Ensco, Suntory, Abbey National price; Fannie Mae passes; International Finance on deck

By Aleesia Forni

Virginia Beach, Sept. 24 – The pace of new issuance in the high-grade bond primary market continued on Wednesday, with Ensco plc, Suntory Holdings Ltd. and Abbey National Treasury Services plc among the names pricing new deals.

Ensco came to market with $1.25 billion of senior notes in tranches due 2024 and 2044 on Wednesday, a market source said.

Both tranches sold at the tight end of price talk.

Meanwhile, Suntory Holdings sold $1 billion of notes in two parts in order to finance the company’s acquisition of Beam Inc.

Abbey National Treasury sold $750 million of senior notes in fixed- and floating-rate tranches due 2017 on Wednesday.

The session also saw Germany’s Landwirtschaftliche Rentenbank sell $1.25 billion of seven-year notes and Inter-American Investment Corp. offer $400 million of three-year floaters.

Compass Bank also sold a new bond offering during the session, though details of the sale were unavailable at press time.

Also on Wednesday, Fannie Mae announced that it would pass on issuing Benchmark Notes this month.

In the preferred market, Dominion Resources Inc. sold $685 million of 5.75% $1,000-par junior subordinated notes due 2054.

After the market closed, a source pegged the Dominion issue at 100.25 bid.

International Finance Corp. joined the forward calendar during the session, announcing price talk for a planned offering of two-year global bonds.

Wednesday’s primary activity brings the week’s total supply to more than $23 billion, in line with what sources had predicted to be a $20 billion to $25 billion week.

In the secondary market, high-grade bond spreads were mostly flat to tighter on Wednesday.

The Markit CDX North American Investment Grade series 22 index was 1 bp tighter at a spread of 59 basis points.

A trader quoted Ensco’s new bonds 1 bp to 3 bps better in the aftermarket.

Abbey National’s fixed-rate notes also traded tighter near the end of the session.

Ensco prices tight

Ensco plc sold $1.25 billion of senior notes (Baa1/BBB+/) in tranches due 2024 and 2044 on Wednesday, a market source said.

There was $625 million of 4.5% 10-year notes sold at 99.864 to yield 4.517%, or Treasuries plus 195 bps.

The notes sold at the tight end of talk set in the Treasuries plus 200 bps area.

In the secondary market, the 10-year notes traded 1 bp better at 194 bps bid, 192 bps offered.

A second tranche was $625 million of 5.75% 30-year bonds priced at Treasuries plus 250 bps. The notes sold at 99.56 to yield 5.781%.

The notes were quoted at 247 bps bid in the aftermarket.

Pricing was at the tight end of the Treasuries plus 255 bps area talk.

The active bookrunners were Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. BofA Merrill Lynch, DnB NOR Markets Inc., Goldman Sachs & Co., HSBC Securities (USA) Inc. and Wells Fargo Securities LLC were the passive bookrunners.

Proceeds will be used for general corporate purposes.

The oil and gas services company is based in London.

Suntory Holdings two-parter

Suntory Holdings sold $1 billion of notes (Baa2/BBB/) in two parts on Wednesday, a market source said.

The company sold $500 million of 1.65% three-year notes at Treasuries plus 60 bps. Pricing was at 99.959 to yield 1.664%.

A second tranche was $500 million of 2.55% five-year notes sold at 99.795 to yield 2.594%, or Treasuries plus 80 bps.

The sale was done via Rule 144A and Regulation S.

Bookrunners were Morgan Stanley & Co. LLC, BofA Merrill Lynch, Citigroup, J.P. Morgan Securities LLC, Barclays and BNP Paribas Securities Corp.

Proceeds will be used to partially repay bank loans incurred in connection with the company’s acquisition of Beam Inc., as well as for general corporate purposes.

Suntory is an Osaka, Japan-based producer of alcoholic and non-alcoholic beverages.

Abbey sells $750 million

Also on Wednesday, Abbey National Treasury Services sold a $750 million two-part offering of senior notes (A2/A/A) due 2017 in fixed- and floating-rate tranches, according to an FWP filed with the Securities and Exchange Commission.

There was $250 million of floating-rate notes due 2017 sold at par to yield Libor plus 41 bps.

A $500 million tranche of 1.65% three-year notes sold at 99.901 to yield 1.684%, or Treasuries plus 62.5 bps.

A trader quoted the notes at 62 bps bid near the end of Wednesday’s session.

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

The notes are guaranteed by Santander UK plc.

Proceeds from the sale will be used for general corporate purposes.

The financial services companies are based in London.

Rentenbank taps market

Landwirtschaftliche Rentenbank priced a $1.25 billion offering of 2.25% seven-year notes at mid-swaps plus 4 bps, or Treasuries plus 13.7 bps, on Wednesday, according to an informed source and an FWP filed with the SEC.

Pricing was at the tight end of talk, which was set in the area of mid-swaps plus 6 bps.

The notes (Aaa/AAA/AAA) sold at 99.339.

JPMorgan, Morgan Stanley, Nomura and RBC Capital Markets LLC managed the sale.

Proceeds will be used to finance lending activities.

The German development agency for agribusiness is based in Frankfurt.

Inter-American floaters

Meanwhile, Inter-American Investment priced $400 million of three-year floaters on Wednesday at par to yield Libor plus 14 bps, a market source said.

Bookrunners were Daiwa Securities, Deutsche Bank and JPMorgan.

The agency provides financing and technical assistance to businesses in Latin America and the Caribbean and is based in Washington, D.C.

Fannie Mae passes

The session also saw Fannie Mae announce that it will not use its Sept. 24 Benchmark Notes announcement date this month, according to a company news release.

The government-backed mortgage lender is based in Washington, D.C.

IFC sets talk

In forward calendar news, International Finance announced price talk on Wednesday for a planned offering of two-year global bonds in the area of mid-swaps minus 12 bps, according to an informed source.

Citigroup and Goldman Sachs are the banks on the deal.

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

Dominion subordinated notes

Dominion Resources priced $685 million of 5.75% $1,000-par 2014 series A enhanced junior subordinated notes due Oct. 1, 2054 (expected ratings: Ba3/BBB/BB-), the company said in an FWP filed with the SEC on Wednesday.

Barclays, Morgan Stanley, UBS Securities LLC and Wells Fargo are running the books.

Through Oct. 1, 2024, interest will be payable semiannually at a fixed rate. After that date, the interest rate will float at Libor plus 305.7 bps and will be payable quarterly.

The company can defer payments for up to 10 years. All accrued payments must be paid in full before the company can commence paying on a regular schedule.

The notes become redeemable at par plus accrued interest on or after Oct. 1, 2024. The company can redeem the notes prior to that date in whole upon the occurrence of a tax event – also at par plus accrued interest – or in whole or in part upon a rating agency event at 102% of par plus accrued interest.

The new securities will not be listed.

Proceeds will be used for general corporate purposes, including the redemption of all outstanding 8.375% 2009 series A enhanced junior subordinated notes due 2064.

Dominion Resources is a Richmond, Va.-based producer and transporter of energy.

Bank/brokerage CDS costs

Investment-grade bank and brokerage CDS prices were lower on Wednesday, according to a market source.

Bank of America Corp.’s CDS costs fell 1 bp to 67 bps bid, 70 bps offered. Citigroup Inc.’s CDS costs were also 1 bp lower at 66 bps bid, 69 bps offered. JPMorgan Chase & Co.’s CDS costs were flat at 57 bps bid, 60 bps offered. Wells Fargo & Co.’s CDS costs ended unchanged at 43 bps bid, 48 bps offered.

Merrill Lynch’s CDS costs were 1 bp lower at 69 bps bid, 73 bps offered. Morgan Stanley’s CDS costs ended 1 bp lower at 75 bps bid, 79 bps offered. Goldman Sachs Group, Inc.’s CDS costs were flat at 77 bps bid, 80 bps offered.

Stephanie N. Rotondo contributed to this review

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