Novartis, ING, Westpac, Total, NextEra among names in packed primary; banks, brokers mixed

By Aleesia Forni and Andrea Heisinger

New York, Sept. 18 - The primary side of the high-grade bond market was inundated with deals on Tuesday from notable names like Novartis Capital Corp., Westpac Banking Corp. and Total Capital International.

Novartis was selling $2 billion of notes in maturities of 2022 and 2042. Both notes priced at the tight end of talk.

Total Capital, a unit of oil and gas company Total SA, priced $1.5 billion of notes due 2016 and 2023.

Australian bank Westpac sold $2.25 billion of notes in two tranches of three-year notes - one fixed-rate and one floating-rate.

That financial was joined by ING Bank NV, which priced $2 billion of notes, also in two tranches due 2015.

Financial services technology company Fiserv, Inc. priced an upsized $700 million of 10-year paper.

FMC Technologies, Inc. sold $800 million of senior notes in five-year and 10-year maturities.

NextEra Energy Capital Holdings, Inc. priced $500 million of debentures due in 2015.

There was a $600 million deal of three-year notes done under Rule 144A and Regulation S by Harley-Davidson Financial Services Inc.

Department store retailer Kohl's Corp. priced $350 million of long 10-year notes.

Norway's Kommunalbanken AS announced a $1 billion sale of five-year notes.

Two small energy deals were priced by early afternoon in the New York session.

Southern California Gas Co. sold $350 million of 30-year first mortgage bonds. Duke Energy Carolinas, LLC was also in the market with a $650 million deal of 30-year first mortgage bonds.

A $500 million sale of seven-year notes was priced by the Development Bank of Japan after the offering was announced on Monday. The notes were priced in line with guidance.

Texas Capital Bancshares Inc. priced $100 million of $25-par 30-year subordinated notes after the deal went overnight from Monday.

A $125 million deal of $25-par notes due 2042 was priced by Argo Group US Inc.

The Markit CDX Series 18 North American Investment Grade index widened 1 basis point to a spread of 86 bps on Tuesday, with one trader commenting that investors seem to be "happy to own anything" in the secondary market.

Investment-grade bank and brokerage credit default swaps costs were mixed.

Bank of America's CDS costs were flat at 148 bps bid, 158 bps offered. Citi's CDS costs were also unchanged at 152 bps bid, 162 bps offered. J.P. Morgan's CDS costs widened 2 bps to 105 bps bid, 110 bps offered. Wells Fargo's CDS costs rose 1 bps to 76 bps bid, 81 bps offered.

Merrill Lynch's CDS costs were 5 bps wider at 145 bps bid, 155 bps offered. Morgan Stanley's CDS costs widened 3 bps to 218 bps bid, 228 bps offered. Goldman Sachs' CDS costs were flat at 165 bps bid, 175 bps offered.

Investors clamor for bonds

There hasn't been a reprieve from investors wanting high-grade bonds, sources said on Tuesday, with demand pushing spreads to the tight end of talk and causing books to be oversubscribed.

Although there was some caution late the previous week and on Monday, more than $11 billion hit the market on Tuesday.

"The tone was definitely much better [than Monday]," said a source who worked on two of the day's trades. "Yesterday there was some chatter about Europe."

The previous week had some companies and investors sitting on the sidelines until after the Federal Reserve Federal Open Markets Committee meeting concluded on Thursday with an announcement of a bond-buying program to help stimulate the economy. This coupled with the news of the same measure being taken by the European Central Bank to help ease fears about the debt crisis in the euro zone spreading.

"It definitely felt good to be busy," a market source said.

Wednesday could see a decrease in new deals as some desks said they had nothing cooking and hadn't heard of much away.

"Doesn't mean there isn't anything, but haven't heard of much," one market source said.

ING prices $2 billion

ING Bank priced $2 billion of notes (A2/A+/A+) in fixed-rate and floating-rate tranches, a source close to the trade said.

A $750 million tranche of three-year floaters sold at par to yield Libor plus 164 bps.

There was also $1.25 billion of 2% three-year notes priced at a spread of Treasuries plus 175 bps. The notes were priced tighter than guidance in the 185 bps area.

Citigroup Global Markets Inc., ING Financial Markets LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were bookrunners.

ING last tapped the U.S. bond market with a $2 billion deal of five-year notes on Feb. 29.

The financial services company is based in Amsterdam.

FMC's first bond deal

FMC Technologies was in the market with a $800 million deal of senior notes (Baa2/BBB) in two tranches, a market source said.

This is the company's first sale in the U.S. bond market, a syndicate source said, and it garnered about $5 billion of demand.

A $300 million tranche of 2% five-year notes sold at a spread of Treasuries plus 135 bps. The tranche priced at the low end of guidance in the 145 bps area, plus or minus 10 bps.

There was also $500 million of 3.45% 10-year notes priced at 165 bps over Treasuries. The notes were sold at the tight end of talk in the 175 bps area, plus or minus 10 bps.

Bookrunners were J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

Proceeds are being used to repay commercial paper and debt under a revolving credit facility.

The company provides technology solutions for the energy industry and is based in Houston.

Novartis prices $2 billion

Novartis Capital priced a $2 billion deal of notes (Aa2/AA-/) in two tranches, a market source said.

A $1.5 billion tranche of 10-year notes sold at a spread of Treasuries plus 68 bps. The tranche was sold at the tight end of talk in the 70 bps area, the source said.

The second part was $500 million of 30-year bonds priced at Treasuries plus 80 bps. The bonds were also priced at the low end of guidance in the 82 bps area.

There was a do-not-grow provision on the deal. Full terms were not available at press time.

J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were bookrunners.

Proceeds are being used for general corporate purposes outside of Switzerland, including refinancing of short-term and long-term debt.

The deal is guaranteed by Basel, Switzerland-based parent company Novartis AG.

Novartis Capital was last in the U.S. bond market with a $5 billion deal of notes in three tranches. A 4.4% 10-year note from that offering sold at 78 bps over Treasuries.

The issuer is a holding company for pharmaceuticals and healthcare subsidiaries and is based in New York City.

Fiserv upsizes

Fiserv sold an upsized $700 million of 3.5% 10-year senior notes (Baa2/BBB-/) to yield Treasuries plus 175 bps, an informed source said.

The size of the trade was increased from $500 million

Bank of America Merrill Lynch and Wells Fargo Securities LLC were active bookrunners. Passives were Mitsubishi UFJ Securities (USA) Inc. and U.S. Bancorp Investments Inc.

Proceeds are being used to repay a portion of a term loan facility maturing in November and for general corporate purposes.

The deal is guaranteed by wholly owned domestic subsidiaries.

Fiserv was last in the bond market with a $1 billion offering in two tranches on June 6, 2011. The 4.75% 10-year notes from that deal were priced at 180 bps over Treasuries.

The financial services technology company is based in Brookfield, Ill.

Harley's $600 million

Harley-Davidson Financial Services was in the market with $600 million of 1.15% three-year medium-term notes priced at Treasuries plus 85 bps, a market source said.

The bonds sold tighter than guidance in the 90 bps area, the source said

The notes (Baa1/BBB+/A-) were sold under Rule 144A and Regulation S.

Citigroup Global Markets Inc., RBS Securities Inc. and U.S. Bancorp Investments Inc. were bookrunners.

Harley-Davidson Financial was last in the market with a $400 million deal of five-year notes on January 26.

The financing arm of motorcycle maker Harley-Davidson Motor Co. is based in Milwaukee.

Total prices $1.5 billion

Total Capital International priced $1.5 billion of notes due 2016 and 2023 (Aa1/AA-/), an informed source said.

The deal will be guaranteed by parent company Total SA.

There was a $500 million tranche of 0.75% notes due 2016 priced at a spread of Treasuries plus 43 bps.

A second part was $1 billion of 2.7% notes due 2023 sold at Treasuries plus 93 bps.

Active bookrunners were Bank of America Merrill Lynch, Goldman Sachs & Co. and HSBC Securities (USA) Inc.

Proceeds are being used for general corporate purposes.

Total Capital was last in the U.S. bond market with a $1.5 billion deal of five-year notes on June 21.

The oil and gas company is based in Courbevoie, France.

Westpac in two tranches

Westpac Banking priced $2.25 billion of senior notes (Aa2/AA-/) in two tranches, an informed source said.

A $1 billion tranche of three-year floating-rate notes priced at par to yield Libor plus 76 bps.

The second part was $1.25 billion of 1.125% three-year notes sold at a spread of 87.5 bps over Treasuries.

Bookrunners were Citigroup Global Markets Inc., HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC.

Proceeds are being used for general corporate purposes.

Westpac last sold bonds in the U.S. market in a $1.25 billion deal with a five-year maturity on Aug. 6.

The banking and financial services company is based in Sydney, Australia.

Kohl's prices tight

Kohl's sold a slightly upsized $350 million deal of 3.25% notes due 2023 (Baa1/BBB+/BBB+) at a spread of 145 bps over Treasuries, an informed source said.

The size of the deal was increased from $300 million, the source said. The bonds were priced tighter than talk in the 150 bps area.

Bookrunners were Goldman Sachs & Co., UBS Securities LLC and U.S. Bancorp Investments Inc.

Proceeds are being used for general corporate purposes, including funding a share repurchase program, for working capital and capital expenditures for store upkeep.

Kohl's was last in the U.S. bond market with a $650 million deal of 4% 10-year notes priced at 183 bps over Treasuries on Oct. 12, 2011.

The department store chain is based in Menomonee Falls, Wisc.

SoCal Gas sells long bonds

Southern California Gas priced a $350 million of 3.75% 30-year first mortgage bonds (Aa3/A+/AA-) at Treasuries plus 80 bps, a market source said.

BNP Paribas Securities Corp., Morgan Stanley & Co. LLC, U.S. Bancorp Investments Inc. and Williams Capital Group LP were bookrunners.

Proceeds will be used for general corporate purposes, including the repayment of the company's outstanding debt, which may include its 4.8% mortgage bonds due Oct. 1.

The natural gas distributor is based in Los Angeles.

Duke's $650 million deal

Duke Energy Carolinas priced a $650 million offering of 4%30-year first mortgage bonds (A1/A/A+) at a spread of 105 bps over Treasuries, a market source said.

There was a do-not-grow provision on the sale.

Barclays, RBS Securities Inc., Scotia Capital (USA) Inc. and UBS Securities LLC were bookrunners.

Proceeds will be used to fund capital expenditures for the company's construction program and for general corporate purposes.

The Charlotte, N.C.-based company generates, transmits, distributes and sells electricity and is a wholly owned subsidiary of Duke Energy Corp.

NextEra sells $500 million

NextEra Energy Capital Holdings sold $500 million of 1.2% debentures (Baa1/BBB+/A-) due on June 1, 2015 at a spread of Treasuries plus 80 bps, a market source said.

Barclays, Credit Agricole Securities USA Inc., Deutsche Bank Securities Inc. and UBS Securities LLC were bookrunners.

Proceeds are being added to general funds and used to repay a portion of the issuer's commercial paper obligations and for other general corporate purposes.

The deal is guaranteed by NextEra Energy, Inc.

The energy company is based in Juno Beach, Fla.

Japan bank's seven-years

The Development Bank of Japan priced $500 million of 1.625% seven-year notes to yield mid-swaps plus 42 bps, or Treasuries plus 55.3 bps, a market source said.

The notes (Aa3/AA-/) were priced in line with initial talk in the mid-swaps plus 45 bps to 49 bps range and revised guidance in the mid-swaps plus 40 to 45 bps range. The sale was roughly two times oversubscribed, the source said.

The deal was done under Rule 144A and Regulation S.

Bookrunners were Bank of America Merrill Lynch, Barclays and J.P. Morgan Securities LLC.

The lender to domestic and international clients is based in Tokyo.

Kommunalbanken preps deal

Kommunalbanken is pricing $1 billion of five-year notes on Tuesday, a market source said.

The notes (Aaa/AAA) are being talked in the mid-swaps plus 30 bps area, the source said. Pricing is expected on Wednesday morning.

Bookrunners are Deutsche Bank Securities Inc., HSBC Securities (USA) Inc. and Nomura Securities.

The bank provides low-cost funding to municipalities and is based in Oslo.

Texas Capital's preferreds

Texas Capital Bancshares brought a $100 million sale of 6.5% $25-par 30-year subordinated notes, a trader told Prospect News.

The deal came at the tight end of talk.

The company intends to list the new notes on the Nasdaq Global Select Market under the ticker symbol "TCBIL." Settlement is expected Sept. 21.

Deutsche Bank Securities Inc., U.S. Bancorp and Macquarie Capital Inc. were bookrunners.

Proceeds will be used for general corporate purposes, including providing capital support for growth to Texas Capital Bank.

Texas Capital Bancshares is the parent company of Dallas-based Texas Capital Bank.

Argo sells $25-pars

Argo Group US sold an upsized $125 million of $25-par 30-year senior notes, a source said late on Tuesday.

The bonds were sold with a coupon of 6.5%. Price talk was 6.5% to 6.625%, a trader said.

The size of the deal was increased from $100 million.

Argo Group International Holdings Ltd. will fully and unconditionally guarantee the debt.

Argo will apply to list the notes on the Nasdaq under the symbol "AGIIL."

Bank of America Merrill Lynch and Wells Fargo Securities LLC were bookrunners.

Proceeds will be used to redeem outstanding trust preferreds and for general corporate purposes, which may include the repayment of debt.

Argo is a Hamilton, Bermuda-based underwriter of specialty insurance and reinsurance.

Stephanie N. Rotondo contributed to this review

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