Hershey, Travelers price amid quiet primary; Fifth Third tightens; Abbey National improves

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 18 – Hershey Co. and Travelers Cos., Inc. priced new bond offerings during a quieter session for investment-grade bonds on Tuesday.

Hershey attracted an order book that was more than 3.5 times oversubscribed for its new $600 million two-part offering.

Tranches of the notes sold 15 basis points tighter than initial price thoughts.

Also, Travelers was in the primary with a $400 million 30-year offering, which sold at the tight end of guidance.

The slower primary follows a frenzied Monday session that hosted eight borrowers and more than $6 billion of new issuance.

The investment-grade market has seen $7.2 billion of supply so far this week, closing in on what was predicted to be around $10 billion of new issuance.

In aftermarket trading, Hershey’s tranche of 3.2% notes due 2025 traded about 1 bp tighter on the bid side.

Fifth Third Bank’s 2.15% senior bank notes due 2018 that were brought to market on Monday tightened 5 bps in secondary trading.

Abbey National Treasury Services plc’s 2% notes due 2018 that priced on Monday traded 1 bp better.

The Markit CDX North American Investment Grade index headed out 1 bp wider at a spread of 78 bps.

The CDX is more than 10 bps wider from a month ago when the index was at a spread of 65.6 bps, according to a Barclays Bank plc market note on Tuesday.

Hershey two-parter

In primary happenings on Tuesday, Hershey sold $600 million of senior notes (A1/A) in two parts, according to a market source and an FWP filing with the Securities and Exchange Commission.

The offering includes $300 million of 1.6% three-year notes that priced at 99.974 to yield 1.609% with a spread of Treasuries plus 55 bps.

The issue sold at the tight end of guidance set in the Treasuries plus 60 bps area, tightened from talk in the Treasuries plus 70 bps area.

A $300 million 3.2% 10-year note priced at 99.703 to yield 3.235% with a spread of Treasuries plus 105 bps.

Pricing was at the tight end of the Treasuries plus 110 bps area guidance. Initially, the notes were talked in the Treasuries plus 120 bps area.

Citigroup Global Markets Inc., BofA Merrill Lynch, PNC Capital Markets LLC and J.P. Morgan Securities LLC are the bookrunners.

Proceeds will be used to repay the company’s $250 million of 4.85% notes due 2015, to fund a tender offer and for general corporate purposes.

Hershey’s new 1.6% notes due 2018 were not seen in aftermarket trading, while the tranche of 3.2% notes due 2025 firmed to 104 bps bid, 103 bps offered, a trader said.

The maker of chocolate and confectionery products is based in Hershey, Pa.

Travelers prices tight

Travelers sold a $400 million offering of 4.3% senior notes (A2/A/A) due Aug. 25, 2045 on Tuesday at Treasuries plus 150 bps, according to an informed source.

Pricing was at 99.216 to yield 4.347%.

The issue came at the tight end of guidance set in the Treasuries plus 155 bps area following initial talk in the area of Treasuries plus 170 bps.

Credit Suisse Securities (USA) LLC, Wells Fargo Securities LLC, Goldman Sachs & Co. and HSBC Securities are the bookrunners.

Proceeds will be used to repay debt.

The holding company for commercial, property and casualty insurance subsidiaries is based in New York City.

Bank/brokerage CDS costs flat

Investment-grade bank and brokerage CDS prices were flat to higher on Tuesday, according to a market source.

Bank of America Corp.’s CDS costs rose 1 bp to 70 bps bid, 73 bps offered. Citigroup Inc.’s CDS costs were flat at 80 bps bid, 83 bps offered. JPMorgan Chase & Co.’s CDS costs were also flat at 71 bps bid, 74 bps offered. Wells Fargo & Co.’s CDS costs increased 1 bp to 51 bps bid, 54 bps offered.

Merrill Lynch’s CDS costs were flat at 72 bps bid, 76 bps offered. Morgan Stanley’s CDS costs ended unchanged at 78 bps bid, 81 bps offered. Goldman Sachs Group, Inc.’s CDS costs ended flat at 88 bps bid, 91 bps offered.

Fifth Third Bank firms

Fifth Third Bank’s new 2.15% notes due 2018 (A3/A-/A) traded late Tuesday afternoon at 105 bps bid, 102 bps offered, a trader said.

The bank sold $1 billion of the notes on Monday at a spread of Treasuries plus 110 bps as part of a $1.25 billion two-part offering.

Fifth Third is a Cincinnati-based financial services company.

Abbey National improves

Abbey National’s 2% notes due 2018 (A2/A/A) traded modestly better at 104 bps bid in the secondary market on Tuesday, a trader said.

The company sold $750 million of the notes on Monday at Treasuries plus 105 bps as part of a $1 billion total two-tranche deal.

The financial services company is a subsidiary of London-based Santander UK plc.

Paul Deckelman contributed to this review

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