Verizon follows Sanofi with mega-deal, Gilead, Caterpillar price; new bonds firm 1 bp-2 bps

By Andrea Heisinger and Cristal Cody

New York, March 23 - Another giant deal came to the high-grade market on Wednesday from Verizon Communications, Inc., following in the footsteps of Sanofi-aventis SA the previous day.

The size of the Verizon offering wasn't known until mid-afternoon when it was launched at $6.25 billion. This was more than the amount of up to $6 billion expected, sources said. It was the first debt sale for the telecommunications and broadband company since March 2009.

Also in Wednesday's primary, a $1 billion sale of 10-year notes came from Gilead Sciences, Inc., pricing in line with guidance.

Caterpillar Financial Services Corp. also sold $1 billion in paper. The deal was divided between notes with three- and five-year maturities.

Real estate investment trust BioMed Realty LP upsized its sale of five-year notes to $400 million from an original $250 million. The notes are guaranteed by BioMed Realty Trust, Inc.

Wells Fargo & Co. entered the debt market for the second day in a row with a $500 million sale of five-year floating-rate notes. The bank sold $2.5 billion of 10-year senior holding company notes on Tuesday.

The Swedish National Debt Office priced $2 billion of 1% notes due 2013. The size was increased on demand due to an oversubscribed sale.

This wasn't the only sovereign debt sale of the day. Bank Nederlandse Gemeenten NV priced $2 billion of three-year notes under Rule 144A. The AAA rated notes were priced via bookrunners BNP Paribas Securities Corp., Deutsche Bank Securities Inc., Nomura Securities and UBS Securities LLC. Full terms of the deal were not available at press time.

Overall investment-grade trading volume on Trace was stronger a second day, up 15% on Wednesday to more than $17 billion, according to a market source.

The new bonds from Gilead Sciences, Verizon and BioMed firmed in the secondary market, while Caterpillar Financial's notes traded flat, traders said.

"Now everything is more or less 1 or 2 [basis points] better," a source said.

Verizon's notes were "wrapped around 100 for the five-year, 130 bid for the 10-year and 150 bid for the 30-year," a source said. "They're doing a little better than a couple."

The Markit CDX Series 15 North American investment-grade index was unchanged at a spread of 97 bps on Wednesday, according to Markit Group Ltd.

Treasuries fell sending yields up on the longer end of the curve as stocks closed better on the day. The benchmark 10-year Treasury note yield rose 2 basis points to 3.34%. The 30-year bond yield was up 1 bp to 4.44%.

"Treasuries were better until right around 9 o'clockish when a bunch of headlines pushed yields up and they're finishing unchanged," a source said.

Investors like bond variety

The recent rash of new deals in multiple tranches has been attractive to investors, a syndicate source said late in the day.

"I mean, you have two deals [Sanofi and Verizon] back to back, and they were both oversubscribed," the source said.

"I think with Verizon wanting to do a 30[-year bond] is shows that short and long [maturities] are going to sell no matter what."

Ideal market conditions have opened the floodgates so far this week for a backlog of deals to come out. Thursday is expected to be slower as the number of potential issuers comes down, but "there could still be a couple of things," a market source said.

Verizon's upsized $6.25 billion

Verizon Communications priced a larger-than-expected $6.25 billion of senior notes (A3/A-/A) in five parts late in the day, an informed source said.

The deal size didn't come out until mid-afternoon, and earlier in the day the amount had been speculated anywhere between $4.5 billion and $6 billion.

A source said that the sale "took awhile to get going," partly because of the previous day's $7 billion mega-sale from Sanofi.

"Initially we were thinking $1 billion per tranche, with $500 million in the floaters," the source said. That was later upped as demand from investors grew.

Total books were about $8.25 billion and a lot of demand was in the 10- and 30-year maturities.

"There hasn't been much 30-year paper lately, so there was a lot of investor demand for the 30-years," the source said.

The $1 billion of three-year floating-rate notes sold at par to yield three-month Libor plus 61 bps. Price talk was in the range of Libor plus 61 to 66 bps.

A second tranche was $1.5 billion of 1.95% three-year notes that priced at a spread of 85 bps over Treasuries. They priced at the tight end of guidance in the 85 to 90 bps range.

The third part was $1.25 billion of 2% five-year notes priced at Treasuries plus 105 bps. Price guidance was in the 105 bps area, and the notes priced in line with that.

A $1.5 billion tranche of 4.6% 10-year notes priced at Treasuries plus 135 bps. They sold in line with talk in the 135 bps area.

The final tranche was $1 billion of 6% 30-year bonds sold at a spread of 165 bps over Treasuries. These notes also priced at the tight end of talk in the 165 to 170 bps range.

Bookrunner for the three-year floaters was Goldman Sachs & Co., and they were joined on the books for the three-year fixed-rate notes by Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co., Inc. and Wells Fargo Securities LLC.

Citigroup, JPMorgan, Morgan Stanley and Wells Fargo ran the books for the five-, 10-, and 30-year notes.

Proceeds are going to repay commercial paper and for general corporate purposes.

Verizon last priced bonds in a $2.75 billion sale of 10- and 30-year senior notes on March 24, 2009. Those 6.35% 10-year notes priced at a steep spread of 387.5 bps and the 7.35% 30-year bonds at the same level.

In the secondary markets, Verizon's notes were stronger, according to sources.

The notes due 2015 were seen at 83 bps bid. The five-year notes were seen at 100 bps bid, and the notes due 2021 traded tighter at 130 bps bid, 127 bps offered.

The bonds due 2041 were seen firmer at 159 bpd bid, 156 bps offered.

The broadband and telecommunications company is based in New York City.

Caterpillar oversubscribed

Caterpillar Financial Services sold $1 billion of notes (A2/A/A) in three tranches late in the afternoon, a source close to the sale said.

A $250 million tranche of three-year floating-rate notes priced at par to yield three-month Libor plus 20 bps.

The $300 million of 1.65% three-year notes priced at a spread of Treasuries plus 53 bps.

A third part was $450 million of 2.65% five-year notes priced at a spread of 65 bps over Treasuries.

Final books on the trade were "over $2 billion," said a source who worked on it. There was about $450 million in the three-year floaters, upwards of $750 million in the three-year fixed and about $800 million in the five-year notes, they said.

Citigroup Global Markets Inc. and Goldman Sachs & Co. were bookrunners.

Proceeds are being used for general corporate purposes.

In secondary trading, the three-year notes were quoted flat at 53 bps bid, one trader said.

The notes due 2016 traded at 65 bps bid, 62 bps offered, another source said.

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

Gilead's $1 billion deal

Biopharmaceutical company Gilead Sciences sold $1 billion of 4.5% 10-year senior notes (Baa1/A-) to yield Treasuries plus 125 bps, said a market source away from the sale.

They sold in line with guidance in the 125 bps area.

J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Inc. and Morgan Stanley & Co., Inc. were bookrunners.

Proceeds are being used for general corporate purposes, including debt repayment and repurchase of common stock.

The notes bounced around in secondary trading, sources said.

The notes were tighter at 123 bps bid, 120 bps offered in the secondary, a trader said.

Another trader saw the notes stronger at 122 bps bid, 117 bps offered. Later, another source saw the notes at 123 bps bid, 121 bps offered.

The biopharmaceutical company is based in Foster City, Calif.

BioMed's upsized five-years

BioMed Realty sold an upsized $400 million of 3.85% five-year guaranteed senior notes (Baa3/BBB-) to yield 195 bps over Treasuries, an informed source said.

The size was originally $250 million but was increased at the launch, a source said.

Wells Fargo Securities LLC was bookrunner.

Proceeds are going to repay debt under an unsecured credit line, for general corporate purposes, and for working capital.

The sale is guaranteed by BioMed Realty Trust, Inc.

In the secondary market, BioMed Realty's notes tightened to 193 bps bid, 188 bps offered, a trader said.

The real estate investment trust specializing in laboratory and office space is based in San Diego.

Wells Fargo prices floaters

Wells Fargo priced $500 million of five-year floaters at par to yield three-month Libor plus 85 basis points, according to an FWP filing with the Securities and Exchange Commission.

Agent for the sale was Wells Fargo Securities LLC.

The financial services company is based in San Francisco.

Sweden's debt office sells $2 billion

The Kingdom of Sweden, through the Swedish National Debt Office, priced $2 billion of 1% notes due 2013 at mid-swaps minus 8 basis points, according to a press release.

The notes priced at 99.849 to yield 1.059%.

Lead managers were Citigroup Global Markets Inc., Credit Suisse Securities LLC and Nordea Markets.

Proceeds are being used to re-fund the Riksbank's debt in foreign currency.

Central banks bought 34% of the deal, according to the release. Corporates participated this time with 34% and as much as 38% was placed in the Nordic area, which is unusual. The balance was sold to the Americas, other countries in Europe, the Middle East and Asia.

"We are tremendously happy with the result," said says Maria Norström, head of funding for the debt office.

"Thanks to the strong interest of $3.3 billion in total, we were able to increase the size compared to what we initially had planned and at the same time tighten the price. In addition, we managed to broaden the investor base through new investors."

The issuer is based in Stockholm.

JPMorgan gives floater terms

JPMorgan Chase & Co. priced $500 million of five-year floating-rate senior medium-term notes at par to yield three-month Libor plus 103 bps, according to a 424B2 filing with the Securities and Exchange Commission.

J.P. Morgan Securities LLC was bookrunner.

The financial services company is based in New York City.

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