Busy week kicks off with $15 billion of supply; new deals mostly tighter in secondary

By Aleesia Forni

Virginia Beach, March 9 – The investment-grade bond market hosted $15.54 billion of supply from 15 issuers during a frenzied session for the primary.

High-grade issuers raced to the market on Monday to secure financing ahead of a number of large M&A deals that are predicted to price later this week.

Barclays plc sold the day’s largest new issue, pricing $3 billion of senior notes in tranches due 2018 and 2025.

The three-year tranche of notes was added following the deal’s announcement.

The Bank of England sold a $2 billion issue of three-year notes at the tight end of talk, while Toyota Motor Credit Corp. priced a $1.75 billion offering of notes in two parts.

The session saw Aflac Inc., Columbia Property Trust Operating Partnership LP and EPR Properties come to market with upsized new issues.

Duke Energy Carolinas LLC attracted an orderbook that was roughly 2.8 times oversubscribed for its $500 million issue of first and refunding mortgage bonds.

Meanwhile, Potomac Electric Power Co. sold a $200 million add-on to its existing 4.15% first mortgage bonds due 2043, attracting an orderbook the was around two times oversubscribed.

New deals from San Diego Gas & Electric Co., BorgWarner Inc., Credit Agricole SA, Spectra Energy Partners LP, Toronto-Dominion Bank, ACE INA Holdings Inc. and Abbey National Treasury Services plc also priced during the session.

Kommunalbanken AS and FMS Wertmanagement joined the forward calendar during the session, both setting price talk for bond offerings expected to price later this week.

In the secondary market, spreads continued to ease over the trading day, while new issues mostly firmed.

The Markit CDX North American Investment Grade index was around 2 basis points wider at 63 bps.

Potomac Electric’s bonds traded around 1 bp better at the session’s close.

Duke Energy’s 3.75% bonds were quoted flat compared to its new issue spread.

ACE INA’s 3.15% notes traded 2 bps tighter on the day.

Barclays prices tight

Barclays sold a $3 billion offering of senior notes (A3/BBB/A) on Monday in tranches due 2018 and 2025, according to an informed source.

There was a $1 billion tranche of 2% three-year notes priced with a spread of 90 bps over Treasuries.

Pricing was at 99.991 to yield 2.003%.

The notes sold at the tight end of guidance set at 90 bps to 93 bps over Treasuries.

The three-year tranche was added following the deal’s announcement early Monday.

A $2 billion tranche of 3.625% 10-year notes sold at 99.685 to yield 3.688%, or 150 bps over Treasuries.

Guidance was set at 150 bps to 155 bps over Treasuries, having tightened from price talk set at 160 bps to 165 bps over Treasuries.

Barclays was the bookrunner.

Proceeds will be used for general corporate purposes.

The financial services company is based in London.

Bank of England’s $2 billion

The Bank of England sold $2 billion of 1.25% three-year notes (Aa1/AAA/) on Monday at mid-swaps minus 7 bps, according to an informed source.

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

Bookrunners were Barclays, BofA Merrill Lynch, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC.

The central bank of the United Kingdom is based in London.

Credit Agricole sub notes

Credit Agricole priced $1.5 billion of 4.375% tier 2 subordinated notes (Baa3/BBB/A-) on Monday at Treasuries plus 225 bps, a market source said.

The notes sold at the tight end of guidance set in the 230 bps area over Treasuries.

Credit Agricole was the bookrunner for the Rule 144A and Regulation S deal.

The retail bank is based in Paris.

TD Bank offering

Toronto-Dominion Bank sold $1.25 billion of senior notes (Aa1/AA-/AA-) in two tranches due 2018 on Monday, a market source said.

The sale included $250 million of floating-rate notes priced at par to yield Libor plus 30 bps.

A second tranche was $1 billion of 1.625% notes priced at 99.997 to yield 1.626%, or Treasuries plus 52 bps.

The fixed-rate notes were guided in the 55 bps area over Treasuries, and the floaters were guided at the Libor equivalent.

TD Securities, Goldman Sachs & Co., UBS Investment Bank and Wells Fargo Securities LLC were the bookrunners.

Proceeds will be added to the company’s general funds and be used for general corporate purposes.

The financial services and banking company is based in Toronto.

Spectra prices tight

Spectra Energy Partners sold a $1 billion two-part offering of senior notes (Baa2/BBB/) on Monday, according to an FWP filed with the Securities and Exchange Commission.

The sale included $500 million of 3.5% 10-year notes priced at 99.582 to yield 3.55%, or Treasuries plus 135 bps.

There was also a $500 million tranche of 4.5% notes due 2045 priced at 99.234 to yield 4.547% with a spread of Treasuries plus 175 bps.

Both tranches priced tighter than price talk.

JPMorgan, BofA Merrill Lynch and SunTrust Robinson Humphrey Inc. were the joint bookrunners.

Proceeds will be used to fund the acquisition of certain subsidiaries from Spectra Energy Corp.

The natural gas transmission and production company is based in Houston.

Toyota Motor two-parter

Toyota Motor Credit priced $1.75 billion of senior notes (Aa3/AA-/) on Monday in fixed- and floating-rate tranches due 2020, according to an informed source.

A $500 million tranche of floaters sold at Libor plus 37 bps.

Guidance was set at the Libor equivalent to the fixed-rate notes.

A $1.25 billion issue of 2.15% notes sold at 52 bps over Treasuries.

The notes were guided in the 55 bps area over Treasuries.

Proceeds will be used for general corporate purposes.

Barclays, Citigroup Global Markets Inc., JPMorgan and RBC Capital Markets LLC were the bookrunners.

The funding arm of auto manufacturer Toyota is based in Torrance, Calif.

Aflac upsizes

Aflac sold an upsized $1 billion issue of five-year and 10-year senior notes (A3/A) in Monday’s session, according to a market source.

There was $550 million of 2.4% notes due 2020 priced at 99.972 to yield 2.406%, or Treasuries plus 75 bps.

The notes sold at the tight end of the Treasuries plus 80 bps area guidance, which firmed from initial talk set in the 85 bps area over Treasuries.

A second tranche was $450 million of 3.25% notes due 2025 priced at 99.602 to yield 3.297%, or Treasuries plus 110 bps.

Guidance was set in the 115 bps area after having tightened from initial talk in the 120 bps area over Treasuries.

Bookrunners were Goldman Sachs, JPMorgan, Morgan Stanley, Wells Fargo Securities, BofA Merrill Lynch, Credit Suisse Securities (USA) LLC and Mizuho Securities.

The company plans to use the proceeds from the offering to fund the redemption if its $850 million 8.5% senior notes due 2019 and for general corporate purposes.

The company provides supplemental health and life insurance through its subsidiaries and is based in Columbus, Ga.

BorgWarner offering

BorgWarner was in Monday’s market with a $1 billion offering of senior notes (Baa1/BBB+/BBB+) due 2025 and 2045, according to an FWP filed with the SEC.

There was a $500 million tranche of 3.375% notes due 2025 sold at 99.798 to yield 3.399%, or Treasuries plus 120 bps.

The notes priced at the tight end of guidance, which was set in the area of 125 bps over Treasuries.

The company also sold $500 million of 4.375% notes due 2045 at 99.685 to yield 4.394%, or Treasuries plus 160 bps.

Pricing was at the tight end of guidance set in the 165 bps area over Treasuries.

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

Proceeds will be used for general corporate purposes.

BorgWarner is an Auburn Hills, Mich.-based manufacturer and seller of engineered automotive systems and components.

Abbey National two-parter

Abbey National Treasury Services priced $1 billion 2.375% five-year senior notes (A2/A/A) on Monday at Treasuries plus 77 bps, according to an informed source.

Pricing was at 99.785 to yield 2.421%.

The notes priced at the tight end of talk set in the 80 bps area over Treasuries. Guidance was set in the high-80 bps area over Treasuries.

BofA Merrill Lynch, Citigroup Global Markets, Morgan Stanley, Santander and Wells Fargo Securities were the bookrunners.

The notes are guaranteed by Santander UK plc.

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

The financial services companies are based in London.

ACE INA new issue

ACE INA Holdings sold $800 million of 3.15% 10-year senior notes (A3/A+/A+) with a spread of Treasuries plus 95 bps on Monday, according to a market source.

Pricing was at the tight end of the Treasuries plus 98 bps area guidance, which firmed from initial talk set at Treasuries plus 105 bps to 110 bps.

The notes sold at 99.983 to yield 3.152%.

In the secondary, the notes traded around 2 bps better at 93 bps bid.

Citigroup Global Markets, Morgan Stanley, JPMorgan and Wells Fargo Securities were the joint bookrunners.

The company plans to use the proceeds from the offering to repay $500 million of its 5.7% senior notes due February 2017 and $300 million of its 5.8% senior notes due March 2018.

The notes are guaranteed by ACE Ltd.

The Bermuda-based holding company for insurance and reinsurance subsidiaries is a unit of Zurich-based ACE Ltd.

Duke Energy mortgage bonds

Duke Energy Carolinas priced $500 million of 3.75% first and refunding mortgage bonds (Aa2/A/A+) due 2045 on Monday at Treasuries plus 100 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 99.166 to yield 3.796%.

A market source quoted the issue at 100 bps bid, 99 bps offered at the session’s close.

Barclays, BofA Merrill Lynch, Citigroup Global Markets, Mizuho Securities USA and U.S. Bancorp Investments Inc. were the bookrunners.

Proceeds will be used to repay at maturity $500 million of the company’s 5.3% first and refunding mortgage bonds due Oct. 1, 2015.

The Charlotte, N.C.-based company generates, transmits, distributes and sells electricity and is a wholly owned subsidiary of Duke Energy Corp.

San Diego G&E mortgage bonds

San Diego Gas & Electric sold $390 million of first mortgage bonds (Aa2/A+/AA-) in two tranches on Monday, according to a source away from the trade.

The sale included $140 million of floating-rate first mortgage bonds, series OOO, due 2017 priced at par to yield Libor plus 20 bps.

Pricing was on top of talk.

A second tranche was $250 million of 1.914% amortizing first mortgage bonds, series PPP, due 2022 priced at par with a spread of Treasuries plus 80 bps.

The notes sold at the tight end of guidance.

Citigroup Global Markets, MUFG, RBC Capital Markets and Williams Capital Group LP were the bookrunners.

Proceeds will be used to repay outstanding commercial paper and for other general corporate purposes.

The public utility serves San Diego and southern Orange counties.

Columbia Property upsizes

Columbia Property Trust Operating Partnership priced an upsized $350 million offering of 4.15% subordinated notes due 2025 on Monday at Treasuries plus 197 bps, according to a market source and an FWP filed with the SEC.

The company originally planned to sell $250 million of notes.

The notes (Baa2/BBB-/) priced at 99.859 to yield 4.167%.

Pricing was at the tight end of the Treasuries plus 200 bps area guidance. Initial talk was set in the 215 bps area over Treasuries.

The notes are guaranteed by Columbia Property Trust Inc.

Bookrunners were JPMorgan, Morgan Stanley and Wells Fargo Securities.

The company will use the proceeds to repay its $300 million unsecured term loan and for general corporate purposes.

Columbia Property Trust is an Atlanta-based real estate investment trust that invests in commercial office properties.

EPR Properties deal

EPR Properties sold an upsized $300 million offering of 4.5% 10-year senior notes (Baa2/BBB-/BBB-) on Monday at 235 bps over Treasuries, according to an informed source and an FWP filed with the SEC.

The notes sold at 99.638 to yield 4.545%.

Price guidance was set in the 240 bps area over Treasuries after having tightened from initial talk set at Treasuries plus 240 bps to 245 bps.

Proceeds will be used to repay the outstanding principal balance of the company’s unsecured revolving credit facility and for general business purposes, which may include funding its ongoing pipeline of acquisition and build-to-suit projects.

Citigroup Global Markets, JPMorgan and Barclays were the joint bookrunners.

The real estate investment trust for entertainment properties is based in Kansas City, Mo.

Potomac add-on

Potomac Electric Power priced a $200 million add-on to its existing 4.15% first mortgage bonds due March 15, 2043 at 110 bps over Treasuries on Monday, according to an informed source and an FWP filing with the SEC.

The notes (A2/A/A-) sold at 104.211 to yield 3.899%.

Pricing was tight of initial talk set at 115 bps to 120 bps over Treasuries.

In the secondary market, the notes were quoted at 109 bps bid, 107 bps offered.

Bookrunners were BNY Mellon Capital Markets LLC, Morgan Stanley and RBS Securities Inc.

The original $250 million issue sold at Treasuries plus 90 bps on March 11, 2013.

Proceeds are being used to repay outstanding commercial paper and for general corporate purposes.

Potomac Electric is a utility based in Washington, D.C.

FMS on deck

FMS Wertmanagement set price talk on Monday for a planned five-year offering of global notes in the mid-swaps plus 1 bp area, according to a market source.

Barclays, Credit Suisse Securities, Goldman Sachs and HSBC Securities are the bookrunners.

The financial services company is based in Munich.

KBN sets talk

Kommunalbanken set price talk for a planned $300 million offering of five-year floating-rate notes (Aaa/AAA/) in the Libor plus 7 bps area, a market source said.

The sale is being done under Rule 144A and Regulation S.

The bookrunners are Nomura, RBC Capital Markets and RBS Securities.

The government-funded lender to municipalities is based in Oslo.

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