Amgen, Symantec bring billion-dollar deals as offerings stack up; HP, Dell 10 bps better

By Sheri Kasprzak and Cristal Cody

New York, Sept. 13 - Monday proved to be abuzz with pricing activity as dropping yields make investment-grade paper more appealing to investors, a sellsider told Prospect News.

"It is filling up out there, isn't it?" the sellsider agreed when asked about a large slew of upcoming offerings and new pricings announced Monday.

"There's a lot for investors to choose from, and I think there's plenty of interest in them. Yields are looking attractive now, so it's no surprise really."

Amid the frantic primary activity was a $1.5 billion sale of senior unsecured notes from biotech firm Amgen, Inc.

The notes (A3/A+/A) were sold in two tranches - a $900 million 10-year tranche and a $600 million 31-year tranche.

Symantec Corp. also came forward with $1.1 billion of senior notes in two tranches.

Overall investment-grade Trace volume gained 14% to about $12 billion, according to a source.

The technology sector was seen about 2 basis points overall on the day in the secondary market, one trader said.

The shorter tranches priced the previous week from Hewlett-Packard Co. and Dell Inc. traded 10 bps to 15 bps better in secondary trading on Monday, according to a source.

The Markit CDX Series 14 North American investment-grade index was unchanged on Monday from Friday's spread of 103 bps, according to Markit Group Ltd.

Treasuries rose, sending yields down as demand fell on long-range plans for bank capital requirements and details from the Federal Reserve of its second round of debt purchases.

Global regulators in Switzerland released the details of rules for capital requirements of banks. The new measures will require banks to increase their capital reserves, but the banks have eight years to comply.

The yield on the Treasury's benchmark 10-year note fell 4 bps to 2.75%. The yield on the 30-year bond dropped 2 bps to 3.85%.

Amgen's $1.5 billion

The $900 million of 10-year notes, which are due Oct. 1, 2020, have a 3.45% coupon priced at 99.629 to yield 3.494%. The spread came in at the anticipated 77 bps over Treasuries.

The $600 million of 31-year notes, which are due Oct. 1, 2041, have a 4.95% coupon priced at 99.182 to yield 5.002% with a spread of 117 bps over Treasuries. The pricing came in line with price talk.

Amgen's stock (AMGN) closed up 5 cents to end the day at $54.40 apiece.

Citigroup Global Markets Inc., Goldman, Sachs & Co. and Morgan Stanley & Co. Inc. were the lead bookrunners for the offering.

Proceeds from the sale will be used for general corporate purposes, including debt repayment.

Amgen's two-tranche sale firmed in the secondary market, according to sources.

The notes due 2020 were seen early at 75 bps bid, a trader said.

Another source saw the notes tighter at 74 bps bid, 73 bps offered later in the day.

The second tranche of bonds due 2041 was not as strong, sources said. The bonds were quoted at 117 bps bid, 115 bps offered.

Based in Thousand Oaks, Calif., Amgen is a biotechnology company that develops pharmaceuticals to treat arthritis, anemia, colon cancer and other ailments.

Symantec brings notes

Another billion-dollar deal for the day came from Symantec's $1.1 billion of senior notes in two tranches, said a pricing term sheet filed with the Securities and Exchange Commission.

The notes (Baa2/BBB/) were sold in two tranches - a $350 million tranche of five-year notes and a $750 million tranche of 10-year notes.

The five-year notes, due Sept. 15, 2015, have a 2.75% coupon priced at 99.935 to yield 2.764%.

The spread was 125 bps over comparable Treasuries. The 10-year notes, due Sept. 15, 2020, have a 4.2% coupon priced at 99.612 to yield 4.248%. The spread was 150 bps over comparable Treasuries. The pricing for those bonds also came right in line with price talk generated earlier in the session.

The five-year notes include a make-whole call at any time at 20 bps plus Treasuries and the 10-year notes also have a make-whole call at 25 bps plus Treasuries.

The deal proceeds will be used to repay the corporation's convertible senior notes, which are due in June 2011.

The joint bookrunners for the notes are J.P. Morgan Securities Inc., Morgan Stanley & Co. Inc. and UBS Investment Bank. The senior co-managers were Banc of America Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Wells Fargo Securities LLC.

Based in Mountain View, Calif., Symantec develops security, storage and systems management software.

Southern powers sale

Atlanta's Southern Co. brought to market $400 million of five-year series 2010A 2.375% senior notes Monday, said a term sheet.

The notes (Baa1/A-/A) were sold through joint bookrunners Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. The co-managers are Aladdin Capital LLC, BB&T Capital Markets and Loop Capital Markets LLC.

The notes are due Sept. 15, 2015, and were priced at 99.981 to yield 2.379%. The notes have a spread of 85 basis points over comparable Treasuries.

Proceeds will be used to redeem all or a portion of the $250 million of series C 5.75% notes due Nov. 15, 2015; repay a portion of its outstanding $511 million of short-term debt as of Sept. 10, 2010; and to fund other general corporate needs. The company intends to deliver a notice of redemption for the senior notes connected with the issuance of the series 2010A notes.

Southern's notes were slightly tighter in secondary trading, according to sources.

In late trading, the notes due 2015 were quoted at 83 bps bid.

Another trader saw the notes at 95 bps bid, 85 bps offered.

Southern Co. is the electric utility parent company of Alabama Power, Georgia Power, Gulf Power and Mississippi Power.

Comerica sells $300 million

Elsewhere, Comerica Inc. priced $300 million of senior notes, said a final term sheet filed with the SEC.

The five-year notes (A2/A-/A) were sold through joint bookrunners Bank of America Merrill Lynch and J.P. Morgan Securities Inc.

The 3% notes, which are due Sept. 16, 2015, were priced at 99.876 to yield 3.027%. The spread came in at 150 bps over comparable Treasuries.

Along with cash on hand, the company intends to use a portion of the proceeds to redeem its trust preferred securities. The remainder will be used for general corporation purposes.

In the secondary market, the notes firmed to 146 bps bid, a trader said.

Dallas-based Comerica is a bank holding company.

W.R. Berkley notes price

Another holding company was in the market on Monday. Insurance holding company W.R. Berkley Corp. brought to market $300 million of 5.375% senior notes, according to a prospectus supplement filed with the SEC.

The 10-year notes (Baa2/BBB+/BBB+) were sold with Bank of America Merrill Lynch as the active bookrunner and J.P. Morgan Securities Inc. and Wells Fargo Securities LLC as the passive bookrunners.

The notes, which are due Sept. 15, 2020, were priced at 99.710 to yield 5.413%. The spread came in at 265 bps over comparable Treasuries.

The notes feature a make-whole call at 50 bps over Treasuries.

Proceeds will be used for general corporate purposes, including the repurchase of stock.

Berkley's notes did well in the secondary market, sources said.

The notes traded tighter at 255 bps bid, 250 bps offered, a trader said. The notes were seen firming 2 bps more on the offer side in late trading to 255 bps bid, 248 bps offered, another source said.

W.R. Berkley is based in Greenwich, Conn.

BorgWarner sells notes

In other news, BorgWarner Inc. sold $250 million of 4.625% senior notes, according to a final term sheet filed Monday with the SEC.

Morgan Stanley & Co. Inc. was the lead bookrunner for the offering with Banc of America Securities LLC and Deutsche Bank Securities Inc. as the co-senior managers.

The notes are due Sept. 15, 2020 and were priced at 98.991 to yield 4.753%. The spread came in at 200 bps over comparable Treasuries.

Proceeds from the notes (Baa1/BBB/BBB) will be used for general corporate purposes.

Borg-Warner's notes were seen firming straight away in the secondary market, traders said.

The notes traded nearly 20 bps tighter in late afternoon trading. One source saw the notes at 182 bps bid.

BorgWarner's stock (BWA) closed out Monday up $1.30 at $47.68.

In April 2009, BorgWarner priced $325 million of 3.5% convertible senior notes due 2012. Those notes were sold in a registered public offering, and are convertible before maturity at $32.82 per share.

Auburn Hills, Mich.-based BorgWarner manufactures automotive components, particularly those used in powertrain applications.

HP, Dell tighter

Hewlett-Packard's notes due 2013 firmed 10 basis points in the secondary market on Monday, a trader said.

"HP's three-year priced at plus 50, and it's right around plus 40," the trader said.

The Palo Alto, Calif.-based computer products and technology company sold the notes on Wednesday as part of a three-tranche deal.

Dell priced its new high-grade debt in three tranches the previous day on Sept. 7.

Dell's 1.4% notes due 2013 also were stronger in the secondary market on Monday. The notes, which priced at Treasuries plus 70 bps, traded about 15 bps better, the trader said.

"The latest market I saw on them was 56, 51," the trader said. "It's a decent yield for three-year paper."

Dell's 2.3% notes due 2015, which priced at Treasuries plus 90 bps, traded about 7 bps better in the secondary on Monday.

The technology and IT company is based in Round Rock, Texas.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.