Primary revived as Total, Bank of Tokyo, Rock-Tenn, Toyota price; Macquarie firms 10 bps

By Andrea Heisinger and Cristal Cody

New York, Feb. 14 - After a slow start to the week, the primary market picked up steam on Tuesday despite some negative headlines about credit rating downgrades of European countries and economic data in the United States.

Total Capital International, Bank of Tokyo-Mitsubishi UFJ Ltd., Rock-Tenn Co., Boston Gas Co., Toyota Motor Credit Corp. and Macquarie Bank Ltd. all priced notes in the high-grade market.

There was also a sovereign deal of $1 billion of five-year global notes from Council of Europe Development Bank.

The largest corporate deal came from France's Total with its $2 billion of notes split evenly between five- and-10-year tranches.

Bank of Tokyo-Mitsubishi UFJ priced $1 billion of five-year notes while another financial, Macquarie Bank, sold $700 million of five-year paper.

Toyota Motor Credit had the second largest offering of the day with $1.25 billion of three-year notes priced tight to guidance.

Rock-Tenn priced a split-rated deal in two parts totaling $750 million. This was upsized from the original $600 million size and included $350 million of seven-year notes and $400 million of 10-year notes, a source said.

Boston Gas sold $500 million of 30-year bonds under Rule 144A and Regulation S.

Topaz Solar Farm LLC announced an upcoming $700 million sale of five-year senior secured notes to help pay for a solar project in California.

There were headlines out late Monday about Moody's Investors Service downgrading Italy, Spain and Portugal, while putting other European countries like France in the negative category.

That was coupled with U.S. economic data that while retail sales were up for January, the results were not as good as expected.

One source said that because issuers didn't tap the market Monday except for one trade from the Bank of New York Mellon Corp., they were intent on pricing on Tuesday since there wasn't a big dip in the tone.

"I don't think anyone was surprised," the source said about the Moody's downgrades.

Another source who worked on one of Tuesday's sales said, "I didn't see any pushback from any of that. People were ready to go this morning."

Rock-Tenn's deal was the star of the day, as it was massively oversubscribed and both tranches were priced 75 basis points tighter than guidance.

The momentum from sizeable demand for nearly all of Tuesday's deals means Wednesday could be active.

One source said: "We definitely will have something" for the coming day, while another said his desk looked quiet.

The new issues mostly traded tighter in the secondary market in the afternoon.

Both of Rock-Tenn's tranches traded more than 20 basis points better.

Total Capital's tranches traded 3 bps to 5 bps better, while Boston Gas' 30-year bonds firmed about 3 bps.

Toyota Motor Credit's notes traded flat.

Macquarie Bank's notes came in 10 bps in secondary trading, and Bank of Tokyo-Mitsubishi's notes traded about 3 bps tighter.

Investment-grade bank and brokerage credit default swaps costs widened on Tuesday, a trader said.

Bank paper CDS costs widened, with Bank of America's CDS costs out 10 bps and Wells Fargo's CDS costs trading 3 bps wider.

Brokerage paper CDS costs also were wider. Goldman Sachs' CDS costs traded 10 bps wider at 255 bps bid, 265 bps offered.

Merrill Lynch's CDS costs were seen 10 bps weaker at 295 bps bid, 315 bps offered. Morgan Stanley's CDS costs traded 13 bps wider at 288 bps bid, 298 bps offered.

Investment-grade bonds overall were flat to weaker on Tuesday. The Markit CDX Series 17 North American high-grade index eased 1 basis point to a spread of 98 bps.

Treasuries traded stronger on Greek concerns and weaker economic data. The 10-year note yield fell to 1.94% from 1.97%. The 30-year bond yield dropped to 3.09% from 3.12%.

Rock-Tenn ratchets tighter

Rock-Tenn priced an upsized $750 million of split-rated senior notes (Ba1/BBB-/) in two parts, an informed source said.

The deal size was increased from $600 million, a source said. It also clocked in as the most oversubscribed sale of the day with roughly $7 billion on the books, the informed source said.

Both tranches priced much tighter than the spreads at which they were talked.

"We were looking at other high-yield crossover credits [for guidance], and it just kept going tighter," the source said.

"Everyone was excited about it. They were eager to get it on their plate."

The $350 million of 4.45% seven-year notes priced at a spread of Treasuries plus 312.5 bps. The tranche priced significantly tighter than talk in the 387.5 bps area.

A second tranche of $400 million in 4.9% 10-year paper priced at 300 bps over Treasuries. The notes were priced tighter than guidance in the 375 bps area.

The 10-year notes have a make-whole redemption at 45 bps over Treasuries.

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

Active bookrunners were Bank of America Merrill Lynch, J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

Proceeds are being used to prepay all $746.3 million of loans outstanding under an existing term loan B facility and to pay related costs and expenses. Any remainder will be used to repay amounts outstanding under a revolving credit or receivables facility.

The notes are guaranteed by current and future domestic subsidiaries.

In the secondary market, the notes due 2019 traded stronger at 285 bps bid, 280 bps offered, a source said.

The notes due 2022 were quoted at 295 bps bid.

Later in trading, the 10-year tranche firmed to 275 bps bid, 270 bps offered, a source at another desk said.

The paper and packaging manufacturer is based in Norcross, Ga.

Toyota unit's $1.25 billion

Toyota Motor Credit sold $1.25 billion of 1% three-year notes to yield 67 bps over Treasuries, an informed source said.

The notes (Aa3/AA-/) were priced at the tight end of guidance in the 70 bps area. The sale was modestly oversubscribed with about $1.9 billion on the books.

Barclays Capital Inc., BNP Paribas Securities Corp., Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. ran the books.

The notes traded at 67 bps bid, 62 bps offered in the secondary market, a trader said.

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

Total Capital's two tranches

Total Capital International sold $2 billion of guaranteed notes (Aa1/AA-/AA) in two tranches, a market source away from the trade said.

The source added that there was roughly $6 billion on the books.

The $1 billion of 1.5% five-year paper priced at a spread of Treasuries plus 78 bps.

There was also a $1 billion tranche of 2.875% 10-year notes sold at 95 bps over Treasuries.

Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC were bookrunners.

Proceeds are being used for general corporate purposes.

The deal is guaranteed by Total SA.

Late afternoon, the notes due 2017 firmed to 74 bps bid, 72 bps offered in the secondary market, a trader said.

Another trader saw the notes at 73 bps bid, 70 bps offered.

The tranche of notes due 2022 edged tighter to 94 bps bid, 92 bps offered and to 92 bps bid, 91 bps offered going out, the traders said.

The oil and gas company is based in Courbevoie, France.

Macquarie Bank oversubscribed

Macquarie Bank sold $700 million of 5% five-year notes (A1/A/A+) at a spread of Treasuries plus 420 bps, a source close to the deal said.

The deal priced tighter than talk in the 437.5 bps area, and the books were more than two times oversubscribed at about $1.6 billion.

The paper was sold under Rule 144A and Regulation S.

Bookrunners were Bank of America Merrill Lynch, Citigroup Global Markets Inc. and RBS Securities Inc.

The notes due 2017 came in 10 bps to 410 bps bid, 405 bps offered in the secondary market, a trader said.

The banking unit of Macquarie Group Ltd. is based in Sydney, Australia.

Bank of Tokyo's $1 billion

Bank of Tokyo-Mitsubishi UFJ sold $1 billion of 2.35% five-year notes to yield Treasuries plus 155 bps, a market source said.

The notes (Aa3/A+) were sold under Rule 144A and Regulation S.

Bookrunners were Bank of America Merrill Lynch, Morgan Stanley & Co. LLC and Mitsubishi UFJ Securities (USA) Inc.

In secondary trading, a source saw the notes due 2017 tighter at 152 bps bid, 148 bps offered.

The retail and commercial banking arm of Mitsubishi UFJ Financial Group is based in Tokyo.

Boston Gas's long bond

Boston Gas sold $500 million of 4.487% 30-year bonds under Rule 144A and Regulation S, sources close to the trade said.

The bonds (A3/A-) were sold at a spread of Treasuries plus 142 bps. The paper priced at the tight end of guidance in the 145 bps area.

Active bookrunners were Citigroup Global Markets Inc., HSBC Securities (USA) Inc. and UBS Securities LLC.

The bonds traded better at 139 bps bid, 136 bps offered toward the end of the secondary market session, a trader said.

The natural gas distribution unit of National Grid is based in Waltham, Mass.

Council of Europe five-years

Council of Europe Development Bank sold $1 billion of 1.5% five-year global notes on Tuesday to yield mid-swaps plus 50 basis points, or Treasuries plus 78.75 bps, according to an FWP with the Securities and Exchange Commission.

The notes (Aaa/AAA/AAA) were priced at 99.45 to yield 1.615%.

Barclays Capital Inc., Daiwa Capital Markets Europe, HSBC Securities (USA) Inc. and RBC Capital Markets LLC were bookrunners.

The financing and development institution for social projects in Europe is based in Paris.

Topaz preps secured notes

Topaz Solar Farm is planning a $700 million sale of senior secured notes (Baa3/BBB-/BBB-) due 2039, according to a syndicate source and press release Tuesday.

Barclays Capital Inc., Citigroup Global Markets Inc. and RBS Securities LLC are bookrunners.

Proceeds are being used to help finance the $2.44 billion solar power project in San Luis Obispo County, Calif. Topaz Solar also plans to sell $565 million of senior secured notes due 2039 in early 2013 to also aid in financing the project.

The unit of First Solar, Inc. is based in Tempe, Arizona.

National Retail's preferreds

National Retail Properties announced plans to sell at least $125 million of $25-par series D cumulative redeemable preferred stock.

The shares will be issued as a 1/100th of an interest in the newly designated perpetual preferreds, the company said in a press release. Price talk is 6.625% to 6.75%, the trader said.

Shortly before the bell, a trader placed the issue at $24.90 in the gray market. He said he expected the deal to price Tuesday, as there was no selling group.

Another market source said the deal was "doing well in the gray [market]," seeing it close around $24.92. He remarked that he expected the issue to come Wednesday.

The Orlando, Fla.-based real estate investment trust has tapped Bank of America Merrill Lynch, Citigroup Global Markets Inc., Wells Fargo Securities LLC and RBC Capital Markets LLC as bookrunners.

Proceeds will be used for general corporate purposes, which may include redeeming outstanding preferred securities and repaying the outstanding indebtedness under the company's credit facility.

Paul Deckelman and Stephanie N. Rotondo contributed to this review

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