Wrigley, Covidien, HSBC Bank, Shell, Genworth among IG issuers; Anadarko bonds slide

By Andrea Heisinger and Cristal Cody

New York, June 21 - General Electric Capital Corp., HSBC Bank plc, Shell International Finance BV, Bank of Montreal, Covidien International Finance SA, Genworth Financial, Inc., Toyota Motor Credit Corp. and William Wrigley Jr. Co. priced deals on a hectic Monday for new investment-grade bond sales.

Covidien sold $1.5 billion of notes in three tranches. The deal consisted of $500 million of three-year notes, $400 million of five-year notes and $600 million of 10-year notes, all of which priced at the tight end of guidance.

A $1.8 billion deal from Wrigley was the last to price for the day. It was in four tranches, including $500 million of one-year floating-rate notes, $425 million of two-year notes, $375 million of three-year notes and $500 million of four-year notes. They were sold under Rule 144A and Regulation S.

GE Capital was one of the first to price its deals. The funding arm of General Electric sold $1 billion of five-year senior notes.

Bank of Montreal sold $1 billion of three-year medium-term notes later in the afternoon at the tight end of guidance.

Financial security company Genworth upsized its 10-year bonds to $400 million from $300 million. They priced at the yield and were sold tighter than guidance.

A $2.75 billion deal from Shell International Finance was sold in two tranches. There was a $1.75 billion tranche of five-year notes and a $1 billion tranche of two-year floaters.

One of the larger sales of the day came from HSBC Bank. It priced $2 billion of five-year notes under Rule 144A.

Toyota Motor Credit priced $125 million of one-year floaters.

The open to the week was strong, allowing those looking to raise some capital for various reasons to do so, a syndicate source said.

"It's the same as last week where people want IG paper and companies are looking to sell some."

There haven't been any upcoming sales announced, but another source said that unless something terrible happens, "there will be more to see on Tuesday."

Anadarko Petroleum Corp.'s bonds weakened in trading on Monday after a cut in ratings to below investment grade on Friday over liability concerns with the continued Gulf oil leak, a source said. BP plc's bonds firmed slightly in the secondary.

The secondary also saw plenty of activity from the new issuances in the high-grade market, sources said.

The CDX Series 14 North American investment-grade index closed 2 bps tighter to a spread of 108 bps, according to a market source.

Overall investment-grade Trace volume rose to more than $10 billion after light trading of about $7 billion on Friday, a source reported.

Treasuries reacted Monday to the overnight news from China that it would relax the yuan to allow it to appreciate against the dollar for more currency flexibility.

Analysts later in the day cited concerns that China, one of the U.S. government's largest buyers of debt, would not have as much of a need for U.S. bonds in the future.

Yields on the 10-year benchmark notes rose 2 bps to 3.24%, while yields on the two-year note were unchanged at 0.71%.

Yields on 30-year government debt ended at 4.16% from 4.15% on Friday.

Meanwhile, the Federal Reserve's Federal Open Market Committee starts its two-day interest rate policy meeting on Tuesday.

The Treasury Department also will start the first auction of $40 billion of two-year notes on Tuesday and sell $38 billion of five-year notes on Wednesday and $30 billion of seven-year notes on Thursday.

Covidien sells notes in three tranches

Covidien International Finance sold $1.5 billion of senior unsecured notes (Baa1/A/A) late in the day in three tranches, a source close to the deal said.

The size of the deal was doubled from the minimum $750 million announced earlier in the day.

A source said that all three tranches priced at the tight end of guidance that was 3 bps higher than the pricing level.

The $500 million of 1.875% three-year notes sold at a spread of Treasuries plus 72 bps. These traded in the secondary at 71 bps bid, 76 bps offered, a trader said.

A $400 million tranche of 2.8% five-year notes sold at Treasuries plus 82 bps. The second tranche firmed in the afternoon. The notes were seen trading at 81 bps bid, 76 bps offered.

The $600 million tranche of 4.2% 10-year notes priced at Treasuries plus 97 bps.

The last tranche also firmed in secondary trading. The notes priced at Treasuries plus 97 bps and tightened to 96 bps bid, 94 bps offered, one trader said.

As the market closed, the 10-year notes firmed 1 point on the offer side to 96 bps bid, 93 bps offered, according to another trader.

They are guaranteed by Covidien plc and Covidien Ltd.

Morgan Stanley & Co. Inc., Barclays Capital Inc. and Goldman Sachs & Co. were the bookrunners.

Proceeds are going to finance a portion of the $2.6 billion acquisition of medical device maker ev3Inc.

The health care products company is based in Luxembourg.

Wrigley prices $1.8 billion of four tranches

Candy and food products maker Wrigley priced $1.8 billion of senior secured notes (Baa2/BBB) in four tranches late in the day, an informed source said.

The $500 million tranche of one-year floating-rate notes priced at par to yield three-month Libor plus 137.5 bps.

The $425 million of 2.45% two-year notes sold at a spread of Treasuries plus 175 bps.

A $375 million tranche of 3.05% three-year notes priced at a 187.5 bps over Treasuries spread.

The final tranche was $500 million of 3.7% four-year notes priced at Treasuries plus 170 bps. Citigroup Global Markets and J.P. Morgan Securities ran the books.

The deal was done under Rule 144A and Regulation S.

Proceeds are being used to retire the company's senior secured bank facilities, including a term loan due in 2012, an undrawn revolver due in 2013 and term loans due in 2013 and 2014.

The issuer is based in Chicago.

Cheap spreads lure issuers

There was a rush of new bonds hitting the investment-grade market for the day, following a week that saw the most issuance since March.

Some of it is a backlog from when negativity from Europe and BP permeated the market and made most companies hesitant to tap the debt market.

Now that Europe is mostly out of the headlines, some of those names are pricing bonds.

"We have cheap prices right now, and the E.U. stuff has kind of gone away, so some people got the 'go' call this morning," a source said.

"It's a good time to jump in."

Some companies, like Covidien, were able to raise capital for an acquisition, while others were just looking to pay down debt or shore up their finances.

"It's been looking good out there, and some companies can even get more done than they need for cheap," a source said.

GE Capital prices $1 billion of five-years

General Electric Capital priced $1 billion of 3.5% five-year senior notes (Aa2/AA+) by early afternoon at 150 bps over Treasuries, an informed source said.

They were priced in line with talk in the 150 bps area.

The debt widened in secondary trading, according to sources.

By late afternoon, the five-year notes had moved out to 154 bps bid, 153 bps offered, a trader said.

The bookrunners were Bank of America Merrill Lynch, Barclays Capital Inc., Deutsche Bank Securities and Morgan Stanley & Co. Inc.

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

Bank of Montreal sells short bond

Bank of Montreal priced $1 billion of 2.125% three-year senior medium-term notes (Aa2/A+/AA-) to yield Treasuries plus 95 bps, a source close to the sale said.

They were priced at the tight end of guidance in the range of 95 to 98 bps, a source said.

The notes were seen tightening on the bid side to 93 bps bid, 98 bps offered, a trader said.

Bookrunners were Morgan Stanley & Co. Inc, Bank of America Merrill Lynch, Barclays Capital Inc. and BMO Capital Markets.

The financial services company is based in Toronto and Montreal, Canada.

Shell prices two tranches

Shell International Finance sold $2.75 billion of senior unsecured notes (Aa1/AA/AA+) in two tranches late in the day, a source away from the deal said.

A $1.75 billion tranche of 3.1% five-year notes priced at a spread of Treasuries plus 110 bps.

The $1 billion tranche of two-year floating-rate notes sold at par to yield three-month Libor plus 35 bps. The three-year notes were 10 bps stronger on the offer side, a source said.

The notes were "offered at + 100," the source said.

The tranches are guaranteed by Royal Dutch Shell plc

Bookrunners were Bank of America Merrill Lynch and HSBC Securities.

Proceeds are being used for general corporate purposes.

The energy and petrochemical company is based in The Hague, The Netherlands.

Genworth Financial upsizes deal to $400 million

Genworth Financial priced an upsized $400 million of 7.7% 10-year senior unsecured notes (Baa3/BBB) at par to yield 7.7% in late afternoon, a source close to the sale said.

The size was increased by $100 million from $300 million.

They were priced tighter than talk in the range of 7.75% to 7.875% yield, a source said.

The notes priced at a spread of Treasuries plus 446 bps and were seen trading near the market close at 100.25, 101.50, a trader said.

Bank of America Merrill Lynch, Credit Suisse Securities, Goldman Sachs & Co. and UBS Investment Bank were bookrunners.

Proceeds are being used to repay a portion of outstanding borrowings under two five-year revolving credit facilities and for general corporate purposes.

The financial security company is based in Richmond, Va.

HSBC Bank sells $2 billion

London-based financial services company HSBC Bank sold $2 billion of 3.5% five-year senior notes (Aa2/AA/AA) late in the afternoon at Treasuries plus 150 bps, a source away from the deal said.

The notes were sold under Rule 144A with HSBC Securities as the bookrunner.

The notes traded tighter in the secondary, with one trader quoting the notes at 148 bps bid, 145 bps offered. Late in the day, the notes were seen offered at 146 bps, according to a source.

Toyota Motor Credit sells floaters

Toyota Motor Credit priced $125 million of one-year floating-rate medium-term notes (Aa2/AA) at par to yield one-month Libor plus 31 bps, according to FWP filings with the Securities and Exchange Commission.

Morgan Stanley & Co. Inc was the agent for $25 million, and J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. were agents for $50 million each.

The U.S. funding arm of Toyota Financial Services is based in Torrance, Calif.

Anadarko weaker

Anadarko Petroleum's bonds weakened in trading on Monday after Moody's Investors Service on Friday cut Anadarko's rating to below investment grade, according to sources.

Moody's lowered the rating to Ba1 from Baa3 over liability concerns regarding Anadarko's 25% ownership of the oil well that BP has been unable to stop leaking since the April 20 explosion in the Gulf of Mexico.

The Woodlands, Texas-based Anadarko's bonds were "down about 2.5 points from Friday," a trader said.

Standard & Poor's and Fitch Ratings have affirmed Anadarko's ratings at the lowest investment-grade rating of BBB-.

Anadarko chief financial officer Robert Gwin said in a statement on Friday that it would "work diligently to regain our investment grade status with Moody's."

Meanwhile, BP's bonds trading slightly stronger on Monday and were "up about ¼ point," a trader said.

Also on Monday, some reports indicated BP does not plan to sell bonds but is considering bank lending lines after widespread reports the previous week the company would sell up to $10 billion of debt.

London-based BP agreed last week to provide $20 billion of a fund for victims of the oil spill.

Bank CDS costs tighten

Looking at the credit-default swaps market, a trader said the cost of protecting holders of bonds issued by major banks, such as Bank of America, Citigroup and JP Morgan Chase, against a possible event of default was 2 bps tighter to even.

The CDS protection cost of bonds of major investment banking houses, including Morgan Stanley and Goldman Sachs, was 2 bps wider to even.

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