Pacific G&E, Baltimore G&E, CAT sell in more constructive primary; Pacific Gas notes firm

By Aleesia Forni and Andrea Heisinger

New York, June 12 - Pacific Gas & Electric Co. and Baltimore Gas & Electric Co. continued the week's string of high-grade bond sales from utility names on Wednesday.

There was also a $250 million offering of two-year floating-rate notes from Caterpillar Financial Services Corp.

With the exception of the CAT sale and another from the financial sector on Monday, the week's supply has come exclusively from utilities.

Pacific Gas sold $750 million of senior notes split evenly between maturities of 2023 and 2043.

There was a $300 million offering of 10-year bonds from Baltimore Gas.

Market conditions were "a little improved" from Tuesday's session when no issuers would touch the primary, a source said.

"It wasn't a lot better, but more constructive," the source added.

Preferred stock issues kept coming down the pipeline.

Vanguard Natural Resources LLC said it was offering series A cumulative redeemable perpetual preferred units.

The trader remarked that he was seeing few markets for the deals - not a surprise given the day's selloff.

He pegged the Vanguard units at $24.65 offered.

The Markit CDX Series 20 North American Investment Grade index was unchanged at a spread of 87 basis points on Wednesday.

Pacific Gas & Electric's new notes traded 5 bps to 8 bps better in the secondary market, one trader said near the day's close.

In recently priced deals, Duke Energy Corp.'s 2.1% five-year notes were quoted 3 bps tighter on the day.

South Carolina Electric & Gas Co.'s 4.6% 30-year bonds traded 2 bps weaker compared to levels seen late Tuesday.

PG&E's two tranches

Pacific Gas & Electric priced $750 million of senior notes (A3/BBB/A-) in two tranches, an informed source said.

The $375 million of 3.25% 10-year notes sold at a spread of Treasuries plus 110 bps. Pricing was at the tight end of talk in the 115 bps area, plus or minus 5 bps.

The notes were quoted at 102 bps bid, 98 bps offered.

A $375 million tranche of 4.6% 30-year bonds priced at 125 bps over Treasuries. The sale was done at the low end of guidance in the 130 bps area, plus or minus 5 bps.

A trader quoted the notes at 120 bps bid, 116 bps offered.

BofA Merrill Lynch, Citigroup Global Markets Inc., BNP Paribas Securities Corp. and CastleOak Securities LP were the bookrunners.

The company plans to use the proceeds from the offering to purchase up to $500 million of its outstanding 4.8% senior notes due March 1, 2014 and for general corporate purposes, including the repayment of a portion of the company's outstanding commercial paper.

The electric and natural gas utility is based in San Francisco.

Baltimore sells 10-years

Baltimore Gas & Electric hit the market with a $300 million offering of 3.35% 10-year notes (Baa1/BBB+/BBB+), according to a press release.

Full pricing details were not available at press time.

J.P. Morgan Securities LLC, BNP Paribas Securities Corp. and Scotia Capital (USA) Inc. were the bookrunners on the deal.

The company plans to use the proceeds to partially refinance its $400 million of 6.125% notes due July 1, 2013 and for general corporate purposes.

The Baltimore-based electric and natural gas utility was last in the market with $250 million 2.8% 10-year senior notes, which priced on Aug. 14, 2012 to yield Treasuries plus 112 bps.

CAT does floaters

Caterpillar Financial Services sold $250 million of two-year medium-term floating-rate notes, series G, at par to yield Libor plus 10 bps, according to an FWP with the Securities and Exchange Commission.

RBS Securities Inc. was bookrunner.

The funding arm of heavy equipment maker Caterpillar is based in Nashville, Tenn.

Vanguard's preferreds

Vanguard Natural Resources plans to price an offering of series A cumulative redeemable perpetual preferred units, according to a prospectus filed with the SEC.

Price talk is around 7.875%, a trader said.

Barclays Capital Inc., Credit Suisse Securities (USA) LLC, Stifel Nicolaus & Co. Inc. and MLV & Co. LLC are the joint bookrunners.

The units will be listed on the Nasdaq Global Select Market under the ticker symbol "VNRAP."

Proceeds will be used to pay down indebtedness outstanding under a reserve-based credit facility.

Vanguard is a Houston-based oil and gas exploration and development company.

Duke notes firm

The secondary market saw Duke Energy's $500 million of 2.1% five-year senior notes trade 3 bps better compared to levels seen late Tuesday at 93 bps bid, 90 bps offered, a trader said.

The notes priced at Treasuries plus 100 bps on Monday.

The diversified energy company is based in Charlotte, N.C.

SC E&G widens

In other secondary action, South Carolina Electric & Gas's $400 million of 4.6% 30-year bonds was quoted 2 bps wider on the day at 129 bps bid, 126 bps offered.

The Cayce, S.C.-based utility priced the offering at a spread of Treasuries plus 128 bps.

Stephanie N. Rotondo contributed to this review

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