Foreign, financial names dominate as NAB, TD Bank, JPMorgan price; IBM five-year notes firm

By Andrea Heisinger and Cristal Cody

New York, July 20 - Toronto-Dominion Bank, National Australia Bank Ltd. and Network Rail priced bonds on Wednesday as foreign names took up space in an otherwise quiet high-grade primary.

The largest sale of the day was from NAB, totaling $2.6 billion in two tranches. There was $1.6 billion of three-year floating-rate notes and $1 billion of five-year notes. Both were priced in line with, or at the tight end, of price guidance.

TD Bank sold bonds for the second time in two weeks after its debut U.S. offering on July 7. The $2.5 billion sale was the same size as its previous deal but was in a single tranche of two-year floaters.

Britain's Network Rail sold an upsized $300 million of two-year floaters. The deal size was initially $250 million.

There was also a reopening of notes from JPMorgan Chase & Co. The banking giant re-tapped its 3.15% notes due 2016 to add $500 million. The total outstanding is now $3 billion.

In the preferred stock market, PNC Financial Services Group Inc. announced a sale of perpetual preferred stock. The public sale of the new preferreds marks the first such offering by a bank in the last three years, since before Lehman Brothers collapsed. Sources speculated that the deal could pave the way for more bank issues in the future.

Terms were also announced for a $425 million sale of cumulative preferreds from Public Storage that was announced on Tuesday and priced late that night.

Issuers favored shorter-term floating-rate paper for the day due to market uncertainty, a source said.

"I think we're going to see more shorter-dated [notes] in general," he said. "I mean, TD Bank jumped back in with this single tranche of two-years."

Fears of a default on debt by Greece resurfaced by day's end, but most of the sales had already priced or been announced. The source said that the market seemed to "mostly brush off" the news.

There are "at least one or two" sales planned for Thursday on momentum from the day's offerings and the fact that more companies are emerging from earnings blackout, a syndicate source said.

Overall trading volume continued to rise on Wednesday. It rose nearly 10% to about $12.5 billion.

In the secondary market, International Business Machines Corp.'s five-year note issue sold the previous day firmed 7 basis points, a trader said.

Also in trading, JPMorgan's reopened notes due 2016 firmed 2 bps.

The Markit CDX Series 15 North American Investment Grade index ended the day 3 bps better at a spread of 94 bps, according to Markit Group Ltd.

Treasuries finished lower across the bond curve as talks regarding the U.S. debt ceiling and the debt crisis in Europe continued. The 10-year note yield rose 6 bps to 2.93%. The 30-year bond yield rose to 4.25% from 4.19%.

NAB sells $2.6 billion

National Australia Bank sold $2.6 billion of notes (Aa2/AA/AA) in two tranches in the Rule 144A, Regulation S market, a source close to the trade said.

The $1.6 billion of three-year floating-rate notes priced at par to yield Libor plus 95 bps. These notes priced in line with guidance in the Libor plus 95 bps area.

A $1 billion tranche of 3% five-year notes sold at a spread of Treasuries plus 160 bps. The tranche priced at the tight end of guidance in the 162.5 bps area, plus or minus 2 bps.

The bookrunners were Citigroup Global Markets Inc., Goldman Sachs & Co., National Australia Bank and RBS Securities Inc.

Proceeds are being used for general corporate purposes.

The bank and financial services company is based in Melbourne.

TD Bank taps market again

Toronto-Dominion Bank priced $2.5 billion of two-year senior medium-term floating-rate notes (Aaa/AA-) at par to yield Libor plus 18 bps, a market source away from the sale said.

The floaters were priced in line with talk in the Libor plus 18 bps area.

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

Proceeds will be added to the company's general funds and used for general corporate purposes.

TD Bank made its debut in the U.S. debt market on July 7 when it sold $2.5 billion of notes in three parts.

The bank and financial services company is based in Toronto.

JPMorgan reopens 5-years

JPMorgan Chase reopened its 3.15% senior notes due 2016 to add $500 million, said a source away from the sale.

The notes (Aa3/A+/AA-) were sold at a spread of Treasuries plus 160 bps.

Total issuance is $3 billion including $2.5 billion priced on June 22 at 165 bps over Treasuries.

J.P. Morgan Securities LLC was the bookrunner.

Proceeds are being used for general corporate purposes.

The notes firmed in secondary trading to 158 bps bid, 156 bps offered, a trader said.

The financial services company is based in New York.

Network Rail upsizes

Network Rail priced an upsized $300 million of two-year floating-rate notes at par to yield Libor plus 1 bp, a source close to the offering said.

The size was initially $250 million.

The notes (Aaa/AAA) were sold under Rule 144A.

Citigroup and Goldman Sachs were the bookrunners.

The government-operated rail infrastructure in Great Britain is based in London.

PNC plans preferreds

A preferred stock trader said the new issue from PNC Financial Services Group was "huge news to our market."

"It's a big deal insofar as that it is the first public deal done [by a bank] in about three years," said another source. He noted that M&T Bank Corp. did a $500 million private placement of preferreds in May, but public deals have been lacking.

"That's big news," the source continued. The last public preferred sale by a bank occurred shortly before the collapse of Fannie Mae and Freddie Mac and the demise of Lehman Brothers. "Credit events had shut down the new issue market, at least among banks."

The Pittsburgh-based bank said early Wednesday that it will issue series O depositary shares representing 1/100th of a share of fixed-to-floating-rate non-cumulative perpetual preferred stock. Talk is around 6.75%, and about $1 billion of paper is expected to be sold.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, PNC Capital Markets LLC and Citigroup Global Markets Inc. are the joint bookrunners.

A market source said the deal was "doing OK" in the gray market, seeing a par bid, 100¼ offered market. He added that by late in the day, there were more offers than bids for the stock.

Public Storage deal does well

Public Storage priced its new issue late Tuesday, bringing $425 million of depositary shares each representing 1/1,000th of a 6.35% series R cumulative preferred.

"That went swimmingly," a trader said, remarking that the sale of 17 million depositary shares was oversubscribed.

"I was surprised they were able to do it at such a low yield," he said. "It really speaks to the lack of new issue supply out there."

He added that there was "a lot of retail demand" for the paper.

"It's a pretty good-size deal for a REIT," said another market source, though he added that Public Storage is "one of the most frequent REIT issuers in our market."

The first trader saw the depositary shares trading "right around par" at $24.98, which he said was indicative of "pretty strong follow-through." The second source pegged the issue at $24.96.

However, the company's 7.25% series K cumulative preferreds (NYSE: PSAPK) fell 16 cents to $25.10. The Glendale, Calif.-based company said Tuesday that proceeds from the new issue will be used to redeem the Ks at par plus accrued dividends on Aug. 22.

"It was probably people dropping out of one and getting into another," a source said of the decline in the Ks.

Stephanie N. Rotondo contributed to this review

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