Amazon.com does bond deal after long absence; Cox, CVS price; Amazon notes firm in gray market

By Aleesia Forni and Andrea Heisinger

New York, Nov. 26 - Multi-billion dollar bond sales were the norm on Monday as high-grade issuers like Amazon.com Inc., Cox Communications Inc. and CVS Caremark Corp. tapped the market.

Amazon was in the high-grade market for the first time, coincidentally on the same day as Cyber Monday. The online retailer sold $3 billion of bonds in three maturities after the size was increased from $2.5 billion, a source said.

Cox Communications priced $1.5 billion tranches due 2022 and 2042 in the Rule 144A and Regulation S market.

Pharmacy retailer CVS Caremark sold $1.25 billion of 10-year notes.

There were a couple of smaller sales in the high-grade market as well.

Citigroup Inc. sold $500 million of five-year floating-rate notes and Wisconsin Public Service Corp. priced $300 million of 30-year first mortgage bonds.

The preferred stock market also jumped back to life with a $175 million sale of $25-par notes by Telephone & Data Systems Inc.

Germany's Allianz SE gave terms of a $1 billion sale of perpetual notes.

The market "looked OK" to start the first full week since Veteran's Day, a market source said.

While some issuers sat on the sidelines, watching how Monday's deals performed, others such as Amazon.com jumped in and saw plenty of demand.

"I think they saw about $11 billion," the market source said of investor appetite on the books. Other sales, such as Cox and Wisconsin Public Service were also well oversubscribed.

"I know we had some calls today, so we'll definitely be busy tomorrow," a syndicate source said. "I would say we'll be busier than today."

The Markit CDX Series 18 North American Investment Grade index was 2 basis points tighter at a spread of 101 bps on Wednesday.

Both the three-year and five-year notes from Amazon were trading 2 bps tighter in the gray market on Monday, while the notes due 2022 were 1 bp tighter, a market source said.

The 10-year notes were quoted at 90 bps offered later in the session.

In other trading, last week's $350 million 4.875% 10-year deal from Avnet, Inc. was quoted 7 bps tighter.

Investment-grade bank and brokerage credit default swaps costs rose on Monday.

Bank of America's CDS costs widened 5 bps to 146 bps bid, 151 bps offered. Citi's CDS costs were 4 bps wider at 140 bps bid, 145 bps offered. J.P. Morgan's CDS costs rose 1 bps to 99 bps bid, 104 bps offered. Wells Fargo's CDS costs also rose 1 bps to 79 bps bid, 84 bps offered.

Merrill Lynch's CDS costs were unchanged at 140 bps bid, 150 bps offered. Morgan Stanley's CDS costs rose 4 bps to 211 bps bid, 216 bps offered. Goldman Sachs' CDS costs rose 5 bps to 170 bps bid, 175 bps offered.

Amazon into bond market

Amazon.com sold $3 billion of notes (Baa1/AA-/) in three maturities, a market source said.

The source said there was roughly $10 billion of investor interest on the books. The size was increased from $2.5 billion.

It's the first bond sale outside of the convertibles market and as an investment-grade-rated company, the source said.

A $750 million tranche of 0.65% three-year notes priced at a spread of Treasuries plus 38 bps. The notes were sold much tighter than initial guidance in the 50 bps area. The notes were quoted at 36 bps bid in the gray market.

There was $1 billion of 1.2% five-year notes sold at 63 bps over Treasuries. The notes were also priced much lower than initial talk in the 75 bps area. A market source saw the notes 2 bps tighter at 61 bps bid, 56 bps offered in the gray market.

Finally, a $1.25 billion tranche of 2.5% 10-year notes priced at Treasuries plus 93 bps. The tranche priced tighter than initial talk in the 105 bps area.

The notes were trading at 92 bps bid, 86 bps offered in the gray market.

Bookrunners were Goldman Sachs & Co. and Morgan Stanley & Co. LLC.

Proceeds are being used for general corporate purposes.

The online retailer is based in Seattle.

Cox sells $1.5 billion privately

Cox Communications tapped the market for $1.5 billion of senior notes (Baa2/BBB/BBB+) in two maturities, an informed source said.

The sale included $1 billion of 3.25% 10-year notes priced at a spread of 160 bps over Treasuries. The tranche sold at the tight end of guidance in the 165 bps area, plus or minus 5 bps.

A $500 million tranche of 4.7% 30-year bonds sold at Treasuries plus 190 bps. The bonds also sold at the low end of talk in the 195 bps area, plus or minus 5 bps.

Active bookrunners were J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

The notes were priced under Rule 144A and Regulation S.

Cox was last in the U.S. bond market with a $1.25 billion offering of 8.375% 30-year bonds priced on Feb. 12, 2009 at 490 bps over Treasuries.

The phone, internet and TV services provider is based in Atlanta.

CVS offers 10-years

CVS Caremark priced $1.25 billion of 2.75% 10-year senior notes (Baa2/BBB+/) to yield a spread of Treasuries plus 110 bps, a source close to the trade said.

There was about $2.3 billion of demand on the trade, the source said. Pricing was in line with guidance in the 110 bps area, plus or minus 5 bps.

Active bookrunners were Barclays and Wells Fargo Securities LLC.

Proceeds are being used for general corporate purposes, possibly including the purchase of notes in a tender offer.

CVS last tapped the U.S. bond market with a $1.5 billion offering in two maturities on May 9, 2011. That sale included a 4.125% 10-year note sold at 115 bps over Treasuries.

The pharmacy retailer is based in Scarsdale, N.Y.

Citi sells floaters

Citigroup priced $500 million of five-year floating-rate notes (Baa2/A-/A) at par to yield Libor plus 119 bps, according to an FWP with the Securities and Exchange Commission.

Bookrunner was Citigroup Global Markets Inc.

The financial services company is based in New York City.

Wisconsin Public Service bonds

Wisconsin Public Service was in the market with a $300 million sale of 3.671% 30-year first mortgage bonds (Aa3/A/) priced to yield 87.5 bps over Treasuries, according to an FWP filing with the SEC.

A source said there was about $1.4 billion on the books for the trade.

Bookrunners were Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Scotia Capital USA Inc. and Wells Fargo Securities LLC.

Proceeds are being used to refund outstanding long-term debt, including $150 million of 4.875% senior notes due Dec. 1; to pay the costs of construction or the acquisition of utility capital assets; to retire short-term debt incurred for construction or acquisition of utility capital assets and other corporate utility purposes; or for general corporate purposes.

The natural gas and utility company is based in Green Bay, Wisc.

TDS prices preferreds

Telephone & Data Systems sold $175 million of 5.875% $25-par senior notes due Dec. 1, 2061, a trader told Prospect News.

Price talk is 5.875% to 6%, according to a trader.

A trader noted that there is no selling group.

Paper was offered at $24.75 in the gray market as of midday.

After pricing, a trader quoted the issue at $24.65 bid, $24.75 offered.

At the close, a market source pegged the deal at $24.80.

The notes will be listed on the New York Stock Exchange.

Joint bookrunners are Bank of America Merrill Lynch, Citigroup Global Markets Inc., UBS Securities LLC and Wells Fargo Securities LLC.

Proceeds will be used for general corporate purposes, which may include acquisitions.

The diversified telecommunications services company is based in Chicago.

Allianz gives terms

Allianz, the Munich, Germany-based insurance company, sold $1 billion of 5.5% subordinated perpetual bonds to international investors, according to a press release.

The deal was officially announced on Thursday.

Ordinary call rights begin in 2018.

The securities will list on the Luxembourg Stock Exchange.

Avnet firms

Avnet's $350 million 4.875% notes due 2022 were quoted 7 bps tighter at 318 bps bid, 313 bps offered, a trader said.

The company priced the notes on Nov. 20 to yield Treasuries plus 325 bps.

The industrial distributor is based in Phoenix.

Stephanie N. Rotondo contributed to this review

© 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.