Ecolab does monster deal, Wells Fargo, Duke Energy among issuers; Ecolab 10-year notes firm

By Andrea Heisinger and Cristal Cody

New York, Dec. 5 - High-grade bond issuers jumped into the primary early and often on Monday as market conditions and borrowings rates remained attractive.

Names like Ecolab Inc., Noble Energy, Inc., Senior Housing Properties Trust and Duke Energy Carolinas, LLC sold debt to finance specific funding needs such as repayment of paper coming due.

Wells Fargo & Co. also tapped the market for a $1.5 billion deal of five-year debt sold for general purposes.

The sale from Ecolab was the largest and most complicated of the day at $3.75 billion priced late in four tranches.

Noble Energy sold $1 billion of 10-year paper. It was joined by Duke Energy Carolinas, which priced $1 billion of debt in five- and 30-year maturities.

Senior Housing Properties Trust priced $300 million of 6.75% senior notes due Dec. 15, 2021.

The real estate investment trust is using the proceeds to repay amounts under a revolving credit facility, acquisitions of properties and debt repayment.

There was also a late-day $2 billion sale of three-year covered bonds by CIBC.

The market tone ended on an upbeat note as sales were oversubscribed and deals were announced and mostly priced prior to the announcement from Standard & Poor's ratings agency that it was downgrading the outlook of all euro zone countries to negative.

More issuers could make their way to the high-grade market on Tuesday if the tone remains constructive at the open, sources said.

"There's not a lot on tap," said one syndicate source. "The market tone was good today - we had a lot of leverage. There are some names that we've been talking to for a while that could restart the conversation and maybe look at the market again."

Overall trading volume was about $11 billion on Monday.

Ecolab's 10-year notes traded more than 20 basis points tighter in the secondary market late afternoon.

Noble Energy's notes firmed about 4 bps and Duke Energy's bonds traded 2 bps to 3 bps tighter, traders said.

Wells Fargo's notes traded wider.

Investment-grade bank and brokerage credit default swaps costs were lower on Monday, though, reflecting more investor confidence in the financial sector, a source said.

Bank CDS costs traded 7 bps to 10 bps lower, and brokerage CDS costs traded 15 bps lower across the board.

Corporate bond spreads were better on the day. The Markit CDX Series 17 North American high-grade index firmed 3 bps to a spread of 123 bps.

The 10-year Treasury note yield rose 1 bp to 2.04%. The 30-year bond yield fell 1 bp to 3.02%.

Noble prices $1 billion

Noble Energy priced $1 billion of 4.15% 10-year notes (Baa2/BBB) to yield 210 bps over Treasuries, a source close to the deal said.

The deal priced at the tight end of talk in the 212.5 bps area, plus or minus 2.5 bps, the source said.

The source added that there was just over $3 billion in demand on the books.

Active bookrunners were Citigroup Global Markets Inc. and J.P. Morgan Securities LLC.

The proceeds are being used to repay outstanding debt under a revolving credit facility and for general corporate purposes.

The notes due 2021 initially traded flat at 210 bps bid, 205 bps offered, a trader said.

Going out, the notes firmed a bit to 206 bps bid, 205 bps offered, another trader said.

The crude oil and natural gas exploration and production company is based in Houston.

Ecolab's $3.75 billion deal

Ecolab sold $3.75 billion of senior notes (Baa1/BBB+) in four parts, a market source said.

A $500 million tranche of 2.375% three-year notes priced at a spread of Treasuries plus 200 bps.

There was a $1.25 billion tranche of 3% five-year notes sold at 210 bps over Treasuries.

The third part was $1.25 billion of 4.35% 10-year paper priced at Treasuries plus 230 bps.

Finally, there was a $750 million tranche of 5.5% 30-year bonds priced at a spread of Treasuries plus 255 bps.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC were bookrunners.

The proceeds will be used to repay outstanding commercial paper and for general corporate purposes.

Ecolab last priced debt in a $250 million sale of 4.875% notes due 2015 on Feb. 5, 2008.

In the secondary market, the new five-year notes traded at 185 bps offered. The 10-year notes were quoted stronger at 209 bps bid.

The cleaning and sanitizing company is based in St. Paul, Minn.

Duke Energy's two tranches

Duke Energy Carolinas sold an upsized $1 billion of first- and refunding-mortgage bonds (A1/A) in two parts, an informed source said.

The deal size was originally talked at $800 million. There was about $4.5 billion on the books for the trade, the source said.

A $350 million tranche of 1.75% five-year notes priced at a spread of Treasuries plus 85 bps. They sold at the tight end of talk in the 90 bps area.

The second part was $650 million of 4.25% 30-year bonds sold at 125 bps over Treasuries. The bonds were priced at the tight end of guidance in the 130 bps area.

Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC were active bookrunners.

The proceeds are being used to fund capital expenditures for an ongoing construction program and for general corporate purposes, including repayment at maturity of $750 million in 6.25% senior notes due Jan. 15, 2012.

Duke Energy's notes due 2016 were quoted late afternoon at 78 bps offered in trading.

Going out, a source at another desk quoted the five-year notes firmer at 82 bps bid, 81 bps offered.

A trader saw the bonds due 2041 at 120 bps offered.

Another trader saw the bonds tighter at 123 bps bid, 119 bps offered.

The electric subsidiary of Duke Energy Corp. is based in Charlotte, N.C.

Wells Fargo's five-year

Wells Fargo sold $1.5 billion of 2.625% five-year notes (A2/A+) at a spread of Treasuries plus 175 bps, a source close to the trade said.

Wells Fargo Securities LLC was bookrunner.

The issuer last priced debt in a $1 billion sale of five-year floating-rate notes on Nov. 9. They last sold five-year fixed-rate senior holding company paper on Feb. 10 with a coupon of 3.676%.

In trading, the notes due 2016 were seen at 172 bps offered, a trader said.

Another trader saw the five-year notes at 177 bps bid, 174 bps offered.

The financial services company is based in San Francisco.

CIBC prices covered bonds

CIBC priced $2 billion of three-year covered bonds (Aaa/AAA) late in the day to yield mid-swaps plus 68 bps, a source away from the trade said.

Full terms were not available at press time.

The bonds were priced under Rule 144A and Regulation S.

CIBC World Markets, HSBC Securities (USA) LLC, J.P. Morgan Securities LLC and RBS Securities Inc. were bookrunners.

The financial services company is based in Toronto.

Paul Deckelman contributed to this review

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