Monsanto meets strong demand, joins TD Bank in primary; Monsanto active in gray; TD Bank firms

By Cristal Cody and Aleesia Forni

Virginia Beach, June 26 – Monsanto Co. and Toronto-Dominion Bank headed to Thursday’s new issue market, adding another $6.25 billion to the week’s total supply.

Orders poured in to the $4.5 billion trade from Monsanto, which saw an orderbook that was more than than four times oversubscribed.

The seven tranches of the new issue sold around 15 basis points to 20 bps tighter compared to initial guidance.

In other primary action, the new issue from Toronto-Dominion Bank also saw solid demand for its $1.75 billion two-part five-year offering, with an orderbook reaching nearly $3 billion.

The deal priced at the tight end of talk, which had firmed around 5 bps from initial guidance.

Thursday’s supply brings the week’s total to roughly $14.1 billion, just short of earlier expectations of a $15 billion to $20 billion week.

Monsanto’s notes priced late afternoon with some of the tranches seen in the gray market, a trader said.

Toronto-Dominion Bank’s 2.125% notes due 2019 tightened about 3 bps in secondary trading, according to a trader.

Investment-grade bonds mostly moved wider over the afternoon, a source said.

The Markit CDX North American Investment Grade series 22 index eased 1 bp to a spread of 57 bps.

Monsanto prices seven-parter

Monsanto sold an offering of senior notes (A3/BBB+/A-) in seven tranches during Thursday’s session, according to a market source and an FWP filed with the Securities and Exchange Commission.

All seven tranches of the deal sold at the tight end of talk, which had firmed around 10 bps to 15 bps compared to earlier guidance.

The company priced $500 million of 1.15% three-year notes at 30 bps over Treasuries, or 99.903, to yield 1.183%.

There was also $500 million of 2.125% five-year notes priced at 99.99 to yield 2.127%, or 50 bps over Treasuries.

Monsanto also priced $500 million of 2.75% seven-year notes at Treasuries plus 65 bps.

The tranche due 2021 priced at 99.815 to yield 2.779%.

A $750 million tranche of 3.375% 10-year notes sold at 85 bps over Treasuries, or 99.94, to yield 3.382%.

The company also sold $500 million of 4.2% 20-year bonds at Treasuries plus 90 bps.

Pricing was at 99.355 to yield 4.248%.

A $1 billion tranche of 4.4% 30-year bonds sold at 110 bps over Treasuries, or 99.207, to yield 4.448%.

Finally, $750 million of 4.7% 50-year bonds sold at 140 bps over Treasuries, or 99.083, to yield 4.748%.

Monsanto’s 3.375% notes due 2024, launched at 85 bps plus Treasuries, were quoted tighter in the gray market at 82 bps bid, a trader said.

The tranche of 4.2% notes due 2034, launched at Treasuries plus 90 bps, were seen in the gray market at 86 bps bid, 85 bps offered, a trader said.

Barclays, Mitsubishi UFJ Securities (USA) Inc., RBS Securities Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC, BofA Merrill Lynch, Goldman Sachs & Co. and Morgan Stanley & Co. LLC were the joint bookrunners.

Proceeds from the sale will be used to fund the $6 billion accelerated portion of the company’s share repurchase programs and for other general corporate purposes.

The company provides agricultural products for farmers and is based in St. Louis.

TD Bank prices tight

Also on Thursday, Toronto-Dominion Bank priced $1.75 billion of senior medium-term notes, series A, in fixed- and floating-rate tranches due 2019, according to a market source and supplements filed with the SEC on Thursday.

The sale included $350 million of floaters due 2019 priced at par to yield Libor plus 44 bps.

A second tranche was $1.4 billion of 2.125% five-year notes priced at 99.877 to yield 2.151%, or Treasuries plus 55 bps.

Both tranches of the issue (A1/AA-/AA-) sold at the tight end of talk.

Toronto-Dominion Bank’s 2.125% notes due 2019 traded better in the secondary market at 50 bps offered, a trader said.

TD Securities, Citigroup Global Markets, Deutsche Bank Securities Inc. and Goldman Sachs were the joint bookrunners.

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

The financial services and banking company is based in Toronto.

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage CDS prices were up, according to a market source.

Bank of America Corp.’s CDS costs eased 1 bp to 65 bps bid, 68 bps offered. Citigroup Inc.’s CDS costs rose 1 bp to 64 bps bid, 67 bps offered. JPMorgan Chase & Co.’s CDS costs weakened 1 bp to 53 bps bid, 56 bps offered. Wells Fargo & Co.’s CDS costs widened 1 bp to 41 bps bid, 44 bps offered.

Merrill Lynch’s CDS costs eased 1 bp to 68 bps bid, 72 bps offered. Morgan Stanley’s CDS costs widened 1 bp to 65 bps bid, 68 bps offered. Goldman Sachs Group, Inc.’s CDS costs rose 1 bp to 69 bps bid, 72 bps offered.

Paul Deckelman contributed to this review.

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