Tyco Electronics, Swepco, Toll Brothers tap market along with Yankees; new deals, Citi firm

By Andrea Heisinger and Cristal Cody

New York, Jan. 31 - There was a handful of new deals in the high-grade bond market on Tuesday, and the corporate ones were all less than $1 billion.

The day's biggest corporate sale was from Tyco Electronics Group SA. The maker of electronic components sold $750 million of notes in two parts. The deal was upsized from $700 million.

There was a split-rated $300 million issue of 10-year notes from Toll Brothers Finance Corp. The sale was upsized slightly from $250 million.

Southwestern Electric Power Co. sold $275 million of 10-year paper - its first deal since March 2010.

There were also some Yankee deals in the market.

Japan Finance Corp. did a $1.25 billion sale of seven-year global notes early in the day.

This financial was joined by Nordic Investment Bank, which sold $1.25 billion of five-year notes.

A $325 million cumulative preferred stock deal by Realty Income Corp. was priced after being announced on Monday.

The primary side of the market was as busy as it's been since Jan. 23.

"It was an interesting day," a syndicate source who worked on one deal said. "The tone shifted throughout the day, and I think that caused some pushback."

There wasn't any specific reason for the tone dropping, the source said, although the Dow Jones industrial average did end down on the day.

Although the day had a lot of new issue activity, Wednesday could be busier, sources said.

"Tomorrow could be busy, which is totally fine," a syndicate source said.

Another source had "maybe a couple for tomorrow, but who knows."

Toll Brothers Finance's notes due 2022 traded "much better" in the secondary market, up about two points, a trader said.

Tyco's tranches also firmed in trading.

Bond spreads came in over the day. The Markit CDX Series 17 North American Investment Grade index firmed 2 basis points to a spread of 101 bps.

"It's been relatively busy," a source said. "Volume's picking up a little bit."

Overall trading volume rose to more than $15.5 billion from about $12 billion on Monday.

Bonds in the telecommunications sector were seen flat to 3 bps better.

Bank and financial paper traded 5 bps to 10 bps better.

Citigroup Inc.'s 4.5% notes due 2022 firmed 3 bps on the day.

In other trading, Canadian gold miner Kinross Gold Corp.'s bonds came in 15 bps to 25 bps over the day, a source said.

Treasuries saw gains on Tuesday on weaker consumer economic data. Yields fell across the curve. The 10-year Treasury note yield fell to 1.79% from 1.84%. The 30-year bond yield dropped 6 bps to 2.94%.

Tyco Electronics' two tranches

Tyco Electronics Group sold an upsized $750 million of guaranteed senior notes (Baa2/BBB) in two tranches, a market source said.

The $250 million of 1.6% three-year debt priced at a spread of Treasuries plus 137.5 bps.

A second tranche was $500 million of 3.5% 10-year notes sold at 175 bps over Treasuries.

Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC were the bookrunners.

Proceeds are being used for general corporate purposes, to help fund the acquisition of outstanding share capital of Deutsch Group SAS and to repay debt including 6% notes due Oct. 1, 2012 at maturity.

The deal is guaranteed by TE Connectivity Ltd.

In the secondary market, Tyco's three-year notes traded tighter at 131 bps bid, 125 bps offered.

Tyco's notes due 2022 firmed to 172 bps bid, 168 bps offered, a trader said.

The maker of electronic components is based in Luxembourg.

Swepco prices 10-year

Southwestern Electric Power sold $275 million of 3.55% 10-year senior notes, series I, (Baa3/BBB/BBB) at a spread of Treasuries plus 180 bps, a source who worked on the trade said.

The deal was priced wider than talk of 165 bps to 170 bps, the source said.

All of the accounts on the deal were high quality, the source said.

"With this name, some of the [comparables] with higher ratings were charging more," the source said of why the paper priced wider than guidance.

Some of the company's other bonds "are pretty illiquid, so there are some barriers," the source added.

JPMorgan, UBS Securities LLC and Wells Fargo Securities LLC were the bookrunners.

Proceeds are being used for general corporate purposes including construction, repaying advances from affiliates and replenishing working capital.

Swepco last priced debt in a $350 million sale of 6.2% 30-year bonds at 160 bps over Treasuries on March 3, 2010.

The subsidiary of American Electric Power is based in Columbus, Ohio.

Toll Brothers' crossover trade

Toll Brothers Finance priced an upsized, split-rated $300 million of 5.875% 10-year senior notes (Ba1/BB+/BBB-) at a spread of Treasuries plus 407.6 bps, an informed source said.

The size was increased from $250 million, the source said.

The active bookrunners were Citigroup Global Markets Inc., Deutsche Bank and RBS Securities Inc.

Proceeds will be used for general corporate purposes, including to repay or repurchase outstanding debt.

The deal is guaranteed by Toll Brothers Inc. and certain subsidiaries that guarantee the company's revolving credit facility.

Toll Brothers Finance's notes due 2022, which priced at par, traded higher in the secondary market, up at 102 bid, 103 offered, a trader said.

Toll Brothers is a home and apartment construction and financing company based in Horsham, Pa.

Japan Finance's $1.25 billion

Japan Finance priced $1.25 billion of 2.125% seven-year global notes (Aa3/AA-) to yield mid-swaps plus 68 bps, or Treasuries plus 89.5 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

Deutsche Bank, JPMorgan and Nomura Securities International Inc. were the bookrunners.

Proceeds are being used for the operations of the Japan Bank of International Cooperation.

The notes are guaranteed by Japan.

Japan Finance is a lender to the general public and Japanese businesses and is based in Tokyo.

NIB's five-year deal

Nordic Investment Bank sold $1.25 billion of 1% five-year notes (Aaa/AAA) at 99.728, according to an FWP filing with the SEC.

Barclays Capital Inc., Daiwa Capital Markets Europe Ltd. and Deutsche Bank were the bookrunners.

The financier for five Nordic countries is based in Helsinki, Finland.

Realty Income's preferreds

Realty Income priced a $325 million offering of 6.625% monthly income class F cumulative redeemable preferred stock, according to a press release.

The deal from the Escondido, Calif.-based real estate investment trust came at the low end of price talk, which was 6.625% to 6.75%.

The underwriters have a $48.75 million over-allotment option.

"It was certainly larger than what they went out with," a market source said of the deal's size. Originally, the company was looking to issue just $150 million of the preferreds.

Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, RBC Capital Markets LLC and UBS Securities LLC were the bookrunners.

Proceeds will be used to redeem the trust's class D preferreds. Remaining funds will be used to repay borrowings under the company's $425 million acquisition credit facility.

Citi tighter

In the secondary market, Citigroup's 4.5% senior notes due 2022 firmed about 3 bps to 278 bps bid, 270 bps offered on Tuesday, a trader said.

Citi sold $250 million of the notes (A3/A-/A+) in a reopening on Dec. 7 at a spread of 290 bps over Treasuries.

The financial services company is based in New York.

Kinross Gold tightens

Bonds from Kinross Gold (Baa3/BBB-/BBB-) were seen trading better on Tuesday, a source said. The 5.125% notes due 2021 firmed 15 bps to 320 bps bid.

The company's 6.875% bonds due 2041 also traded 25 bps better at 350 bps.

Kinross sold both tranches on Aug. 15.

The notes due 2021 priced in a $500 million offering at a spread of 290 bps. Kinross Gold sold the long bonds in a $250 million offering at a spread of 315 bps plus Treasuries.

The mining and gold ore processing company is based in Toronto.

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.