Time Warner, GE Capital, TD Bank, Kohl's price oversubscribed deals; Kohl's trades tighter

By Andrea Heisinger and Cristal Cody

New York, Oct. 12 - A window opened for investment-grade issuers on Wednesday after a sluggish start to the short week, and several names from Canada and the United States took advantage.

There were deals from Time Warner, Inc., Kohl's Corp. and General Electric Capital Corp. on the corporate side.

They were joined in the market by National Bank of Canada and Toronto-Dominion Bank.

The largest deal was from GE Capital at $3 billion in two parts. Both tranches of five- and 10-year notes were sold at the tight end of guidance.

They were joined in late-day sales by Time Warner, which priced $1 billion. The deal was split evenly between 10- and 30-year maturities. This sale was a blowout at nearly eight times oversubscribed.

Retailer Kohl's sold $650 million of 10-year notes. It was the company's first bond sale since 2007.

Toronto-Dominion Bank sold $1.5 billion of five-year notes.

National Bank of Canada priced $1.4 billion of five-year covered bonds in the Rule 144A and Regulation S market.

Paper with a 10-year maturity seemed to fare the best with investors. Both GE Capital and Time Warner saw more interest in those tranches.

The market felt good, but momentum increased throughout the morning as more companies jumped in.

All of the deals were heavily oversubscribed, showing investors are looking at high-grade paper as a safe haven amid the current volatility over Greece and the euro zone.

"That's even with people going into blackout," a market source said of investor interest.

"I'd think we'll see more tomorrow, but it's hard to tell."

JPMorgan Chase & Co. releases earnings on Thursday, and there was some speculation that the company could tap the debt market after doing so.

Time Warner's bonds were not released into the secondary, but they will be in the morning, a source said.

"If those trades perform well, I think we'll see others come in," she said.

In the secondary market, the notes that General Electric Capital and Kohl's priced traded tighter.

The Markit CDX Series 17 North American Investment Grade index firmed 5 basis points to a spread of 130 bps on Wednesday.

Treasuries ended lower on optimism that Europe will resolve its debt problems. The 10-year Treasury note yield rose 6 bps to 2.21%. The 30-year bond yield climbed 10 bps to 3.2%.

Time Warner prices tight

Time Warner sold $1 billion of notes and debentures (Baa2/BBB/BBB) late in the day, according to a source close to the trade.

The company sold $500 million of 4% senior notes due 2022 at a spread of Treasuries plus 200 bps. They were whispered in the 210 bps to 215 bps area and later revised down to the 210 bps area, plus or minus 5 bps. The tranche was priced tight to revised talk.

A $500 million issue of 5.375% 30-year senior debentures priced at 225 bps over Treasuries. They were whispered at a 25 bps curve to the 10-year tranche, and talk was later revised to the 235 bps area, plus or minus 5 bps. They were sold tighter than revised guidance.

There was "just under $8 billion on the books" and slightly more investor interest in the 10-year paper, the source said.

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

Proceeds will be used for general corporate purposes, including the repurchase of common stock.

The new debt is guaranteed by Historic TW Inc., which is guaranteed by Home Box Office Inc. and Turner Broadcasting System Inc.

Time Warner last priced debt in a $2 billion sale of notes with 10- and 30-year maturities on March 29, 2011.

The media and entertainment company is based in New York.

GE Capital sells $3 billion

General Electric Capital sold $3 billion of notes (Aa2/AA+) in two tranches late in the afternoon, a syndicate source said.

The $1.25 billion of 3.35% five-year notes was sold at Treasuries plus 222 bps. They were sold at the tight end of talk in the 225 bps area.

A second tranche was $1.75 billion of 4.65% 10-year notes priced at a spread of Treasuries plus 247 bps. These notes were also priced at the tight end of guidance in the 250 bps area.

There was a little more than $8 billion on the books for the trade, the syndicate source said, adding that interest was "skewed slightly toward the 10-year notes."

Bank of America Merrill Lynch, Barclays Capital Inc., Citigroup, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and JPMorgan were the bookrunners.

Proceeds are being used for general corporate purposes.

In the gray market, the notes due 2016 firmed to 222 bps bid, while the notes due 2021 were seen at 245 bps bid, a trader said.

In late afternoon, the five-year notes tightened to 221 bps bid in the secondary market, a trader said. The 10-year notes also firmed to 242 bps bid, 238 bps offered.

The funding arm of General Electric Co. is based in Fairfield, Conn.

TD Bank's five-years

Toronto-Dominion Bank sold $1.5 billion of 2.375% five-year senior medium-term notes, series A, (Aaa/AA-) to yield 135 bps over Treasuries, a market source said.

There was about $3.5 billion of demand on the books, the source said.

The bookrunners were TD Securities (USA) LLC, JPMorgan, Citigroup and Goldman Sachs.

Proceeds will be added to general funds and used for general corporate purposes.

TD Bank last priced paper in a $5 billion sale of covered bonds in three- and five-year maturities on Sept. 7. The 1.625% five-year bonds from that sale were priced at mid-swaps plus 44 bps, or Treasuries plus 73.4 bps.

The bank and financial services company is based in Toronto.

Kohl's prices $650 million

Department store chain Kohl's sold $650 million of 4% 10-year senior notes (Baa1/BBB+/BBB+) to yield 183 bps over Treasuries, said a source close to the trade. It was the company's first debt sale in four years.

They were sold tighter than guidance in the low 200 bps area.

There was about $4 billion of demand for the paper, and it was a quick sale, the source said.

"It was pretty good," the source said. "A few people dropped out after we launched it at 183."

After about 30 minutes, the books had about $2 billion of orders on them, the source said.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC ran the books.

Proceeds will be used to retire $100 million of 7.375% senior notes due in October and for general corporate purposes including funding a share repurchase program, working capital, repayment or refinancing of other debt and to fund the capital expenditures related to store growth or remodeling.

Kohl's last priced debt in a $1 billion sale in 10 and 30-year tranches on Sept. 25, 2007. The 6.25% 10-year notes from that trade were priced at 170 bps over Treasuries.

In the secondary market, Kohl's notes traded about 2 bps tighter at 181 bps bid, 178 bps offered, a trader said.

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

National Bank of Canada prices

National Bank of Canada sold $1.4 billion of 2.2% five-year covered bonds to yield Treasuries plus 104.5 bps, an informed source said.

The bonds (Aaa/AAA/AAA) were offered under Rule 144A and Regulation S.

Barclays, Citigroup, National Bank Financial and RBC Capital Markets LLC were the bookrunners.

The financial services company is based in Montreal.

CDS costs fall

Bank and brokerage credit default swaps costs dropped on Wednesday, indicating greater investor confidence in the financial sector, a trader said.

Bank of America's CDS costs fell 25 bps to 330 bps bid, 335 bps offered. Wells Fargo's CDS costs traded 12 bps lower at 125 bps bid, 135 bps offered.

On the brokerage side, Morgan Stanley's CDS costs ended 40 bps lower at 345 bps bid, 355 bps offered.

Merrill Lynch's CDS costs firmed 25 bps to 375 bps bid, 390 bps offered.

Goldman Sachs' CDS costs traded 20 bps lower at 295 bps bid, 310 bps offered.

Paul Deckelman contributed to this review

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