Actavis, Johnson, RBC price, primary spree continues; new issues mixed in aftermarket trading

By Cristal Cody and Aleesia Forni

Virginia Beach, June 10 – The high-grade primary market’s momentum continued into Tuesday’s session, with $9.84 billion of new deals pricing.

Actavis plc led the day’s session, pricing a $3.7 billion offering of senior notes in four maturities.

The notes each sold between 20 basis points to 30 bps tighter compared to initial guidance, and the deal’s orderbook was more than four times oversubscribed.

Johnson Controls Inc. was also in the day’s market with a four-part deal, selling $1.7 billion of senior notes.

All tranches of Johnson’s new deal sold at the tight end of talk and up to 30 bps tighter than original guidance, according to a source.

Financial issuers had a solid showing on Tuesday, with new deals pricing from Royal Bank of Canada, Svensk Exportkredit AB (Swedish Export Credit Corp.), Wintrust Financial Corp., European Bank for Reconstruction and Development (EBRD) and First Republic Bank.

In other primary action, Sempra Energy sold $500 million of 10-year bonds, while Spain’s Telefonica Emisiones, SAU priced a $500 million three-year offering and Mid-America Apartments LP sold $400 million of 3.75% 10-year notes.

Nearly $19 billion of supply in only two sessions has priced so far this week, already closing in on earlier expectations of a $20 billion to $25 billion week.

“Figured it was going to be front-loaded again this week,” one market source said, though he added that another active session is expected for Wednesday.

Bonds traded mostly unchanged to slightly wider on the day, according to market sources.

The Markit CDX North American Investment Grade series 22 index was unchanged at a spread of 57 bps.

Johnson Controls’ four-tranche offering of notes was mixed in aftermarket trading, with the short and long ends about 1 bp tighter and the other tranches wider, according to a trader.

Actavis’ four tranches of notes traded wrapped around issuance to 5 bps better, a trader said.

Mid-America Apartments’ 3.75% notes due 2024 headed out 1 bp wider on the bid side, according to a trader.

Sempra Energy’s 3.55% notes due 2024 were wrapped around issuance in the secondary market, a trader said.

First Republic Bank’s 2.375% notes due 2019 were active in aftermarket trading, while Royal Bank of Canada’s new paper was not seen in late afternoon secondary activity, according to a trader.

Actavis brings $3.7 billion

Actavis plc’s indirect subsidiary, Actavis Funding SCS, sold the largest new issue of Tuesday’s busy session, pricing $3.7 billion of senior notes (Baa3/BBB-/BBB-) in four tranches.

The sale included $500 million of 1.3% notes due 2017 priced at 99.74 to yield 1.389%, or Treasuries plus 50 bps.

The joint bookrunners for the three-year tranche were BofA Merrill Lynch, Sumitomo, Mizuho Securities and Wells Fargo Securities LLC.

A $500 million tranche of 2.45% senior notes due 2019 sold with a spread of Treasuries plus 80 bps.

Pricing was at 99.716 to yield 2.511%.

Bookrunners for the five-year tranche are BofA Merrill Lynch, Mizuho Securities, Wells Fargo Securities and RBS Securities Inc.

There was also $1.2 billion of 3.85% senior notes due 2024 priced at Treasuries plus 125 bps, or 99.623, to yield 3.896%.

BofA Merrill Lynch, Mizuho Securities, HSBC Securities and Wells Fargo Securities were bookrunners.

Finally, a $1.5 billion of 4.85% senior notes due 2044 sold at 98.894 to yield 4.921%, or Treasuries plus 145 bps.

The joint bookrunners were BofA Merrill Lynch, Mizuho Securities, Mitsubishi and Wells Fargo Securities.

Actavis’ 1.3% notes due 2017 traded better at 45 bps offered in the secondary market, according to a trader.

The 2.45% notes due 2019 tightened to 77 bps bid, 72 bps offered in aftermarket trading.

The 3.85% notes due 2024 firmed to 122 bps bid, 118 bps offered in the secondary.

The 4.85% notes due 2044 traded flat at 145 bps bid, 141 bps offered.

All tranches sold tight of price guidance.

The notes were sold via Rule 144A and Regulation S.

Proceeds will be used to fund the acquisition of Forest Laboratories, Inc., to refinance Warner Chilcott’s 7.75% senior notes due 2018 and to pay related fees and expenses and for general corporate purposes.

Actavis is a pharmaceutical company with headquarters in Dublin.

Johnson prices tight

Johnson Controls was also in the market on Tuesday, pricing a $1.7 billion issue of senior notes in tranches due 2017, 2024, 2044 and 2064, according to a market source and an FWP filed with the Securities and Exchange Commission.

A $300 million tranche of 1.4% notes due 2017 priced at 99.872 to yield 1.439%, or Treasuries plus 55 bps.

There was also $500 million of 3.625% 10-year notes sold with a spread of Treasuries plus 100 bps, or at 99.948, to yield 3.631%.

A $430 million tranche of 4.625% 30-year bonds priced at 99.418 to yield 4.661%. The notes sold with a spread of Treasuries plus 120 bps.

Finally, $450 million of 4.95% bonds due 2064 priced at 99.794 to yield 4.961%, or Treasuries plus 150 bps.

Johnson Controls’ 1.4% notes due 2017 tightened to 54 bps bid, 49 bps offered in the secondary market, according to a trader.

The 3.625% notes due 2024 eased in aftermarket trading to 102 bps bid, 97 bps offered.

The 4.625% notes due 2044 traded wider at 123 bps bid, 118 bps offered, a trader said.

The 4.95% notes due 2064 firmed to 149 bps bid, 144 bps offered.

BofA Merrill Lynch, Barclays, Citigroup Global Markets Inc., Goldman Sachs & Co. and Wells Fargo Securities were the joint bookrunners.

Proceeds will be used to finance a portion of the company’s acquisition of Air Distribution Technologies.

Johnson Controls is a diversified technology and industrial company based in Milwaukee.

RBC brings two-parter

In other market action on Tuesday, Royal Bank of Canada priced $1.65 billion of senior notes (Aa3/AA-/AA) in fixed- and floating-rate tranches due 2017, according to a market source and two separate FWP filings with the SEC.

A $400 million tranche of floating-rate notes due 2017 priced at par to yield Libor plus 24 bps.

The sale also included $1.25 billion of 1.25% three-year senior notes priced at 99.962 to yield 1.263%, or Treasuries plus 38 bps.

The notes sold at the tight end of price talk.

RBC Capital Markets LLC, Morgan Stanley & Co. LLC and Wells Fargo Securities were the joint bookrunners.

RBC is a Montreal-based financial services company.

EBRD adds on

The European Bank for Reconstruction and Development (EBRD) priced a $250 million add-on to its existing 1.75% five-year notes (Aaa/AAA/AAA) to yield mid-swaps flat, according to a market source.

BofA Merrill Lynch, Standard Chartered and TD Securities were the bookrunners.

The original $1 billion issue priced to yield mid-swaps plus 1 bp on April 8.

The lender to banks, businesses and industries is based in London.

Svensk prices tight

Also on Tuesday, Svensk Exportkredit priced $1 billion of 1.875% notes due 2019 at mid-swaps plus 13 bps, according to a market source and an FWP filed with the SEC.

The sale came at the tight end of talk, which was set in the area of 15 bps over mid-swaps.

Pricing was at 99.772 to yield 1.923%.

Barclays, BofA Merrill Lynch, Citigroup Global Markets and Daiwa Capital Markets were the joint lead managers.

Based in Stockholm, Svensk is the lender to Sweden's export industry.

Spain’s Telefonica prices

Telefonica Emisiones priced $500 million of three-year senior notes (Baa2/BBB/BBB+) at par to yield Libor plus 65 bps on Tuesday, according to an FWP filed with the SEC.

Citigroup Global Markets was the underwriter.

The notes are guaranteed by Telefonica SA.

The company is based in Madrid and provides fixed and mobile telephony services through telecommunications networks in Spain, Europe and Latin America.

Sempra sells 10-years

A new deal from Sempra Energy also sold on Tuesday.

The company priced $500 million of 3.55% senior notes due 2024 on Tuesday with a spread of Treasuries plus 95 bps, according to an informed source and an FWP filed with the SEC.

The notes (Baa1/BBB+/BBB+) priced at 99.708 to yield 3.585%.

Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Wells Fargo Securities and Credit Suisse Securities (USA) LLC were the joint bookrunners.

Sempra Energy’s 3.55% notes due 2024 traded wrapped around issuance at 95 bps bid, 92 bps offered, a trader said.

Proceeds from the offering will be used to repay commercial paper.

The holding company for utility subsidiaries is based in San Diego.

First Republic upsizes

Tuesday’s session saw First Republic Bank sell an upsized $400 million of 2.375% senior notes (A3/A-/A-) due 2019 at 70 bps over Treasuries, according to an informed source and a company press release.

First Republic’s 2.375% notes due 2019 were quoted closing the day at 62 bps bid, 60 bps offered in the secondary market, a trader said.

Proceeds will be used for general corporate purposes.

BofA Merrill Lynch, Goldman Sachs, JPMorgan and Morgan Stanley were the joint bookrunners.

First Republic is a San Francisco-based bank.

Mid-America prices tight

Mid-America Apartments priced $400 million of 3.75% 10-year notes (Baa2/BBB/BBB) at 125 bps over Treasuries on Tuesday, according to a market source and an FWP filed with the SEC.

Pricing was at 98.873 to yield 3.887%.

The notes sold at the tight end of the Treasuries plus 130 bps talk.

Mid-America Apartments’ 3.75% notes due 2024 traded slightly weaker at 126 bps bid, 124 bps offered in aftermarket trading, a trader said.

JPMorgan, Jefferies LLC, Wells Fargo Securities and U.S. Bancorp Investments Inc. were the joint bookrunners.

Proceeds will be used to repay borrowings under the company’s revolving credit facilities and for general corporate purposes.

Mid-America Apartments is a Memphis-based real estate investment trust.

Wintrust new issue

In a deal announced on Monday, Wintrust Financial sold $140 million of 5% subordinated notes due 2024 with a spread of Treasuries plus 235.6 bps on Tuesday, according to an FWP filed with the SEC.

The notes (//BBB-) priced at par.

RBC Capital Markets LLC was the bookrunner.

EIB sets talk

In forward calendar news, European Investment Bank set price guidance for a $3 billion offering of five-year bonds on Tuesday at mid-swaps flat, a market source said.

BofA Merrill Lynch, Standard Chartered and TD Securities are running the books.

The lender for the European Union is based in Kirchberg, Luxembourg.

Fannie Mae passes

The market also saw Fannie Mae announce that it will not use its June 10 Benchmark Notes announcement date this month, according to an informed source.

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

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage CDS prices rose on Tuesday, according to a market source.

Bank of America Corp.’s CDS costs eased 2 bps to 58 bps bid, 61 bps offered. Citigroup Inc.’s CDS costs rose 2 bps to 58 bps bid, 61 bps offered. JPMorgan Chase & Co.’s CDS costs were unchanged at 46 bps bid, 49 bps offered. Wells Fargo & Co.’s CDS costs widened 2 bps to 34 bps bid, 37 bps offered.

Merrill Lynch’s CDS costs eased 2 bps to 61 bps bid, 65 bps offered. Morgan Stanley’s CDS costs rose 2 bps to 59 bps bid, 62 bps offered. Goldman Sachs Group, Inc.’s CDS costs eased 2 bps to 64 bps bid, 67 bps offered.

Paul Deckelman contributed to this review.

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