Stanley Black & Decker sells first bonds; KfW prices; Black & Decker tightens in secondary

By Andrea Heisinger and Cristal Cody

New York, Aug. 31 - Stanley Black & Decker, Inc. and KfW priced bonds on Tuesday to end the month of August and keep the string of high-grade new issues alive.

It was the first bond sale for Stanley Black & Decker since Stanley Works merged with Black & Decker. Since there were no outstanding bonds to price off, the $400 million of 30-year bonds took until mid-afternoon to price.

Germany's KfW priced $4 billion of guaranteed 10-year notes by early afternoon. The deal is guaranteed by the German government.

There may be a couple of straggling sales on Wednesday, but after that, the market is expected to be quiet until after Labor Day. The first week or two of September is expected to be "pretty active by all accounts," as one market source said.

Another source predicted there will be "a flurry of activity" post-Labor Day.

In secondary trading, Stanley Black & Decker's notes firmed 5 bps to 7 bps soon after pricing, sources said.

The secondary market jumped in overall trading, but continued a mostly slow pace on the last day of the month, according to traders.

Overall investment-grade Trace volume climbed 74% to more than $12 billion, a source said.

"A lot of people are on vacation because of the holiday weekend coming up," one trader said.

"Activity should pick up next week. Also, it's month-end and you see a fair amount of people involved in month-end activities as opposed to buying bonds."

The Markit CDX Series 14 North American investment-grade index eased 1 point to a spread of 114 bps, according to Markit Group Ltd.

Treasuries continued to rally, sending yields down on Tuesday.

The yield on the benchmark 10-year note fell 6 bps to 2.47%. The yield on the 30-year bond dropped 6 bps to 3.52%.

"Continued concerns over the global economy continue to weigh on the markets," strategists at Confluence Investment Management LLC said in a research note on Tuesday.

Stanley's 30-years

Stanley Black & Decker sold $400 million of 5.2% 30-year senior unsecured notes by mid-afternoon to yield 165 bps over Treasuries, a source who worked on the sale said.

The notes were priced at the tight end of talk whispered in the 175 bps area. The deal took a good part of the day to price because it was the company's first bond sale since the Stanley Works merged with Black & Decker Corp. on March 12.

The notes (Baa1/A/A-) are guaranteed by Black & Decker Corp.

Barclays Capital Inc., Citigroup Global Markets, J.P. Morgan Securities and UBS Investment Bank ran the books.

The deal was about six times oversubscribed, the source said late in the day.

"It went very well; there was strong reception," he said. "It priced at the tight end of talk."

The company's merger earlier in the year didn't seem to affect investor confidence.

"I think people liked the credit story," the source said. "They had strong earnings in July."

There weren't any outstanding bonds to go off for pricing, and no really strong comps either. They looked at bonds from Tyco Electronics for some guidance.

Proceeds are going to reduce borrowings and for other general corporate purposes.

The tool company is based in New Britain, Conn.

Tone stays solid

The number of deals coming to the market to price may be dwindling, but the tone has not suffered.

It stayed solid for the day, a market source who worked on the Stanley Black & Decker deal said.

"The 30-year rallied and the tone was stable," he said.

It's unclear if any deals will price on Wednesday or Thursday, but it seems likely anyone wanting to tap the market would do it sooner rather than later.

"I wouldn't think we're going to see anything after tomorrow," a source said at the end of the day. "Everyone's already in vacation mode."

KfW sells $4 billion

German development bank KfW priced $4 billion of 2.75% 10-year guaranteed global notes by early afternoon at 99.29, according to an FWP filing with the Securities and Exchange Commission.

The notes (Aaa/AAA/AAA) are guaranteed by the Republic of Germany.

Bookrunners were Bank of America Merrill Lynch, Goldman Sachs & Co. and J.P. Morgan Securities Inc.

The notes were seen trading in the secondary market at 34 bps bid, a source said.

The bank is based in Frankfurt.

Stanley Black & Decker stronger

Stanley Black & Decker's new bonds sold on Tuesday were strong in secondary trading, sources said.

The company priced $400 million of 5.2% bonds due 2040 to yield Treasuries plus 165 bps.

"They're doing well on the break - about 5 to 7 basis points better," a trader said in the afternoon.

The bonds were seen trading late in the day at 160 bps bid, 158 bps offered, a second trader said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.