Oil names Transocean, Weatherford sell late; Nucor, Asciano price; demand holds for paper

By Andrea Heisinger and Cristal Cody

New York, Sept. 16 - Transocean Inc., Weatherford International Ltd. (Bermuda), Nucor Corp. and Asciano Finance Ltd. made for another day of solid issuance in the high-grade market.

The two most-watched sales were from oil rig operators Weatherford and Transocean. Both had not priced bonds recently - especially Transocean, which last did a deal in 2007. Oil names have struggled in the months since the Transocean-owned oil platform in the Gulf of Mexico exploded in April, killing 11 people and causing a massive spill.

Transocean had the largest sale of the day with its $2 billion of notes in two tranches that priced after 5 p.m. ET.

Weatherford's sale priced around the market close and totaled $1.4 billion of tranches of longer maturities.

Steel and steel products maker Nucor priced an upsized $600 million deal of 12-year notes. The sale had been upsized by $100 million from the original deal announcement.

Australia's Asciano Finance also upsized its sale, doing $1 billion of notes in two tranches. The size was increased from $750 million and was priced under Rule 144A following a roadshow the previous week.

In trading on Thursday, corporate bond buying remained "very strong," a source said.

Overall investment-grade Trace volume rose 8% to more than $12 billion, a market source said.

Treasuries fell on Thursday, sending the yield on the 30-year bond yield up as high as 3.956% before settling up at 3.93% from 3.87% a day earlier.

The yield on the 10-year note rose 4 bps to 2.76%.

"The market is probably getting a little bit of indigestion here from the supply. TVA announced a $1 billion deal and there's a bank out with a 100-year deal," said Nick Kalivas, a market strategist at MF Global Holdings Ltd.

"There's really been a big flurry of supply, which has hurt the longer end of the market."

More than $35 billion of new corporate bonds was sold just in the previous week.

"When you get people issuing 50- and 100-year debt, that makes the market a little nervous," he said. "Yields are low. From a corporate standpoint, it makes a lot of sense and there seems to be enough demand out there for this paper."

Transocean's two tranches

Offshore drilling contractor Transocean priced a $2 billion deal of senior unsecured notes (Baa3/BBB/BBB) in two tranches late in the day, an informed source said.

The deal took a while to price because outstanding notes had spreads that were "so much higher" that it was difficult to gauge where the notes would price.

The $1.1 billion of 4.95% five-year notes priced at a spread of Treasuries plus 359 bps.

A second $900 million tranche of 6.5% 10-year notes priced at Treasuries plus 375 bps.

Goldman Sachs & Co., J.P. Morgan Securities and Citigroup Global Markets were bookrunners.

Proceeds will be used to fund the repurchase of 1.625% convertible senior notes due Dec. 2037, which holders may require to be repurchased in December and to fund a portion of the repurchase of 1.5% convertibles due 2037. The remainder will be used for general corporate purposes.

The deal is guaranteed by Transocean Ltd.

Transocean's last sold bonds in a $2.5 billion sale in three tranches on Dec. 4, 2007. That deal also included 5.25% five-year notes and 6% 10-years, with the shorter-dated notes pricing at 200 bps over Treasuries and the longer-dated 10-years at 215 bps.

The company was then rated Baa2/BBB+ before the oil rig it owned in the Gulf of Mexico exploded in April.

The issuer is based in Zug, Switzerland.

Eyes on oil rig names

Two oil rig operators, one of which has been in the headlines recently, priced large bond deals at significantly lower rates than the last time they issued.

The Transocean sale was off the radar for some in the high-grade market., however, as the company's outstanding bonds had been trading like junk since the Gulf oil spill dragged on.

"I didn't even know they were high-grade," said one market source.

The company chose to issue bonds to help pay for the repurchase of two convertible notes.

"They were probably looking for low coupons like everyone," said one source away from the deal. The bonds priced late and at coupons closer to what would be seen in the junk market.

Weatherford fared better, pricing its 10-year note 90 bps less than the same maturity from Transocean.

"They didn't get dragged through the mud," the market source said of the implication of Transocean in the BP plc oil spill.

Friday is expected to be quieter, with "maybe a deal or two," a syndicate source said. Those deals could come from overseas names, as much of Thursday's issuance did.

Weatherford offers $1.4 billion

Weatherford International (Bermuda) sold a $1.4 billion deal of senior unsecured notes (Baa2/BBB) late in the afternoon in two tranches, a market source away from the sale said.

The $800 million of 5.125% 10-year notes priced at a spread of 237.5 bps over Treasuries.

A $600 million tranche of 6.75% 30-year bonds sold at Treasuries plus 285 bps.

Deutsche Bank Securities, Morgan Stanley & Co. Inc., UBS Investment Bank and J.P. Morgan Securities were bookrunners.

Proceeds are being used to fund offers to repurchase notes, to repay existing short-term debt and for general corporate purposes.

The deal is guaranteed by Weatherford International Ltd. (Switzerland) and Weatherford International Inc.

The company's last bond sale totaled $1.25 billion of two tranches priced on Jan. 5, 2009. The 9.625% 10-year notes from that deal priced at 723 bps over Treasuries, while the 9.875% 30-year bonds sold at a yield of 10%, or a spread of 698.2 bps over Treasuries.

Weatherford's ratings have dropped a notch since then, when it was rated Baa1/BBB+.

The oil and natural gas well production company is based in Geneva, Switzerland.

Nucor upsizes 12-year

Steelmaker Nucor sold an upsized $600 million of 4.125% 12-year senior unsecured notes (A2/A) by mid-afternoon to yield Treasuries plus 140 bps, a syndicate source close to the sale said.

The notes were priced at the tight end of talk in the 145 bps area, with a margin of plus or minus 5 bps. The size of the sale was increased by $100 million from $500 million, and it was a little less than three times oversubscribed, with about $1.5 billion on the books.

Bank of America Merrill Lynch, Citigroup Global Markets and J.P. Morgan Securities were bookrunners.

Proceeds are being used for general corporate purposes, including debt repayment.

In the secondary market, the notes firmed 1 bp to 139 bps bid, according to a source.

The issuer is based in Charlotte, N.C.

Asciano prices privately

Australian rail and port operator Asciano Finance sold an upsized $1 billion of notes (Baa3/BBB-) in two tranches, a source away from the sale said.

The size was increased from a planned $750 million. The sale was done after a roadshow the previous week.

The $400 million of 3.125% five-year notes was sold at a spread of Treasuries plus 170 bps.

A second tranche was $600 million of 4.625% 10-year notes priced at a 190 bps over Treasuries spread.

The bonds were sold under Rule 144A.

J.P. Morgan Securities, Morgan Stanley & Co. Inc. and RBS Securities were bookrunners.

Proceeds will be partly used to help fund the planned expansion of the company's coal-hauling business.

Both tranches firmed on the offer side in the secondary market, a trader said.

The notes due 2015 traded at 170 bps bid, 165 bps offered, the trader said.

The tranche of notes due 2020 were seen at 190 bps bid, 185 bps offered.

The issuer is based in Melbourne.

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