Home Depot, Bank of Tokyo-Mitsubishi sell in packed primary; telecom bonds improve

By Cristal Cody and Aleesia Forni

Virginia Beach, Va., Sept. 3 - Activity in the primary market came back with a solid crop of new issuers on Tuesday following the extended Labor Day holiday weekend.

Home Depot Inc., Starbucks Corp., Caterpillar Financial Services Corp. and Ameriprise Financial Inc. were among the corporate names to hit the primary to start the shortened week.

In total, nine issuers priced new deals during the session, selling nearly $11 billion of high-grade bonds on Tuesday.

Home Depot came to market pricing a $3.25 billion issue of senior notes in three parts on Tuesday, according to a syndicate source and a filing with the Securities and Exchange Commission.

Bank of Tokyo-Mitsubishi UFJ Ltd. priced a $3 billion offering of notes in four parts during the session in a private placement, according to an informed source.

Meanwhile, Starbucks sold $750 million of 3.85% senior notes due Oct. 1, 2023 with a spread of Treasuries plus 100 bps, according to a market source and a filing with the SEC.

The session also saw MetLife Inc. sell $999,886,000 of 4.368% series D senior debentures due June. 1, 2024 on Tuesday, according to a company release.

Caterpillar Financial brought a two-part offering of notes on Tuesday, according to filings with the Securities and Exchange Commission.

In other primary news, Ameriprise Financial came to the primary selling $600 million of 4% notes due Oct. 15, 2023 with a spread of Treasuries plus 120 bps.

There was also a new deal from Unilever Capital Corp., which sold $750 million of 5.5-year notes priced with a spread of Treasuries plus 80 bps. The notes priced on top of talk.

The day also saw a new issue from Duke Energy Ohio, Inc. The company sold $450 million of first mortgage bonds in two parts, according to an informed source and a filing with the Securities and Exchange Commission.

Also during the session, Macy's Retail Holdings Inc. sold $400 million of 4.375% 10-year senior notes at a spread of Treasuries plus 160 bps, according to a market source and a filing with the SEC.

Players are still focused on volatility in the Treasury market, one market source said, with the yield on the 10-year note reaching 2.875% on Tuesday.

The rest of the shortened week is expected to see continued pick up in activity, as issuers are attempting to hit the primary prior to the Federal Open Market Committee meeting this month.

"We should see another few busy days," one syndicate source said.

In the secondary market, the rush of new bonds priced on Tuesday traded mostly better, according to market sources.

Unilever's new issue tightened 7 bps in secondary trading, a trader said.

Macy's 4.375% notes due 2023 firmed 3 bps in late afternoon trading, a source said.

Caterpillar Financial's tranche of 2.45% notes due 2018 also tightened 3 bps in the secondary market.

Ameriprise Financial's notes and Starbucks' notes both traded wrapped around issuance going out, according to a trader.

In other new issue trading, Home Depot's new bonds firmed 1 bp to 2 bps, a trader said.

Verizon Communication Inc.'s bonds tightened on Tuesday after trading wider at the open, according to market sources.

The Markit CDX Series 20 North American Investment Grade index edged tighter over the day but ended flat at a spread of 84 bps.

Home Depot three-parter

Tuesday's primary market saw Home Depot price an issue of senior notes in three parts, according to a syndicate source and an SEC filing.

All three tranches priced tighter than talk.

The company priced $1.15 billion of 2.25% notes due 2018 with a spread of Treasuries plus 60 basis points, or 99.859 to yield 2.28%. That compared with talk for a spread of 65 bps.

A $1.1 billion tranche of 3.75% notes due 2024 sold with a spread of Treasuries plus 95 bps, versus talk of a 100 bps spread.

Pricing was at 99.481 to yield 3.811%.

Finally, $1 billion of 4.875% notes due 2044 were priced at Treasuries plus 115 bps. Talk was 120 bps for this tranche.

The notes were sold at 98.506 to yield 4.971%.

Home Depot's 3.75% notes due 2024 traded 1 bp tighter at 94 bps bid, 89 bps offered after the issue priced, a trader said. The tranche of 4.875% bonds due 2044 went out 2 bps better at 113 bps bid, 105 bps offered.

BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. and J.P. Morgan Securities LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes, including the refinancing of $1.25 billion of the company's 5.25% senior notes due Dec. 16 and repurchasing shares of its common stock.

Home Depot is an Atlanta-based home improvement retailer.

MetLife prices remarketing

Also on Tuesday, MetLife priced $999,886,000 of 4.368% series D senior debentures due June 1, 2024, according to a company release.

Full details were not available at press time.

The debentures were originally issued in November 2010 as $1 billion of series D senior debentures due 2024, which formed part of Met Life's 40 million common equity units, with an amount at issuance of $3 billion.

Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, HSBC Securities (USA) Inc. and Morgan Stanley & Co. LLC are the remarketing agents.

The insurance and employee benefits company is based in New York City.

In other primary action during Tuesday's session, Unilever Capital priced sold $750 million 5.5-year notes with a spread of Treasuries plus 80 bps, according to a market source.

Full terms were not available at press time.

Citigroup Global Markets Inc., HSBC Securities, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the joint bookrunners.

The company plans to use proceeds for general corporate purposes.

The notes will be guaranteed by Unilever NV, Unilever plc and Unilever United States Inc.

The U.S. office of the Dutch and English consumer goods company is based in Englewood Cliffs,

Starbucks sells $750 million

Starbucks priced on Tuesday $750 million of 3.85% senior notes (Baa2/A-/A-) due Oct. 1, 2023 with a spread of Treasuries plus 100 basis points, according to a market source and a filing with the SEC.

Pricing was at 99.964 to yield 3.854%.

Starbucks' 3.85% senior notes due 2023 traded flat at 100 bps bid, 98 bps offered, a trader said.

BofA Merrill Lynch, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are the joint bookrunners.

The company plans to use proceeds from the offering for general corporate purposes.

Starbucks is a Seattle-based coffee company.

Caterpillar sells in two parts

In other primary action, Caterpillar Financial sold a two-part offering of notes on Tuesday, according to filings with the Securities and Exchange Commission.

There was a tranche of $450 million 1.35% notes due 2016 priced with a spread of Treasuries plus 55 basis points.

The notes sold at 99.985 to yield 1.355%.

There was also a $300 million tranche of 2.45% notes due 2018 priced at Treasuries plus 78 bps, or 99.953 to yield 2.46%.

In the secondary market, Caterpillar Financial's 2.45% notes due 2018 tightened to 75 bps bid, 70 bps offered, according to a trader. The tranche of 1.35% notes due 2016 was not seen in late afternoon trading.

Barclays and J.P. Morgan Securities LLC are the joint bookrunners.

The funding arm of heavy equipment maker Caterpillar is based in Nashville, Tenn.

Amerprise gets $600 million

Ameriprise Financial came to Tuesday's session pricing $600 million of 4% notes (A3/A/) due Oct. 15, 2023 with a spread of Treasuries plus 120 basis points, according to a FWP filing with the SEC.

Pricing was at 99.518 to yield 4.058%.

Ameriprise Financial's notes traded flat at 120 bps bid, 118 bps offered in secondary trading, according to a trader.

Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the joint bookrunners.

The proceeds will be used for general corporate purposes, which may include the repayment of the company's 5.65% senior notes due 2015 and 7.75% senior notes due 2039.

The financial planning and services company is based in Minneapolis.

Duke sells mortgage bonds

Meanwhile, Duke Energy Ohio sold $450 million of first mortgage bonds in two parts, according to an informed source and a filing with the SEC.

The company sold $150 million floating-rate first mortgage bonds due 2015 at par to yield Libor plus 14 basis points.

There was also a $300 million tranche 3.8% of first mortgage bonds due 2023 priced with a spread of Treasuries plus 95 bps.

The notes sold at 99.967 to yield 3.804%.

Barclays, RBS Securities and UBS Investment Bank were the joint bookrunners.

Proceeds from the sale will be used for general corporate purposes, including the repayment of short-term notes.

The electric subsidiary of Duke Energy Corp. is based in Cincinnati.

Macy's prices tight

Another new deal came from Macy's Retail, which sold $400 million of 4.375% 10-year senior notes during Tuesday's session at a spread of Treasuries plus 160 bps, according to a market source and a filing with the SEC.

The notes priced at the tight end of talk.

Pricing was at 99.314 to yield 4.461%.

In the secondary market, Macy's 4.375% notes due 2023 firmed to 157 bps bid, 152 bps offered, a trader said.

BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, and J.P. Morgan Securities LLC, Goldman Sachs & Co., U.S. Bancorp Investments Inc., Wells Fargo Securities LLC were the joint bookrunners.

Proceeds from the sale will be used for general corporate purposes, which may include working capital, capital expenditures, retirement of indebtedness and repurchasing outstanding common stock.

The notes were guaranteed by Macy's Inc.

The department store holding company is based in Cincinnati.

Telecom bonds improve

Verizon's 2.45% notes due 2022 (A3/A-/A) traded around the 134 basis points area early Tuesday and tightened to 128 bps bid over the day following Monday's report the company will purchase London-based Vodafone Group plc's 45% stake in Verizon Wireless, according to traders.

The debt traded on Friday at 129 bps bid, 124 bps offered.

Verizon sold $1.75 billion of the notes in November at a spread of Treasuries plus 75 bps.

Moody's Investors Service and Standard & Poor's downgraded Verizon on Monday after the New York City-based telecommunications company officially announced it will purchase Vodafone's stake for $130 billion, which includes about $67 billion in new debt.

Moody's dropped Verizon by one notch to Baa1, while S&P downgraded the company to BBB+ from A- on Monday.

Fitch dropped Verizon's A rating to A- on Tuesday.

The deal helped Canadian telecommunications bonds trade tighter, sources said.

"As a result of the Vodafone transaction, Verizon has signaled that it no longer intends to enter the Canadian telecom market, which is causing Canadian telco spreads to tighten 5 to 8 bps across the respective credit curves," RBC Capital Markets, LLC analysts said in a note on Tuesday.

A Canadian investment-grade market source said telecom bonds were "definitely improving" over the day.

"They had widened on the news that Verizon is not coming to Canada, but now they're tighter," the source said.

Bank CDS costs drop

Investment-grade bank and brokerage CDS costs declined, a market source said on Tuesday.

Bank of America Corp.'s CDS costs firmed 2 bps to 107 bps bid, 112 bps offered. Citigroup Inc.'s CDS costs tightened 2 bps to 100 bps bid, 105 bps offered. JPMorgan Chase & Co.'s CDS costs fell 2 bps to 85 bps bid, 90 bps offered. Wells Fargo & Co.'s CDS costs declined 2 bps to 62 bps bid, 66 bps offered.

Merrill Lynch's CDS costs fell 2 bps to 101 bps bid, 111 bps offered. Morgan Stanley's CDS costs tightened 2 bps to 138 bps bid, 143 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 2 bps to 130 bps bid, 135 bps offered.

Paul Deckelman contributed to this review

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