GlaxoSmithKline sells $3.5 billion notes; Target, SEB, utilities tap high-grade market

By Cristal Cody

Tupelo, Miss., March 18 – GlaxoSmithKline Capital plc led deal volume in the high-grade bond market on Monday with a $3.5 billion three-tranche offering of notes.

The company dropped a floating-rate tranche from the final deal.

Also during the session, Target Corp. priced $1 billion of 10-year notes.

Skandinaviska Enskilda Banken AB sold $750 million of three-year senior notes.

In addition, a handful of utility issuers tapped the primary market on Monday.

Kansas City Power & Light Co. priced $400 million of 30-year mortgage bonds.

Louisville Gas and Electric Co. sold $400 million of 30-year first mortgage bonds.

Kentucky Utilities Co. placed a $300 million add-on to its 4.375% first mortgage bonds due Oct. 1, 2045.

About $20 billion to as much as $30 billion of investment-grade issuance is expected by syndicate sources this week following more than $27 billion of supply last week.

Coming up on Tuesday, the Federal Reserve will kick off its two-day monetary policy meeting.

The Markit CDX North American Investment Grade 31 index closed the day about 1 basis point tighter at a spread of 57 bps.

GlaxoSmithKline prices

GlaxoSmithKline Capital priced $3.5 billion of notes (A2//A) in three tranches on Monday, according to a market source.

The company sold $1.5 billion of 2.875% three-year notes at a spread of 50 bps over Treasuries.

A $1 billion tranche of 3% five-year notes priced with a Treasuries plus 70 bps spread.

The final $1 billion tranche of 3.375% 10-year notes priced at a 90 bps over Treasuries spread.

The notes all priced on the tight side of guidance.

BofA Merrill Lynch, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC and HSBC Securities (USA) Inc. were the bookrunners.

The bonds are guaranteed by parent company GlaxoSmithKline plc.

GlaxoSmithKline Capital is a financing arm of the Brentford, England-based pharmaceuticals and consumer health products company.

Target sells $1 billion

Target priced $1 billion of 3.375% 10-year notes (A2/A/A-) on Monday at 99.99 to yield 3.376%, or a spread of 78 bps over Treasuries, according to an FWP filing with the Securities and Exchange Commission.

Barclays, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Goldman Sachs and BofA Merrill Lynch were the bookrunners.

The discount merchandise chain is based in Minneapolis.

SEB raises $750 million

Skandinaviska Enskilda Banken priced $750 million of 3.05% senior notes due March 25, 2022 (Aa2/A+/AA-) at a spread of 68 bps over Treasuries on Monday, according to a market source.

Price guidance was in the Treasuries plus 70 bps area, plus or minus 2 bps. The notes were initially talked to price in the high 70 bps spread area.

BofA Merrill Lynch, Barclays, Goldman Sachs, Morgan Stanley & Co. LLC and Skandinaviska Enskilda Banken were the lead managers.

Skandinaviska Enskilda Banken is a Swedish financial group based in Stockholm.

Kansas City Power prices

Kansas City Power & Light sold $400 million of 4.125% 30-year mortgage bonds (A2/A/) at a spread of 115 bps over Treasuries, according to an FWP filing with the SEC on Monday.

The bond priced at 99.454 to yield 4.157%.

BNP Paribas Securities Corp., BNY Mellon Capital Markets, LLC, PNC Capital Markets LLC and SunTrust Robinson Humphrey Inc. were the bookrunners.

The electric utility is based in Kansas City, Mo.

Louisville Gas sells bonds

Louisville Gas and Electric sold $400 million of 4.25% 30-year first mortgage bonds (A1/A-/A+) at a spread of Treasuries plus 125 bps on Monday, according to an FWP filing with the SEC.

The bonds priced at 99.882 to yield 4.257%.

BofA Merrill Lynch, Mizuho Securities (USA) LLC, MUFG, Morgan Stanley and PNC Capital Markets were the bookrunners.

The electric and gas utility is based in Louisville, Ky.

Kentucky Utilities reopens issue

Kentucky Utilities priced a $300 million tap of its 4.375% first mortgage bonds due Oct. 1, 2045 (A1/A-/) on Monday at a Treasuries plus 125 bps spread, according to an FWP filing with the SEC.

The bonds priced at 101.845 to yield 4.257%.

The notes were first issued in a $250 million offering on Sept. 28, 2015 at 99.917 with a yield of 4.38% and a spread of Treasuries plus 135 bps. The total outstanding is now $550 million.

BofA Merrill Lynch, Mizuho Securities, MUFG, RBC Capital Markets, LLC and Scotia Capital (USA) Inc. were the bookrunners.

Kentucky Utilities is an electric utility based in Lexington, Ky.

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