ADT, GE Capital, Markel, QVC, Delta Air tap market as tone holds; Comcast, AT&T issues busy

By Aleesia Forni and Andrea Heisinger

New York, June 27 - Activity in the high-grade primary market remained steady on Wednesday, although volume slowed slightly from the previous day.

The largest sale came from ADT Corp., which priced $2.5 billion in three tranches to help pay for its spinoff from Tyco International Ltd. The deal is guaranteed by Tyco.

QVC Inc. was in the market with a split-rated $500 million issue of 10-year senior secured notes.

Frequent issuer General Electric Capital Corp. priced $1.5 billion of three-year notes in two tranches. One tranche has a fixed rate and other is floating.

Financial holding company Markel Corp. sold $350 million of 10-year notes to repay debt. The sale was slightly upsized from $300 million.

There was also an offering of class A and B passthrough certificates from Delta Air Lines, Inc. The deal totals $479.89 million and is split-rated.

"We definitely saw demand," a source said of investor interest in the day's deals.

The ADT deal - the largest of the day - was about five times oversubscribed, and all of the tranches were priced tight.

Some companies are coming to the market for capital before entering earnings blackout, while others are taking advantage of favorable rates.

"That's why GE was in here," a source said, referring to GE Capital, which was in the market with a $3.1 billion issue in two tranches on April 24.

The flow of deals for Thursday could be less, although there are likely to be "at least a couple of things" pricing, a syndicate source said late in the day.

The secondary market saw a "positive tone" on Wednesday, a trader said near the session's close.

Tuesday's dual-tranche issuance from Comcast Corp. and AT&T Inc.'s notes due 2017 were among the day's most actively traded bonds, and the trader said technology paper was 5 basis points to 10 bps better on the day.

Additionally, AT&T's notes due 2019 and Time Warner Cable Inc.'s issuance due 2021 tightened during the day's session.

Both Markel and QVC tightened more than 10 bps in secondary trading near the end of New York's session, a market source said.

Investment-grade bank and brokerage credit default swap costs declined on Wednesday.

Bank of America's CDS costs tightened 2 bps to 270 bps bid, 275 bps offered. Citi's CDS costs were 3 bps tighter at 250 bps bid, 255 bps offered. Wells Fargo's CDS costs declined 1 bps to 100 bps bid, 105 bps offered.

Merrill Lynch's CDS costs were 4 bps tighter at 283 bps bid, 293 bps offered. Morgan Stanley's CDS costs tightened 5 bps to 368 bps bid, 373 bps offered.

ADT prices $2.5 billion tight

ADT sold $2.5 billion of senior notes (Baa2/BBB/BBB+) in three maturities, a market source said.

There was about $12.5 billion of demand on the books, the source said.

The $750 million of 2.25% five-year notes sold at a spread of Treasuries plus 155 bps. The tranche was priced at the tight end of guidance in the 160 bps area, plus or minus 5 bps.

A $1 billion tranche of 3.5% 10-year notes priced at 195 bps over Treasuries. These notes were also sold at the low end of price talk in the 195 bps area, plus or minus 5 bps.

Finally, there was a $750 million tranche of 4.875% 30-year bonds priced at a spread of Treasuries plus 230 bps. The bonds were sold at the tight end of talk in the 230 bps area.

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

The bookrunners were Citigroup Global Markets Inc., Goldman Sachs & Co. and J.P. Morgan Securities LLC.

Proceeds are being used to repay intercompany debt and make other cash payments to Tyco International to allow it to fund purchases or the redemption of debt.

The deal is guaranteed by Tyco until the spinoff of ADT is complete.

ADT is a security and alarm system company and unit of Tyco, based in Schaffhausen, Switzerland.

GE Capital sells in two parts

General Electric Capital sold $1.5 billion of three-year notes (A1/AA+/) in two parts, an informed source said.

A $1.2 billion tranche of 1.625% three-year notes priced at a spread of Treasuries plus 125 bps.

The second part was $300 million of three-year floating-rate notes priced at par to yield Libor plus 103 bps.

The bookrunners were Citigroup, Deutsche Bank Securities Inc., JPMorgan and Morgan Stanley & Co. LLC.

The financial products and services provider is based in Norwalk, Conn.

Markel upsizes

Markel priced an upsized $350 million of 4.9% 10-year senior notes (Baa2/BBB/BBB) to yield Treasuries plus 330 bps, a source close to the trade said.

The deal size was increased from $300 million, the source said.

The notes traded 8 bps tighter in the secondary at 322 bps bid, 317 bps offered, a market source said.

Citigroup and Wells Fargo Securities LLC were the bookrunners.

Proceeds are being used to prefund the repayment of 6.8% notes at maturity on Feb. 15, 2013 and for general corporate purposes including the possible redemption of 7.5% debentures due 2046.

Markel was last in the market with a $250 million offering of 5.35% 10-year notes priced at 225 bps over Treasuries on May 25, 2011.

The financial holding company, primarily for specialty insurance products, is based in Glen Allen, Va.

QVC's split-rated deal

QVC priced $500 million of 5.125% 10-year senior secured notes at par to yield 5.125%, a market source said.

The notes (Ba2/BBB-/BBB-) were sold at a spread of Treasuries plus 349.9 bps.

A trader saw the notes at 326 bps bid, 323 bps offered.

Barclays Capital Inc., Bank of America Merrill Lynch and RBS Securities Inc. were the bookrunners.

Proceeds are being used to reduce borrowings under the company's revolving credit facility and for general corporate purposes.

The home shopping retailer is based in West Chester, Pa.

Delta's passthroughs

Delta Air Lines priced $479.89 million of class A and B passthrough certificates, according to an FWP filing with the Securities and Exchange Commission.

The $353.69 million of 4.75% class A certificates (Baa2/A-/) priced at par to yield 4.75%. The certificates have an expected regular distribution of May 7, 2020 and an expected legal distribution of Nov. 7, 2021.

Delta also priced $126.2 million of 6.875% class B certificates (Ba3/BB/) at par to yield 6.875%. These certificates have an expected regular distribution of May 7, 2019 and an expected legal distribution of Nov. 7, 2020.

The bookrunners were Deutsche Bank, Credit Suisse Securities (USA) LLC, Goldman Sachs and Morgan Stanley.

Proceeds are being held in escrow and used to purchase equipment notes for aircraft. This includes nine Airbus aircraft delivered in 2002 to Northwest Airlines, Inc., two Airbus aircraft delivered to Northwest in 1998, one Boeing aircraft delivered in 2001, eight Boeing aircraft delivered from 1995 to 1997 and six new Boeing aircraft delivered in 2000.

Delta is a commercial airline based in Atlanta.

Experian gives terms

Experian Finance plc gave the terms of its $600 million of 2.375% five-year notes (Baa1/A-/). They priced at a spread of 175 basis points over Treasuries, a source away from the deal said.

The size of the trade was increased from $500 million.

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

The bookrunners were Bank of America Merrill Lynch, Mitsubishi UFJ Securities (USA), Inc., RBS Securities and Societe Generale.

Proceeds are being used for general corporate purposes including the acquisition and repayment of certain debt.

The deal is guaranteed by parent company Experian plc, which provides data and analytical tools to companies and consumers and is based in Dublin.

AT&T tightens

In the secondary market, AT&T's bonds due 2019 tightened 7 bps on Wednesday, closing the session at 55 bps bid.

The Dallas-based phone and internet services provider priced $2.25 billion of the 5.8% notes in January 2009 at 300 bps over Treasuries.

Time Warner firms

Time Warner Cable's $700 million of 4.125% notes due 2021 tightened 8 bps in secondary trading.

The New York-based telecommunications company priced the notes at 155 bps over Treasuries on Nov. 9, 2010.

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