Johnson & Johnson, CVS, Starbucks bring new deals; Starbucks firms in secondary

By Aleesia Forni

Virginia Beach, Dec. 2 - Johnson & Johnson, CVS Caremark Corp. and Starbucks Corp. kicked off what is expected to be a busy week for the high-grade bond market.

CVS Caremark led the day's new issues, selling $4 billion of senior notes in four tranches on Monday, according to an informed source and an FWP filed with the Securities and Exchange Commission.

There was $750 million of 1.2% senior notes due 2016 priced with a spread of Treasuries plus 65 basis points, while $1.25 billion of 2.25% notes due 2018 sold at Treasuries plus 85 bps.

A $1.25 billion tranche of 4% 10-year notes sold with a spread of 125 bps over Treasuries.

CVS also priced $750 million of 5.3% 30-year notes at Treasuries plus 145 bps.

Johnson & Johnson also hit Monday's market, pricing a $3.25 billion six-part sale of senior notes during the session.

The company sold a $400 million issue of 0.7% three-year notes at Treasuries plus 18 bps and an $800 million issue of three-year floaters at par to yield Libor plus 7 bps.

There was also $600 million of 1.65% five-year notes priced with a spread of Treasuries plus 28 bps and $550 million of 3.375% notes due 2023 priced at Treasuries plus 58 bps.

Johnson & Johnson also sold a $650 million tranche of 4.375% notes due 2033 at 55 bps plus Treasuries.

Finally, the company sold a $500 million issue of 4.5% 30-year notes with a spread of 65 bps over Treasuries.

All six tranches priced at the tight end of talk.

Meanwhile, Starbucks came to Monday's market with a two-part $750 million sale of notes, a market source said.

That deal included $400 million of 0.875% notes due 2016 priced with a spread of Treasuries plus 38 bps and $350 million of notes due 2018 priced at Treasuries plus 63 bps.

Both tranches sold at the tight end of talk.

Also on Monday, Barclays Bank plc priced a $335 million issue of floating-rate senior notes due 2016 with a coupon of Libor plus 54 bps, according to an FWP filed with the SEC.

The day's new deals met solid demand, according to a market source, namely the new issue from CVS.

The source said the deal's orderbook was more than four times oversubscribed.

With $8 billion of paper priced on Monday, players continue to expect around $20 billion of supply for the week.

In the secondary market, bonds were mostly tighter on the day, market sources said.

The Markit CDX North American Investment Grade series 21 index tightened 1 bp to a spread of 69 bps.

Starbucks' new 0.875% three-year notes were 2 bps better late Monday, a trader said, while the 2% tranche of notes due 2018 was quoted 3 bps better.

Another trader had seen "nada" on the new Johnson & Johnson deal, which priced late during the session.

CVS prices $4 billion

Monday's primary saw CVS sell $4 billion of senior notes (Baa1/BBB+/) in a four-part deal, according to an informed source and an FWP filed with the SEC.

The deal included $750 million of 1.2% senior notes due 2016 priced with a spread of Treasuries plus 65 bps, or 99.962, to yield 1.213%.

A second tranche was $1.25 billion of 2.25% notes due 2018 sold at Treasuries plus 85 bps.

Pricing was at 99.887 to yield 2.274%.

There was also $1.25 billion of 4% 10-year notes sold with a spread of 125 bps over Treasuries.

The notes sold at 99.56 to yield 4.054%.

Finally, $750 million of 5.3% 30-year notes priced at 99.806 to yield 5.313%, or Treasuries plus 145 bps.

Barclays, J.P. Morgan Securities LLC, BofA Merrill Lynch, BNY Capital Markets Corp. and Wells Fargo Securities LLC were the bookrunners for the offering.

Proceeds will be used to repay commercial paper and for general corporate purposes, which may include funding the acquisition of Coram LLC.

The pharmacy retailer is based in Scarsdale, N.Y.

Johnson & Johnson's six parts

Johnson & Johnson was also in the primary market on Monday, pricing $3.25 billion of senior notes (Aaa/AAA/AAA) in six tranches, according to a market source.

The company priced $400 million of 0.7% three-year notes at Treasuries plus 18 bps, or 99.879, to yield 0.741%.

There was also $800 million of three-year floaters priced at par to yield Libor plus 7 bps.

A $600 million tranche of 1.65% five-year notes sold at 99.78 to yield 1.696%, or Treasuries plus 28 bps.

Johnson & Johnson also priced $550 million of 3.375% notes due 2023 with a spread of Treasuries plus 58 bps.

Pricing was at 99.941 to yield 3.382%.

There was $650 million of 4.375% notes due 2033, which sold at 55 bps over Treasuries, or 99.433, to yield 4.418%.

Finally, $500 million of 4.5% 30-year notes sold at 99.706 to yield 4.518%, or 65 bps over Treasuries.

All six tranches priced at the tight end of talk.

BofA Merrill Lynch, Goldman Sachs & Co., JPMorgan, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and RBS Securities Inc. were the joint bookrunners.

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

The consumer products company is based in New Brunswick, N.J.

Starbucks prices tight

Starbucks priced a $750 million two-part sale of senior notes on Monday, according to a market source and a 424B3 filed with the SEC.

The sale included $400 million of 0.875% three-year notes priced with a spread of Treasuries plus 38 bps.

The notes were quoted at 36 bps bid, 34 bps offered.

There was also $350 million of notes due 2018 sold at Treasuries plus 63 bps.

A trader saw the notes at 60 bps bid, 59 bps offered.

Both tranches sold at the tight end of talk.

BofA Merrill Lynch, JPMorgan, Citigroup Global Markets, Goldman Sachs, Morgan Stanley & Co. LLC and Wells Fargo Securities were the joint bookrunners.

The company plans to use proceeds from the offering to fund a portion of the recent arbitration award to Kraft Foods Global, Inc. relating to the 2011 termination of a distribution agreement between Kraft and Starbucks.

The company intends to use the remaining net proceeds from the offering for general corporate purposes, which may include business expansion, payment of cash dividends on the company's common stock, the repurchase of common stock under its ongoing share repurchase program or the financing of possible acquisitions.

The Seattle-based coffee company was last in the market on Sept. 3 with a $750 million issue of 3.85% senior notes due 2023 priced at Treasuries plus 100 bps.

Barclays sells floaters

In other primary action, Barclays priced $335 million of three-year floating-rate senior notes (A2/A/A) with a coupon of Libor plus 54 bps, according to an FWP filed with the SEC.

Barclays was the bookrunner.

The bank is based in London.

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