. Inc., Bank of Nova Scotia, Bank of Montreal and Monsanto Co.

Financial issuers raced to the primary following Monday’s muted session, capitalizing on the lull in corporate issuance due to earnings blackouts periods.

General Motors Financial was in the market with a $2.4 billion three-part split-rated new issue.

Bank of Montreal garnered around $2.4 billion of orders for its $1.25 billion two-part offering of senior notes on Tuesday.

Scotiabank priced a $1.1 billion five-year covered bond in line with price talk.

Meanwhile, Monsanto’s upsized $800 million offering attracted an order book that was around four times oversubscribed.

The session also saw Metropolitan Life Global Funding I sell $750 million of funding agreement-backed securities, Compass Bank issue $700 million of subordinated notes and TECO Energy Inc. price $250 million of floaters.

In forward calendar news, Inter-American Development Bank set price talk for a planned offering of global notes.

Investment-grade bonds were mostly better on the day with energy bonds tightening 3 basis points to 5 bps in secondary trading, sources said on Tuesday.

Exxon Mobil Corp.’s 2.709% notes due 2025 firmed 5 bps over the day.

Southwestern Energy Co.’s 4.95% senior notes due 2025 tightened 3 bps.

New issues were mixed in aftermarket trading as the session closed.

Monsanto’s 2.85% notes due 2025 traded 2 bps better.

General Motors Financial’s tranche of 3.45% notes due 2022 were seen 1 bp softer on the bid side.

In other trading, Apple Inc.’s 2.5% notes due 2025 were flat.

Microsoft Corp.’s 2.7% notes due 2025 eased 3 bps.

The Markit CDX North American Investment Grade series 23 index ended 1 bp tighter at a spread of 60 bps.

GM sells crossovers

General Motors Financial priced a $2.4 billion split-rated issue of senior notes (Ba1/BBB-/BB+) on Wednesday in three parts, according to market sources.

The sale included $300 million of floating-rate notes due 2018 priced at par to yield Libor plus 136 bps.

There was also $850 million of 2.4% notes due 2018 priced at 99.914 to yield 2.43%, or Treasuries plus 160 bps.

The notes sold in line with guidance set in the Treasuries plus 160 bps area and were initially talked in the area of 165 bps over Treasuries.

A $1.25 billion tranche of 3.45% notes due 2022 sold at 182 bps over Treasuries. The tranche priced at 99.803 to yield 3.482%.

Pricing was at the tight end of the Treasuries plus 185 bps area guidance after having firmed from initial price talk in the area of 190 bps over Treasuries.

Deutsche Bank Securities Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, RBC Capital Markets LLC and TD Securities were the joint bookrunners.

General Motors Financial’s 3.45% notes due 2022 were quoted at 183 bps bid, 174 bps offered in the secondary market, a trader said.

The Fort Worth-based finance subsidiary of General Motors Co. plans to use the proceeds for general corporate purposes.

Scotiabank covered bond

Also on Tuesday, Bank of Nova Scotia priced $1.1 billion of 1.85% covered bonds due 2020 at mid-swaps plus 37 bps, or Treasuries plus 54 bps, according to an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.948 to yield 1.861%.

The notes (Aaa/AAA/AAA) sold in line with price talk set in the high-30 bps area over mid-swaps.

The bookrunners were BofA Merrill Lynch, Barclays, Citigroup Global Markets Inc., Scotiabank and UBS Securities LLC.

The financial services company has its principal offices in Halifax, N.S.

BMO two-parter

Bank of Montreal priced $1.25 billion of medium-term notes (Aa3/A+/AA-), series C, on Tuesday in fixed- and floating-rate tranches due April 10, 2018, according to a market source.

A $250 million tranche of three-year floaters priced at par to yield Libor plus 36 bps.

The notes sold at the tight end of the Libor plus 39 bps area guidance.

A $1.25 billion tranche of 1.4% three-year notes sold at 99.936 to yield 1.422%, or 60 bps over Treasuries.

Guidance was set in the area of 63 bps over Treasuries.

The floating-rate tranche was added following the deal’s announcement early Tuesday.

BMO Capital Markets Corp., Citigroup Global Markets, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes.

The financial services company is based in Toronto and Montreal.

Monsanto upsizes

Monsanto sold an upsized $800 million offering of senior notes (A3/BBB+/A-) in tranches due 2025 and 2045 on Tuesday, according to a market source and an FWP filed with the SEC.

The issue was upsized from $750 million.

The sale included a $300 million tranche of 2.85% 10-year notes sold with a spread of Treasuries plus 100 bps.

Pricing was at the tight end of the Treasuries plus 100 bps to 105 bps guidance, tightened from initial talk in the 115 bps area over Treasuries.

The notes sold at 99.594 to yield 2.897%.

A $500 million tranche of 3.95% 30-year bonds sold at 99.703 to yield 3.967%, or Treasuries plus 145 bps.

Guidance was set at 145 bps to 150 bps over Treasuries after having tightened from initial price thoughts in the 155 bps area over Treasuries.

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

BofA Merrill Lynch, Goldman Sachs, Barclays and MUFG are the bookrunners.

Monsanto’s 2.85% notes due 2025 firmed to 98 bps bid in the secondary market, a trader said.

The company provides agricultural products for farmers and is based in St. Louis.

MetLife Global offering

Metropolitan Life Global priced $750 million of 2% funding agreement-backed securities (Aa3/AA-/AA-) due April 14, 2020 on Tuesday at Treasuries plus 77 bps, an informed source said.

The company sold the notes at 99.561 to yield 2.093%.

The issue sold at the tight end of price guidance which was set in the area of 80 bps over Treasuries.

BofA Merrill Lynch, Barclays, Citigroup Global Markets, Deutsche Bank Securities, JPMorgan and Morgan Stanley were the joint bookrunners for the Rule 144A and Regulation S deal.

The issuer is the funding arm of New York-based insurance company Metropolitan Life Insurance Co.

Compass Bank sub notes

Compass Bank was in the market on Tuesday pricing a $700 million issue of 3.875% subordinated notes (Baa3/BBB-/BBB-) with a spread of 210 bps over Treasuries, a source away from the trade said.

The notes sold at 99.019 to yield 3.995%.

Pricing was at the tight end of guidance set in the 215 bps area.

The bookrunners were BofA Merrill Lynch, BBVA Securities, Citigroup Global Markets and Wells Fargo Securities.

The financial holding company is based in Birmingham, Ala.

TECO floaters

TECO Energy priced a $250 million issue of three-year floating-rate notes (Baa1/BBB/BBB) on Tuesday at par to yield Libor plus 60 bps, according to an informed source and an FWP filed with the SEC.

The notes were issued through the TECO Finance Inc. unit. TECO Energy is the guarantor.

Proceeds will be used to retire TECO Finance’s 6.75% notes due May 2015, to repay borrowings under TECO Finance’s revolving credit facility and for general corporate purposes.

JPMorgan and Wells Fargo Securities are the bookrunners.

The energy holding company is based in Tampa, Fla.

IADB sets talk

Inter-American Development Bank is planning to price an offering of seven-year global notes (Aaa/AAA), according to a market source.

The notes are being guided in the area of mid-swaps plus 2 bps.

Pricing is expected during Wednesday’s session.

BofA Merrill Lynch, Deutsche Bank Securities, Goldman Sachs and TD Securities are the joint bookrunners.

The issuer provides financing for Latin American and Caribbean countries and is based in Washington, D.C.

Exxon Mobil better

Exxon Mobil’s 2.709% notes due 2025 tightened 5 bps on Tuesday to 63 bps bid, a market source said.

Exxon Mobil sold $1.75 billion of the notes (Aaa/AAA/) on March 3 at Treasuries plus 58 bps.

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

Southwestern Energy firms

Southwestern Energy’s 4.95% notes due 2025 firmed 3 bps to 274 bps bid, according to a market source.

Southwestern Energy sold $1 billion of the notes (Baa3/BBB-/) on Jan. 20 at Treasuries plus 318 bps.

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

Apple improves

Apple’s 2.5% notes due 2025 firmed 1 bp to 83 bps bid, a market source said.

The notes (Aa1/AA+/) were flat over the morning at 78 bps offered.

Apple sold $1.5 billion of the notes on Feb. 2 at Treasuries plus 85 bps.

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

Microsoft soft

Microsoft’s 2.7% notes due 2025 eased 3 bps to 74 bps bid in late afternoon trading, a market source said.

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

The computer software company is based in Redmond, Wash.

Bank/broker CDS costs flat to lower

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

Bank of America Corp.’s CDS costs were unchanged at 64 bps bid, 67 bps offered. Citigroup Inc.’s CDS costs were also flat at 73 bps bid, 76 bps offered. JPMorgan Chase & Co.’s CDS costs fell 1 bp to 61 bps bid, 64 bps offered. Wells Fargo & Co.’s CDS costs were also 1 bp lower at 40 bps bid, 43 bps offered.

Merrill Lynch’s CDS costs were unchanged at 67 bps bid, 72 bps offered. Morgan Stanley’s CDS costs were down 1 bp to 72 bps bid, 76 bps offered. Goldman Sachs Group, Inc.’s CDS costs were 1 bp lower at 82 bps bid, 86 bps offered.

Stephanie N. Rotondo contributed to this review.

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