GSK does massive trade alongside BP, WellPoint, Ericsson, Barclays; Ericsson comes in 15 bps

By Andrea Heisinger and Cristal Cody

New York, May 2 - GlaxoSmithKline Capital plc, WellPoint, Inc. and BP Capital Markets plc were among the investment-grade issuers tapping the primary Wednesday in what was the busiest day in weeks.

Barclays Bank plc added $2 billion to the total with its sale of five-year covered bonds.

Sweden's Telefonaktiebolaget LM Ericsson (publ) sold $1 billion of 10-year paper.

The largest sale came from GlaxoSmithKline. The deal totaled $5 billion in three parts - all of which sold 15 basis points tighter than initial price guidance. It was the pharmaceutical name's first sale of dollar bonds since 2008 when it priced $9 billion in four maturities.

WellPoint priced $1.75 billion of bonds due 2022 and 2042, and BP Capital Markets priced $3 billion of paper due 2017 and 2022.

A syndicate source said that American Honda Finance Corp. had priced $250 million of two-year floating-rate notes in the market as well, but the terms were not available at press time.

In the preferred stock market, PS Business Parks Inc. announced plans to sell cumulative perpetual preferreds. Zions Bancorporation gave terms for its $143.75 million auction of perpetual preferreds.

While the primary has been on fire for the past two days, there was news on Wednesday that the unemployment rate in the eurozone for March had reached a record high of 10.9%. There is also an upcoming European Central Bank meeting on monetary policy that could quiet the flow of new deals.

"I don't know how much people are paying attention [to the headlines]," one source said.

Issuance is expected to slow considerably on Thursday. While there could be a deal or two, sources reported that their calendars were mostly empty for the remainder of the week.

"We don't have anything more this week," one source said. "I'm not hearing of anything away. Should be quiet. All the big ones got done."

The new issues traded mostly better in the secondary market. Ericsson's notes due 2022 tightened 15 bps in late afternoon trading.

WellPoint's bonds were mixed, with the 10-year tranche 2 bps tighter and the 30-year tranche 1 bp wider.

BP Capital Markets' tranches firmed 2 bps to 3 bps in trading.

GlaxoSmithKline Capital's firmed about 2 bps.

The Markit CDX Series 18 North American Investment Grade index was unchanged at a spread of 94 bps.

Treasuries ended with slight gains. The yield on the benchmark 10-year note fell 1 bp to 1.93%. The 30-year bond yield dropped 2 bps to 3.11%.

Glaxo prices $5 billion

GlaxoSmithKline Capital tapped the market for $5 billion of notes (A1/A+/A+) in three tranches, an informed source said.

The trade was about three times oversubscribed with $15 billion on the books, the source said. The size never really changed and was between $4 billion and $5 billion from the start despite an initial generic announcement of a benchmark, or $500 million, trade.

The $1 billion of 0.75% three-year paper priced at a spread of Treasuries plus 45 bps. The notes sold well below talk in the 70 bps area.

A $2 billion tranche of 1.5% five-year notes sold at 75 bps over Treasuries. The tranche sold tighter than talk in the 90 bps area.

The third part was $2 billion of 2.85% 10-year notes priced at a spread of Treasuries plus 100 bps. These notes also came in tighter than guidance in the 115 bps area.

The bookrunners were Barclays Capital Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC.

The deal is guaranteed by GlaxoSmithKline plc, a health-care and pharmaceutical company based in Brentford, England.

Proceeds are being used for general corporate purposes including refinancing existing debt.

GlaxoSmithKline was last in the dollar bond market with a massive $9 billion deal in four tranches on May 6, 2008. That sale included a 4.85% five-year note and 5.65% 10-year note, both priced at 173 bps over Treasuries.

GlaxoSmithKline's notes due 2017 traded in the gray market at 71 bps bid, 68 bps offered, a source said. The notes due 2022 were seen in the gray market at 97 bps bid, 94 bps offered.

In the secondary market, the five-year notes traded at 73 bps bid, 67 bps offered, according to a trader at another desk. The 10-year tranche traded at 98 bps bid, 91 bps offered.

A trader saw "nothing" in trading activity in the new notes due 2015.

Barclays sells covered bonds

Barclays Bank priced $2 billion of 2.25% five-year covered bonds under Rule 144A and Regulation S, a source said.

The notes (Aaa/AAA/AAA) were sold at a spread of Treasuries plus 153 bps, or mid-swaps plus 125 bps. The deal was sold tighter than guidance in the 125 bps to 128 bps range, a source said.

Barclays Capital, Citigroup, HSBC Securities (USA) Inc. and UBS Securities LLC ran the books.

The unit of Barclays plc is based in London.

BP prices in two parts

BP Capital Markets sold $3 billion of senior notes (A2/A/) in two tranches, a syndicate source said.

The $1.25 billion of 1.846% five-year paper sold at a spread of Treasuries plus 103 bps.

A $1.75 billion tranche of 3.245% 10-year notes priced at Treasuries plus 133 bps.

Credit Suisse Securities (USA) LLC, Mizuho Securities USA Inc., Morgan Stanley, RBS Securities Inc. and UBS were the bookrunners.

BP Capital was last in the market with a $1.6 billion deal in three tranches on Dec. 1. The issuer last priced 2.248% five-year notes at 107 bps over Treasuries and 3.561% 10-year paper at 117 bps as part of a $2 billion, two-tranche sale on Oct. 27, 2011.

In the secondary market, BP Capital Markets' notes due 2017 traded tighter early afternoon at 100 bps bid, 98 bps offered, a trader said. Another trader saw the notes at 97 bps offered.

The notes due 2022 were seen at 131 bps bid, 126 bps offered and later at 130 bps bid, 128 bps offered.

The unit of oil and gas company BP plc is based in London.

WellPoint's two-tranche deal

WellPoint sold $1.75 billion of notes (Baa1/A-/A-) in two parts, a source away from the trade said.

The $850 million of 3.125% 10-year notes sold at a spread of Treasuries plus 127 bps.

There was a $900 million tranche of 4.625% 30-year bonds sold at a spread of 157 bps over Treasuries.

The bookrunners were Bank of America Merrill Lynch and Deutsche Bank Securities Inc.

Proceeds are being used for working capital and general corporate purposes including the repayment of short-term and long-term debt.

WellPoint's notes due 2022 traded at 125 bps bid, 122 bps offered, a trader said.

The 30-year bonds were seen at 158 bps bid, 154 bps offered.

The health benefits company is based in Indianapolis.

Ericsson offers $1 billion

Telefonaktiebolaget LM Ericsson priced $1 billion of 4.125% 10-year notes (A3/BBB+/) at a spread of 225 bps over Treasuries, a market source said.

Deutsche Bank and JPMorgan were the bookrunners.

Proceeds are being used to refinance debt and for general corporate purposes.

Ericsson's notes due 2022 narrowed to 210 bps bid, 208 bps offered in the secondary market, a trader said in the late afternoon.

The telecommunication and data communications company is based in Stockholm.

PS Business preps preferreds

PS Business Parks is planning a sale of series T cumulative perpetual preferred stock, according to a prospectus filed with the Securities and Exchange Commission.

The securities will be issued as depositary shares representing a 1/1,000th interest in a preferred. The liquidation preference will be $25,000 per preferred, or $25 per depositary share.

A trader said the deal was "doing well," hearing that price talk was revised to 6% from 6.125% and that the deal was increased from 4 million shares to 8 million.

"It's the second largest REIT next to Public Storage," he added.

The trader said the paper closed at $24.85 in the gray market, down from earlier levels around $24.90.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are the joint bookrunners.

The company will apply to list the preferreds on the New York Stock Exchange under the ticker symbol "PSBPT."

Proceeds will be used for general corporate purposes, including the repayment of outstanding debt, the redemption of preferreds and the acquisition of commercial properties.

PS Business Parks is a Glendale, Calif.-based real estate investment trust.

Zions auctions preferreds

Zions Bancorporation is issuing $143.75 million of 7.9% series F fixed-rate noncumulative perpetual preferred stock, according to an FWP filed with the SEC.

The securities (BB/B/B low) will be issued as depositary shares representing a 1/40th interest in a preferred. The liquidation preference is $1,000, or $25 per depositary share.

The depositary shares were sold via an online auction that began Tuesday and ended Wednesday. The price was set at $25.

Zions will apply to list the preferreds on the NYSE under the ticker symbol "ZBPF."

Deutsche Bank was the bookrunner.

Proceeds will be used to redeem all of the 11% series E resettable noncumulative perpetual preferreds.

The bank holding company is based in Salt Lake City.

Stephanie N. Rotondo contributed to this review

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