Waste Management, Illinois Tool Works see high demand for debt sales; Kinross Gold widens

By Andrea Heisinger and Cristal Cody

New York, Aug. 24 - There was another burst of new paper from names like Waste Management, Inc., Illinois Tool Works, Inc. and Swedbank AB on Wednesday as rates remained low.

Waste Management sold $500 million of five-year notes in a deal that had a do-not-grow clause on it.

There was a two-tranche offering from Illinois Tool Works. The company priced $1 billion of debt with 10- and 30-year maturities, both at the lowest end of talk.

Stockholm-based Swedbank priced $1 billion of five-year notes that were guaranteed by the government of Sweden and sold under Rule 144A. Terms of the sale were not available at press time.

The market tone was in good shape, and issuers were enjoying low borrowing rates, although some were still fearful of issuing until after Federal Reserve chairman Ben Bernanke makes his comments later in the week.

Two of the names tapping the market hadn't sold debt in the U.S. market since 2009, including Illinois Tool Works.

"They had funding [needs] and decided it was the time," one source who worked on the sale said.

Treasury yields were up from the day before, giving high-grade bonds a boost, a syndicate source said, adding that "the Dow wasn't down today."

"These are good signs," she said.

At the same time, there is little on the radar for Thursday despite a few calls to potential issuers on Wednesday to update them on market conditions.

"At first this morning we were worried that nothing was going to price and kind of closing our eyes," the syndicate source said.

"It was good when we saw things coming out. People want to issue."

The Markit CDX Series 16 North American Investment Grade index improved 1 basis point to a spread of 125 bps.

In the secondary market, the new bonds from Illinois Tool Works firmed 7 bps to 8 bps, a trader said.

Waste Management's new notes also firmed in trading.

Kinross Gold Corp.'s bonds traded wider as gold prices sank, a trader said.

Overall trading volume fell about 10% to $11.5 billion.

Treasuries sold off on better durable goods orders data and the move into stocks ahead of Bernanke's speech on Friday. The benchmark 10-year Treasury note yield jumped to 2.3% on Wednesday from 2.15%. The 30-year bond yield climbed to 3.65% from 3.49%.

Illinois Tool Works prices

Illinois Tool Works priced $1 billion of notes (A1/A+) in two maturities, said a source close to the sale.

Another source said that there was about $6.75 billion of demand, which was "huge for a $1 billion deal."

The $350 million of 3.375% 10-year notes priced at a spread of Treasuries plus 115 bps. They were priced at the low end of talk in the 120 bps area.

A second tranche was $650 million of 4.875% 30-year bonds sold at 135 bps over Treasuries. A source said they were sold at the tight end of guidance in the 140 bps area.

The notes were sold under Rule 144A and Regulation S.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC ran the books.

Proceeds are being used to repay short-term debt including commercial paper and for general corporate purposes.

The company last sold debt in a $1.5 billion trade in two tranches on March 23, 2009. The 6.25% 10-year notes from that sale were priced at 360 bps over Treasuries.

In late afternoon secondary trading, the notes due 2021 firmed to 107 bps bid, 103 bps offered, while the tranche of long bonds due 2041 also traded tighter at 128 bps bid, 124 bps offered, a trader said.

The manufacturer of engineered and specialty products is based in Glenview, Ill.

Waste Management prices tight

Waste Management sold $500 million of 2.6% five-year senior notes (Baa3/BBB/BBB) at a spread of Treasuries plus 160 bps, according to an informed source.

They sold at the tight end of guidance in the 165 bps area, plus or minus 5 bps. There was about $2.25 billion on the books for the sale.

Credit Suisse Securities (USA) LLC and JPMorgan were active bookrunners.

The deal is guaranteed by Waste Management Holdings, Inc.

Proceeds are being used to repay outstanding borrowings in full under a $2 billion revolving credit facility with any remainder used for general corporate purposes.

Waste Management last sold debt in a $400 million sale of 4.6% 10-year notes priced at 118 bps over Treasuries.

In the secondary market, the new notes due 2016 traded tighter at 156 bps bid, 153 bps offered, a trader said.

The company handles the collection, transfer, recycling and disposal of waste and is based in Houston.

Kinross Gold widens

Kinross Gold's U.S.-dollar high-grade senior notes (Baa3/BBB-/BBB-) widened in the secondary market as gold prices fell on Wednesday, a trader said.

The tranche of 3.625% notes due 2016 traded late afternoon at 285 bps offered. The notes were sold in a $250 million tranche at a spread of Treasuries plus 270 bps.

Kinross Gold's 6.875% bonds due 2041 widened to 340 bps offered, the trader said. The company sold the $250 million offering to yield 315 bps plus Treasuries.

The company sold the notes on Aug. 16.

The mining and gold ore processing company is based in Toronto.

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