Financials dominate primary as SMBC, ANZ price; Honda Finance, GM Financial mostly better

By Cristal Cody and Aleesia Forni

Virginia Beach, July 8 – Financial issuers dominated the investment-grade primary market again on Tuesday.

The session saw new deals price from ANZ Banking Group Ltd., Sumitomo Mitsui Banking Corp., American Honda Finance Corp. and Sweden's Kommuninvest i Sverige AB.

SMBC brought the largest deal of the day to market, pricing $3 billion of notes in four tranches.

A source noted that the deal’s orderbook was more than four times oversubscribed.

Meanwhile, American Honda Finance priced $1 billion of three-year notes in fixed- and floating-rate tranches.

Kommuninvest and ANZ both came to market with floating-rate note offerings due 2016.

New deals from Seven and Seven Ltd. and Bank Nederlandse Gemeenten NV were added to the forward calendar on Tuesday.

So far, the quieter primary market has seen $7.3 billion of high-grade paper price this week.

Sources are expecting the week to see around $15 billion of supply.

Investment-grade bonds headed out flat to slightly softer, market sources said.

The Markit CDX North American Investment Grade series 22 index eased 2 basis points to a spread of 58 bps.

American Honda Finance’s fixed- and floating-rate notes traded wrapped around issuance to 1 bp tighter, a trader said.

General Motors Financial Co., Inc.’s two tranches of senior notes (Ba2/BB-/BB+) priced on Monday were slightly better in secondary trading, according to a trader.

SMBC prices tight

Tuesday’s primary saw Sumitomo Mitsui Banking price $3 billion of notes (Aa3/A+/) in four tranches, according to a market source.

The deal’s fixed-rate tranches sold tight of guidance.

The offering included $500 million of three-year floating-rate notes priced to yield Libor plus 32 bps.

A $1 billion tranche of 1.35% three-year notes priced with a spread of 45 bps over Treasuries.

There was also $1 billion of 2.25% five-year notes priced at Treasuries plus 60 bps.

Finally, a $500 million tranche of 3.4% notes due 2024 priced at Treasuries plus 85 bps.

Bookrunners are SMBC Nikko, Barclays, BofA Merrill Lynch, Citigroup Global Markets Inc. and Goldman Sachs & Co.

Sumitomo Mitsui is a Tokyo-based financial services company.

American Honda’s three-years

In other primary news on Tuesday, American Honda Finance priced $1 billion of notes (A1/A+/) due 2017 in two parts, according to two separate filings with the Securities and Exchange Commission.

The deal included $350 million of three-year floating-rate notes sold at par to yield Libor plus 17 bps.

A $650 billion part of 1.2% three-year notes was sold at a spread of Treasuries plus 30 bps, or 99.859, to yield 1.248%.

Pricing was tight of guidance.

American Honda Finance’s floating-rate notes due 2017 traded wrapped around issuance at 17 bps bid in aftermarket trading, according to a trader.

The tranche of 1.2% notes due 2017 firmed to 29 bps bid, 25 bps offered, the trader said.

Proceeds will be used for general corporate purposes.

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

The U.S. arm of Honda Financial Services is based in Torrance, Calif.

ANZ prices floaters

ANZ Banking Group priced $500 million of floating-rate notes (Aa2/AA/AA) due 2016 at par to yield Libor plus 18 bps on Tuesday, an informed source said.

RBC Capital Markets LLC was the bookrunner.

The financial services company is based in Melbourne, Australia.

Kommuninvest new issue

Sweden's Kommuninvest priced $300 million of floating-rate notes due Jan. 15, 2016 on Tuesday at par to yield Libor plus 4 bps, an informed source said.

BofA Merrill Lynch, Deutsche Bank Securities Inc., and Morgan Stanley were the bookrunners.

Kommuninvest offers funding to municipalities of Sweden and is based in Orebro.

BNG sets talk

Looking ahead, Bank Nederlandse Gemeenten is planning to price an offering of two-year notes.

The bank set price guidance for its planned $1 billion offering in the area of mid-swaps flat, according to a market source.

The bookrunners for the Rule 144A and Regulation S deal are Barclays, Deutsche Bank Securities and TD Securities.

The local government funding agency is based in the Hague, the Netherlands.

Seven and Seven eyes sale

In other forward calendar news, Seven and Seven is planning to price $125.25 million of floating-rate notes due 2019, according to a filing with the SEC.

Proceeds from the sale will be used to fund a portion of loans made to a group of 18 borrowers under a $429.6 million term loan facility agreement with Scorpio Tankers, Inc.

The Export-Import Bank of Korea will guarantee the notes, which are being issued in connection with Scorpio’s credit facility.

The notes will be issued via Rule 144A and Regulation S.

Seven and Seven is an exempted company incorporated with limited liability under the laws of the Cayman Islands. Monaco-based Scorpio is an oil tanker business.

General Motors Financial better

General Motors Financial’s 2.625% notes due 2017 traded mostly unchanged at 100.375 offered, according to a trader.

General Motors Financial sold $700 million of the notes on Monday at par.

The company’s 3.5% notes due 2019 tightened to 172 bps bid, 170 bps offered, the trader said.

General Motors Financial priced $800 million of the notes at Treasuries plus 176.5 bps.

The Fort Worth-based auto finance company is a wholly owned subsidiary of the General Motors Co.

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage CDS costs rose, according to a market source.

Bank of America Corp.’s CDS costs widened 3 bps to 67 bps bid, 72 bps offered. Citigroup Inc.’s CDS costs eased 4 bps to 66 bps bid, 71 bps offered. JPMorgan Chase & Co.’s CDS costs ended unchanged at 53 bps bid, 58 bps offered. Wells Fargo & Co.’s CDS costs eased 3 bps to 43 bps bid, 47 bps offered.

Merrill Lynch’s CDS costs widened 3 bps to 72 bps bid, 76 bps offered. Morgan Stanley’s CDS costs rose 7 bps to 71 bps bid, 76 bps offered. Goldman Sachs Group, Inc.’s CDS costs widened 3 bps to 71 bps bid, 74 bps offered.

Paul Deckelman contributed to this review.

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