Textron prices deal following strong jobs data; ConocoPhillips, Exxon Mobil mixed; Cisco eases

By Aleesia Forni and Cristal Cody

New York, March 4 – Textron Inc. priced $350 million of senior notes on Friday at the tight end of guidance to close out the week on the heels of strong U.S. jobs data.

Non-farm payrolls grew by 242,000 during the month of February, topping earlier forecasts of 190,000.

The unemployment rate was flat at 4.9%, in line with expectations.

In other data, the U.S. Commerce Department announced that the trade deficit in January widened to $45.7 billion from a revised $44.7 billion deficit in December.

The better-than-expected payrolls data closes out what has been a stellar week for the high-grade bond market, with more than $52 billion of supply hitting the tape.

The pace is expected to carry over into the week ahead, with another $35 billion to $40 billion of investment-grade issuance predicted to price.

Meantime, Lipper US Fund Flows reported $761 million of outflows from corporate investment-grade bond funds for the week ended March 3.

This figure follows last week’s $141.8 million of inflows and brings the total year-to-date outflows to about $6.13 billion.

Investment-grade bonds were mixed over the session.

“Secondary was slow for me,” a trader said. “Seemed quiet out there, but maybe others had more flow.”

The day was heavy with economic data that kept activity light with “everyone focused on nonfarm payrolls,” a market source said.

ConocoPhillips Co.’s 4.95% senior notes due 2026 priced on Thursday traded modestly tighter to 2 basis points softer during the session.

The company’s existing bonds traded 3 bps to 20 bps better on Friday after tightening 5 bps to 15 bps on Thursday.

Exxon Mobil Corp.’s 3.043% notes due 2026 traded mostly flat to 1 bp softer on Friday.

The Markit CDX North American Investment Grade index closed the day 3 bps better at a spread of 95 bps.

“After reaching the widest levels in more than three and a half years on February 11, IGCDX has rallied significantly, tightening more than 24 [bps] over the past three weeks,” Barclays analyst Jigar Patel said in a note on Friday. “The speed and magnitude of the rally have been impressive, with the index now having retraced more than two-thirds of the year-to-date widening.”

Patel said the recent stabilization in the commodity complex, improved investor sentiment, as evidenced by fund flows, and reduced macro concerns have contributed to the rally.

Textron prices tight

In Friday’s lone new issue, Textron priced $350 million of 4% senior notes (Baa3/BBB) at Treasuries plus 220 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

Pricing was at 99.242 to yield 4.093%.

The notes sold at the tight side of guidance in the Treasuries plus 225 bps area and inside initial price thoughts in the Treasuries plus mid-200 bps area.

Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were the active bookrunners. Passive bookrunners were BofA Merrill Lynch and MUFG.

Proceeds will be used for general corporate purposes, which may include the redemption or repayment of debt, including the outstanding principal amount of the company’s existing 4.625% notes due 2016.

The multi-industry company has units including aircraft, defense and finance. It is based in Providence, R.I.

ConocoPhillips mixed

ConocoPhillips’ 4.95% notes due 2026 were seen at 314 bps bid, 312 bps offered in secondary trading earlier on Friday, a trader said.

The company sold $1.25 billion of the 10-year bonds (Baa2/ A/A-) on Thursday at a spread of Treasuries plus 312.5 bps.

ConocoPhillips’ existing 3.35% notes due 2025 traded late Friday 20 bps tighter at 283 bps bid, according to a market source. The bonds priced in a $500 million sale on May 13 at Treasuries plus 110 bps.

The energy company is based in Houston.

Exxon Mobil mostly flat

Exxon Mobil’s 3.043% notes due 2026 traded at 118 bps bid, 116 bps offered late afternoon on Friday, a trader said.

The company sold $2.5 billion of the notes (Aaa/AAA) on Feb. 29 at a spread of Treasuries plus 130 bps.

Exxon Mobil is an energy company based in Irving, Texas.

Hewlett-Packard firms

Hewlett-Packard Enterprise Co.’s 4.9% notes due 2025 (Baa2/BBB/A-) traded 9 bps tighter on Friday at 363 bps bid, a market source said.

The company on Thursday reported fiscal first-quarter earnings and revenue results that beat analysts’ expectations.

The company sold $2.5 billion of the notes on Sept. 30 at Treasuries plus 290 bps.

Hewlett-Packard Enterprise is a Palo Alto, Calif.-based provider of technology services.

Cisco eases

Cisco Systems, Inc.’s 2.95% notes due 2026 eased 3 bps on Friday to 102 bps bid, according to a market source.

The company sold $750 million of the notes (A1/AA-) on Feb. 22 at 120 bps over Treasuries.

San Jose, Calif.-based Cisco produces internet protocol-based networking and other communications and information technology products.

AT&T improves

AT&T Inc.’s 4.125% notes due 2026 firmed 3 bps to 193 bps bid during the session, a source said.

The company sold $1.75 billion of the notes (Baa1/BBB+/A-) on Jan. 29 at 220 bps plus Treasuries.

AT&T is a Dallas-based telecommunications company.

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