Bank, financial supply heavy; Morgan Stanley, Goldman, Bank of America, TD Bank price notes

By Cristal Cody

Tupelo, Miss., Jan. 18 – Bank and financial issuers dominated high-grade primary activity on Thursday.

Morgan Stanley, Goldman Sachs Group Inc., Bank of America Corp., Toronto-Dominion Bank, U.S. Bank NA and Jefferies Group LLC all priced new paper during the session.

Bank and financial supply has been the focus for most of the week with new deals priced earlier in the week from Citigroup Inc., Westpac Banking Corp., Deutsche Bank AG, New York Branch, PNC Bank, NA, Wells Fargo Bank NA, JPMorgan Chase & Co. and ANZ New Zealand International Ltd.

In addition, Lloyds Banking Group plc tapped the Canadian high-grade primary market with a C$500 million offering of 3.5% senior notes due Feb. 3, 2025 (A3/BBB+/A+) that priced at par to yield a spread of 135 basis points over the interpolated Government of Canada bond curve, a source said.

The offering from the London-based bank and financial services group is Canada’s first maple bond offering of 2017.

In other corporate issuance on Thursday, Southwestern Electric Power Co. and Buckeye Partners, LP priced notes.

The Markit CDX North American Investment Grade 29 index closed mostly unchanged at a spread of of 48 bps.

Morgan Stanley sells $7.5 billion

Morgan Stanley (A3/BBB+/A) priced $7.5 billion of series I global medium-term senior notes on Thursday in three tranches, according to a market source and an FWP filing with the Securities and Exchange Commission.

Morgan Stanley sold $2 billion of three-year floating-rate notes at par to yield Libor plus 55 bps, on the tight side of guidance of Libor plus 55 bps to 65 bps.

The company sold $2.5 billion of 3.125% five-year fixed-rate notes at 99.775 and a spread of Treasuries plus 77 bps. The notes priced on the tight side of talk in the Treasuries plus 80 bps area.

Morgan Stanley also priced $3 billion of 3.772% 11-year fixed-to-floating-rate notes at par to yield a spread of Treasuries plus 117 bps. The notes convert to a floating rate of Libor plus 114 bps from Jan. 24, 2028 to but excluding the final maturity date.

The fixed/floaters were talked to price in the Treasuries plus 120 bps area.

Morgan Stanley & Co. LLC was the bookrunner.

Morgan Stanley is a New York-based financial products and services company.

Goldman prices $6.75 billion

Goldman Sachs Group sold $6.75 billion of notes (A3/BBB+/A) in a three-tranche offering on Thursday, according to a market source.

Goldman sold $2.5 billion of five-year floating-rate notes at Libor plus 75 bps.

The company priced $1.75 billion of 3.2% five-year fixed-rate notes at a spread of Treasuries plus 80 bps.

Goldman also sold $2.5 billion of 3.814% fixed-to-floating-rate notes due April 23, 2029 at a Treasuries plus 120 bps spread. The notes will convert to a floating rate of Libor plus 115.8 bps after the initial fixed-rate period.

Goldman Sachs & Co. was the bookrunner.

Goldman Sachs Group is a New York-based banking, securities and investment management company.

Bank of America brings deal

Bank of America sold $5.25 billion of notes (A3/A-/A) in four tranches on Thursday, according to a market source.

The bank priced $500 million of four-year floating-rate notes at Libor plus 38 bps.

Bank of America priced $1.5 billion of 2.738% four-year fixed-to-floating-rate notes at a spread of Treasuries plus 57 bps. The rate will convert to a floating rate after the initial fixed-rate period.

The bank sold $2 billion of 3.366% fixed-to-floating-rate notes due Jan. 23, 2026 at a spread of 82 bps over Treasuries. The notes will convert to a floating rate after the initial fixed-rate period.

The final $1.25 billion tranche of 3.946% fixed-to-floating-rate notes due Jan. 23, 2049 priced with a Treasuries plus 105 bps spread. The notes will convert to a floating rate after the initial fixed-rate period.

BofA Merrill Lynch was the bookrunner.

The financial services company is based in Charlotte, N.C.

U.S. Bank places notes

U.S. Bank priced $1.8 billion of notes (A1/AA-/AA) in three tranches on Thursday, according to a market source.

The company sold $500 million of floating-rate notes due Jan. 23, 2020 at Libor plus 12.5 bps.

U.S. Bank priced $550 million of 2.35% two-year notes at a spread of Treasuries plus 45 bps.

The $750 million tranche of 2.85% five-year notes were sold with a Treasuries plus 45 bps spread.

Barclays, RBC Capital Markets, LLC and U.S. Bancorp Investments, Inc. were the bookrunners.

U.S. Bank is a Cincinnati, Ohio-based banking services company.

TD Bank prints $1.5 billion

Toronto-Dominion Bank priced $1.5 billion of series A senior medium-term notes (Aa2/AA-/) in two tranches on Thursday, according to FWP filings with the SEC.

The bank sold $500 million of three-year floating-rate notes at par to yield Libor plus 24 bps.

Toronto-Dominion Bank placed $1 billion of 2.55% three-year notes at 99.862 to yield 2.598%, or a spread of Treasuries plus 43 bps.

TD Securities (USA) LLC, Barclays, Goldman Sachs and Wells Fargo Securities, LLC were the bookrunners.

The bank and financial services company is based in Toronto.

Jefferies raises $1 billion

Jefferies Group sold $1 billion of 4.15% senior notes due Jan. 23, 2030 (Baa3/BBB-/BBB-) on Thursday at 98.966 and a spread of 165 bps over Treasuries, according to a market source and an FWP filing with the SEC.

The notes priced on the tight side of guidance set at Treasuries plus 170 bps.

Jefferies LLC was the bookrunner.

Proceeds will be used for general corporate purposes.

Jefferies is an investment bank based in New York.

Funds extend gains

Meanwhile investment-grade corporate mutual funds posted their third straight gain for the year so far this week and their 18h consecutive weekly gain following a rare two straight weekly losses, according to a Prospect News analysis of statistics generated by AMG Data Services Inc.

The calculations by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division indicated that the funds saw a net inflow of $3.92 billion during the reporting week ended Wednesday, not too far down from last week’s reported upturn of $4.19 billion – one of the largest weekly inflows ever recorded for the IG funds.

The year had started off with a $965 million advance.

The inflows seen over the past 18 weeks followed net outflows of $25 million recorded during week ended Sept. 13 and $43 million during the week ended Sept. 6, which had been the first loss of the year after 35 straight weekly net inflows last year before that and a total of 37 weekly inflows overall dating back to the week ended Dec. 21, 2016 according to the Prospect News analysis.

This week’s inflow establishes an estimated year-to-date net inflow figure of $9.07 billion, a second consecutive new peak for the year so far, up from last week’s $5.15 billion.

Last year ended with an estimated $117.35 billion net inflow total for the year, the 14th consecutive new 2017 cumulative peak level, the analysis indicated.

-Paul Deckelman contributed to this report

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