Sanofi, Avery Dennison, Barclays price as supply grows; Colonial Pipeline notes trade flat

By Aleesia Forni and Andrea Heisinger

New York, April 3 - Corporate issuers Sanofi, Avery Dennison Corp., ERP Operating LP and Idaho Power Co. were in the investment-grade bond market on Wednesday.

French health-care company Sanofi priced $1.5 billion of five-year notes for purposes that include repaying existing borrowings.

ERP Operating tapped the market for $500 million of 10-year notes.

Avery Dennison sold $250 million of 10-year notes, and Idaho Power priced $150 million of bonds split evenly between tranches due 2023 and 2043.

There was a $300 million crossover trade of 10-year senior notes from Toll Brothers Finance Corp., which was priced on the high-grade bond desk.

Colonial Pipeline Co. priced $350 million of 30-year bonds via Rule 144A and Regulation S.

A previously announced offering of $1 billion of 10-year contingent capital notes was priced by Barclays Bank plc. The bonds have an automatic write-down provision if a capital adequacy trigger is met.

There was a $2 billion sale of five-year notes from the World Bank's International Finance Corp.

Daimler International Finance BV, a unit of German car maker Daimler AG, gave the terms of its $300 million sale of five-year guaranteed notes priced Tuesday.

A sale of series D cumulative preferred stock was announced by NorthStar Realty Finance Corp.

"I'm sure it will be relatively small like their other deals," a trader said.

The trader saw the issue offered at less 20 cents in the midday gray market.

"Nobody is really trading that in the gray right now," he remarked.

Meanwhile, Digital Realty Trust Inc.'s newly priced $225 million issue of 5.875% series G cumulative redeemable preferreds had yet to free up as of midday. The deal priced late Tuesday

A trader opined that the issue would free "probably later this afternoon." He pegged the securities at $24.75.

The high-grade market, despite seeing more issuance than the first two days of the week, was said to have a "so-so" tone at the end of the day, a market source said.

"We're still seeing [news] out of North Korea, and people are still out for spring break," the source added.

In secondary action, one trader saw Colonial's notes trading at 118 basis points bid near the end of the session.

Recent deals from Home Dept, Inc., Boston Properties LP and Ireland's Kerry Group were mixed on the session.

A trader saw Home Depot's two-part issue trading 2 bps better to 1 bp wider in the secondary market, while the 3.125% notes due 2023 from Boston Properties were quoted 2 bps wider from levels seen late Tuesday.

In another sale from Tuesday, Kerry Group's $750 million issue of 3.125% 10-year notes traded flat.

The Markit CDX Series 20 North American Investment Grade index was 1.5 bps wider, one source said, closing the session at a spread of 89 bps.

Trading volume was $9.7 billion on Wednesday, which the source commented was "more than I thought it [would] be."

"Quiet on my end," the source added of the day's trading activity.

Sanofi's $1.5 billion

Sanofi priced $1.5 billion of 1.25% five-year global notes (A1/AA-/) to yield Treasuries plus 62 bps, a source close to the trade said.

Guidance on the bonds at midday was in the Treasuries plus 65 bps area, plus or minus 3 bps, a source said.

The bookrunners were Barclays, BofA Merrill Lynch, Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC.

Proceeds are being used for general corporate purposes, including repayment of existing borrowings.

Paris-based Sanofi, a diversified health-care products maker, was last in the U.S. bond market with a $1 billion sale of three-year notes on Sept. 27, 2011.

Avery's 10-year

Avery Dennison priced $250 million of 3.35% 10-year senior notes (Baa2/BBB/) at Treasuries plus 155 bps, a market source said.

The active bookrunners were BofA Merrill Lynch and JPMorgan. Passives were RBS Securities Inc. and Wells Fargo Securities LLC.

Proceeds are being used to repay existing debt under a commercial paper program.

Avery Dennison was last in the U.S. bond market with a $250 million offering of 5.375% 10-year notes sold at 150 bps over Treasuries on April 8, 2010.

The office product and labeling company is based in Pasadena, Calif.

ERP sells tight

ERP Operating was in the day's session with a $500 million trade of 3% 10-year notes (Baa1/BBB+/BBB+) sold at 130 bps over Treasuries, a source close to the sale said.

Whispered talk at midday was in the Treasuries plus 140 bps, the source said.

The bookrunners were Citigroup Global Markets Inc., Barclays, Morgan Stanley & Co. LLC and RBC Capital Markets LLC.

Proceeds are being used for working capital and general corporate purposes including repayment of the balance under a revolving credit facility.

The unit of apartment property builder and manager Equity Residential is based in Chicago.

Colonial does 30-year

Colonial Pipeline priced $350 million of 4.2% 30-year bonds (A2/A/) in a private sale to yield Treasuries plus 118 bps, a market source said.

"Just saw a 118 [bps] bid," one trader said late during the session.

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

The bookrunners were RBS, Wells Fargo and Mitsubishi UFJ Securities (USA) Inc.

Colonial last was in the U.S. bond market with a $275 million sale of 3.5% 10-year notes priced at 95 bps over Treasuries on Oct. 15, 2010.

The fuel pipeline operator is based in Alpharetta, Ga.

Idaho Power's two parter

Idaho Power was in the market with a $150 million sale of first mortgage bonds (A2/A-/) in two tranches, a market source told Prospect News.

There was $75 million of 2.5% 10-year notes priced at 99.501.

A $75 million tranche of 4% 30-year bonds sold at 99.741.

BofA Merrill Lynch, JPMorgan and Wells Fargo were the bookrunners.

Proceeds will be used to pay at or prior to maturity $70 million of 4.25% first mortgage bonds due October 2013 and to fund a portion of the company's capital requirements.

The Boise-based electric utility was last in the market with a $150 million offering of bonds in two parts on April 10, 2012. That sale included a 2.95% 10-year bond priced at 100 bps over Treasuries and a 4.3% 30-year bond priced at 120 bps over Treasuries.

Barclay's CoCo bonds

Barclays priced $1 billion of 7.75% 10-year contingent capital notes (/BBB-/BBB-) at par to yield 7.75%, a market source said.

Pricing was at Treasuries plus 701.9 bps.

There is an automatic note write-down if a capital adequacy triggering event occurs.

The bookrunners were Barclays, BNP Paribas Securities Corp., BofA Merrill Lynch, Morgan Stanley and Wells Fargo.

Proceeds are being used for general corporate purposes.

The unit of financial services company Barclays plc is based in London.

Toll does crossover

Toll Brothers Finance sold $300 million of split-rated 4.375% 10-year senior notes (Ba1/BB+/BBB-) at par to yield 4.375%, an informed source said.

The sale was done off the high-grade syndicate desk. Whispered talk at midday was in the 4.375% area, the source said.

Pricing was at a spread of Treasuries plus 256 bps.

The bookrunners were Citigroup, Deutsche Bank, RBS and SunTrust Robinson Humphrey Inc.

Proceeds are being used for general corporate purposes, including repayment or repurchase of some outstanding debt.

The sale is guaranteed by Toll Brothers, Inc. and some subsidiaries that guarantee the company's revolving credit facilities.

Toll Brothers was last in the U.S. bond market with a $300 million sale of 5.875% 10-year notes priced to yield 5.875% on Jan. 31, 2012.

The homebuilder is based in Horsham, Pa.

IFC does fives

International Finance priced $2 billion of 0.875% five-year notes (Aaa/AAA/AAA) on Wednesday to yield mid-swaps minus 3 bps, a market source said.

The sale was announced on Tuesday.

Pricing was at 99.662.

The bookrunners were Citigroup, JPMorgan and Nomura Securities International Inc.

The World Bank member and lender to the private sector in developing countries is based in Washington, D.C.

Daimler gives terms

Daimler International Finance priced $300 million of 1.75% five-year guaranteed notes (A3/A-/) to yield mid-swaps plus 85 bps, a market source said.

The bookrunners were Goldman Sachs International and BofA Merrill Lynch.

The sale is guaranteed by Daimler AG.

The subsidiary of Daimler is based in Stuttgart, Germany.

NorthStar's preferred

NorthStar Realty Finance Corp. will issue series D cumulative redeemable preferred stock, the company said in a prospectus filed with the Securities and Exchange Commission.

Price talk is 8.5% to 8.625%, according to a trader.

Citigroup and UBS Securities LLC are the joint bookrunning managers. Barclays, Deutsche Bank, JPMorgan and Keefe, Bruyette & Woods are the joint co-lead managers.

Co-managers are FBR, JMP Securities Inc., MLV & Co. and Sterne Agee & Leach.

The preferreds become redeemable at par in April 2018.

There is a change of control feature.

The New York-based real estate investment trust will apply to list the new series of preferreds on the New York Stock Exchange under the ticker symbol "NRFPD."

Proceeds will be used to make investments, to repurchase or pay off debt and for general corporate purposes.

Home Depot notes mixed

Home Depot's $2 billion of senior notes, which priced in two parts on Tuesday, were trading mixed during Wednesday's session, a trader said.

The $1 billion of 2.7% 10-year notes was quoted 2 bps better at 79 bps bid, 77 bps offered. The notes sold at a spread of Treasuries plus 85 bps.

The $1 billion tranche of 4.2% 30-year bonds traded 1 bp wider compared to levels seen late Tuesday at 107 bps bid, 105 bps offered. The notes were sold at 110 bps over Treasuries.

Home Depot is an Atlanta-based home improvement retailer.

Kerry unchanged

In other secondary action, Kerry Group's $750 million sale of 3.125% 10-year notes, which sold at Treasuries plus 137.5 bps on Tuesday, was trading flat during the session.

The notes were quoted at 135 bps bid on Wednesday.

The food ingredient and flavor maker and consumer foods distributor is based in Tralee, Ireland.

Boston Properties notes widen

Boston Properties' $500 million of 3.125% senior notes due 2023 traded 2 bps wider compared to Tuesday's close at 132 bps bid, 129 bps offered, a trader said.

The notes were priced on Tuesday to yield Treasuries plus 133 bps.

The REIT for office properties is based in Boston.

Stephanie N. Rotondo contributed to this review

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