Oracle, GE Capital lead return of big high-grade corporate deals; GE, Allegheny notes firm

By Aleesia Forni and Andrea Heisinger

New York, July 9 - The investment-grade bond market sprang to life Tuesday with $8.75 billion of corporate trades from names including Oracle Corp. and General Electric Capital Corp.

Oracle brought a $3 billion sale in three parts, following up on a $5 billion sale in two tranches in October of 2012. A source away from the trade said there was about $13 billion of demand on the books for the trade.

"They got that one done nicely," they said. "The concession was nice."

There was reportedly a high new issue concession initially for those wanting to get their hands on the bonds. After guidance tightened, there "weren't a lot of drops," the source said.

GE Capital sold $3.5 billion in three tranches, including two maturities of floating-rate notes.

Real estate investment trust Realty Income Corp. priced $750 million of 10-year senior notes, while Allegheny Technologies Inc. tapped the market for an upsized $500 million of 10-year senior notes. The offering size was increased from $300 million.

On the sovereign side of the market, the World Bank's International Bank for Reconstruction and Development priced $1 billion of four-year global notes early in the day.

There were also two sales from Toyota Motor Credit Corp. Each consisted of $500 million of one-year floating-rate notes.

The day's total, along with the $850 million of bonds priced in Monday's session, brings the week close to the $10 billion to $15 billion range of expected supply, with three more days to issue.

"We're off to a good start," a syndicate source said of the week's haul.

Following the strong demand seen for Monday's new issues from Duke Energy Indiana, Inc. and PPL Electric Utilities Corp., coupled with a positive tone to the day's session, activity in the high-grade secondary bond market picked up on Tuesday, market sources said.

Meanwhile, the Markit CDX North American Investment Grade index was 4 basis points tighter compared to Monday's close at a spread of 83 bps.

The day's new issues from General Electric and Allegheny were trading better near the end of the session, one market source said.

A trader at another desk saw Monday's offering from Duke Energy Indiana trading 11 bps better on Tuesday.

The trader also saw PPL Electric Utilities' $350 million 4.75% 30-year bond firm 14 bps.

Oracle's $3 billion

Oracle was in the market with a $3 billion sale of notes (A1/A+/A+) in three tranches, a market source said.

There was $500 million of floating-rate notes due 2019 priced at par to yield Libor plus 58 bps. Initial price thoughts were in the Libor plus 75 bps area.

The second part was $1.5 billion of a 2.375% note due in January 2019 sold at a spread of Treasuries plus 95 bps. The tranche was initially talked in the Treasuries plus 110 bps area.

A $1 billion tranche of 3.625% 10-year notes was priced at 110 bps over Treasuries. Initial guidance was in the 125 bps to 130 bps range.

Bookrunners were BofA Merrill Lynch, Credit Suisse Securities (USA) LLC and HSBC Securities (USA) Inc.

Proceeds are being used for general corporate purposes, possibly including stock repurchases, payment of cash dividends on common stock and future acquisitions.

Oracle last tapped the U.S. bond market with a $5 billion sale in two tranches on Oct. 18, 2012. That offering included a 1.2% five-year note priced at 45 bps over Treasuries and a 2.5% 10-year note sold at Treasuries plus 68 bps.

The computer software and technology company is based in Redwood City, Calif.

GE sells in three parts

General Electric Capital was in the session with a $3.5 billion trade (A1/AA+/) in three parts, an informed source said.

The sale includes $900 million of two-year floating-rate notes priced at par to yield Libor plus 38 bps. Initial guidance was in the Libor plus low 40 bps area.

A $1.35 billion tranche of three-year floaters also priced at par to yield Libor plus 65 bps. The notes were initially talked in the Libor plus low 70 bps area.

Finally, there was $1.25 billion of 1.5% three-year notes sold at a spread of Treasuries plus 83 bps. Price thoughts were initially in the Treasuries plus 90 bps area.

A secondary market source saw the notes at 77 bps offered near the end of the session.

Bookrunners were BofA Merrill Lynch, Barclays and Citigroup Global Markets Inc.

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

Realty Income prices tight

Realty Income sold $750 million of 4.65% 10-year senior notes (Baa1/BBB+/BBB+) at a spread of Treasuries plus 205 bps, an informed source said.

Initial price guidance was in the Treasuries plus 225 bps area, the source said.

Bookrunners were Citigroup Global Markets Inc., BofA Merrill Lynch, BNY Mellon Capital Markets LLC, J.P. Morgan Securities LLC, RBC Capital Markets LLC, Regions Financial, U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC.

Proceeds are being used to repay a portion of borrowings outstanding under an acquisition credit facility and for general corporate purposes and working capital, possibly including acquisitions.

Realty Income was last in the U.S. bond market with an $800 million offering in two tranches on Oct. 2, 2012.

The real estate investment trust for retail and commercial properties is based in Escondido, Calif.

Allegheny upsizes

Allegheny Technologies was in the market with a $500 million trade of 5.875% 10-year senior notes (Baa3/BBB-/) priced at a spread of Treasuries plus 325.4 bps, according to an FWP filing with the Securities and Exchange Commission.

The notes were quoted at 310 bps offered late Tuesday.

The size was increased from $300 million.

Bookrunners were BofA Merrill Lynch and JPMorgan.

Proceeds are being used for general corporate purposes.

The specialty metals producer is based in Pittsburgh.

IBRD's four-year global notes

The World Bank's International Bank for Reconstruction and Development completed a $1 billion sale of 1.125% four-year global notes (Aaa/AAA/) to yield mid-swaps minus 8 bps or Treasuries plus 52.1 bps, an informed source said.

Bookrunners were Barclays, Citigroup Global Markets Inc. and TD Securities (USA) LLC.

The IBRD offers loans to developing countries and is based in Washington, D.C.

Duke Energy Indiana in demand

Duke Energy Indiana's $350 million of 30-year bonds, which sold at a spread of Treasuries plus 130 bps on Monday, traded 11 bps better on Tuesday.

The notes were quoted at 119 bps bid, 117 bps offered at mid-morning.

The sale also included $150 million of three-year floating-rate notes priced at par to yield Libor plus 35 bps.

The electric subsidiary of Duke Energy Corp. is based in Plainfield, Ind.

PPL notes tighten

In other secondary market action, PPL Electric Utilities' $350 million of 4.75% 30-year first mortgage bonds traded 14 bps tighter at 101 bps bid, 97 bps offered.

The company sold the notes on Monday to yield Treasuries plus 115 bps.

PPL Electric is a utility based in Allentown, Pa.

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