Westpac, Signet price as week nears $30 billion; DirecTV climbs on merger talks with AT&T

By Aleesia Forni and Cristal Cody

Virginia Beach, May 14 - Despite a somewhat weaker tone to Wednesday's market, four issuers brought new deals to the investment-grade primary during the session.

"Felt a little soft today," one market source said of the day's tone.

Westpac Banking Corp. was in the market with two separate deals on Wednesday, pricing a two-part offering of three-year senior notes and a five-year covered bond.

The bank priced $1.25 billion of floating-rate notes due 2017 at par to yield Libor plus 33 basis points and $1.25 billion of 1.2% three-year notes sold at Treasuries plus 43 bps.

Both tranches of the sale priced at the tight end of talk.

There was also a $1.75 billion 2% five-year covered bond priced by the bank at mid-swaps plus 35 bps, according to a syndicate source.

Pricing was on top of talk.

The session also saw FirstEnergy Transmission LLC price $1 billion of senior notes in 10- and 30-year tranches, a market source said.

The company priced $600 million of 4.35% 10.5-year notes at Treasuries plus 180 bps and $400 million of 5.45% 30-year bonds at Treasuries plus 210 bps.

In other primary action on Wednesday, Signet UK Finance plc sold $400 million of 4.7% senior notes due 2024 with a spread of Treasuries plus 220 bps, according to an informed source.

The notes sold at the tight end of talk.

Corporate Office Properties LP came to market with an upsized $300 million sale of 3.7% seven-year senior notes priced at Treasuries plus 165 bps.

Also on Wednesday, NRW.Bank announced price talk for a planned $1 billion offering of three-year notes at mid-swaps plus 11 bps, a market source said.

A source had expected the deal to price during Wednesday's session, though he had not seen pricing details as of late Wednesday.

The Federal Home Loan Bank System said that it would not offer Global Notes on its May 14 issuance slot, market sources said.

Roughly $5.95 billion of high-grade paper priced on Wednesday, bringing the week's total to more than $29 billion.

One market source said that Thursday's session "could see a couple" of high-grade issuers hit the primary market, and supply for the week could top earlier expectations of $30 billion.

DirecTV Holdings LLC's 4.45% notes due 2024 rose nearly 3 points over the day, with the 10-year notes trading more than 40 bps tighter since the issue priced in March, according to market sources.

The bonds remained active over the session on reports that AT&T Inc. is in advanced talks to acquire DirecTV.

AT&T's 3.9% senior notes due 2024 slipped in trading but are about 20 bps tighter since the issue priced in March, according to market sources.

Investment-grade bonds were mostly unchanged to slightly wider on the day, according to a market source.

The Markit CDX North American Investment Grade series 22 index eased 1 bp to a spread of 63 bps.

Westpac prices tight

Westpac Banking sold $2.5 billion of senior notes (Aa2/AA-) in two tranches on Wednesday, according to a syndicate source.

The bank sold $1.25 billion of floating-rate notes due 2017 at par to yield Libor plus 33 bps.

A second tranche was $1.25 billion of 1.2% three-year notes sold at 99.895 to yield 1.236%, or Treasuries plus 43 bps.

The notes sold at the tight end of talk.

BofA Merrill Lynch, Citigroup Global Markets Inc., HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC were the joint bookrunners.

Proceeds from the offering will be used for general corporate purposes.

The banking organization is based in Sydney, Australia.

Westpac brings covered bond

Westpac Banking also sold a $1.75 billion 2% five-year covered bond during Wednesday's session at mid-swaps plus 35 bps, or Treasuries plus 44.8 bps, according to a syndicate source.

Pricing was at 99.995 to yield 2.001%.

The notes sold on top of talk.

Westpac, BofA Merrill Lynch, Citigroup Global Markets, HSBC Securities and JPMorgan were the joint bookrunners for the Rule 144A and Regulation S deal.

Proceeds from the offering will be used for general corporate purposes.

The banking organization is based in Sydney, Australia.

FirstEnergy two-parter

FirstEnergy Transmission sold $1 billion of senior notes (Baa3/BB+/) in tranches due 2024 and 2044, according to a market source.

A $600 million tranche of 4.35% 10.5-year notes sold at 99.991 to yield 4.35%, or Treasuries plus 180 bps.

FirstEnergy also sold $400 million of 5.45% 30-year bonds at 99.56 to yield 5.479%.

The notes priced with a spread of Treasuries plus 210 bps.

Citigroup Global Markets, Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, RBS Securities Inc., BofA Merrill Lynch, Barclays, BNP Paribas Securities Corp., Scotia Capital (USA) Inc. and Mitsubishi UFJ Securities (USA) Inc. were the joint bookrunners for the Rule 144A and Regulation S deal.

The diversified energy holding company is based in Akron, Ohio.

Signet offers $400 million

Signet UK Finance was in Wednesday's market with a $400 million offering of 4.7% bonds (Ba1/BBB-/BBB-) due 2024 sold with a spread of Treasuries plus 220 bps, according to an informed source and an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.599 to yield 4.75%.

The joint bookrunners were JPMorgan, Fifth Third Securities and PNC Capital Markets LLC.

Proceeds will be used to pay a portion of the company's proposed acquisition of Zale Corp.

The notes will be guaranteed by Signet Jewelers Ltd., a specialty retail jeweler based in Hamilton, Bermuda.

Corporate Office upsizes

Corporate Office Properties priced an upsized $300 million issue of 3.7% senior notes (Baa3/BBB-/BBB-) due 2021 with a spread of Treasuries plus 165 bps, according to a market source and an FWP filing with the SEC.

Pricing was at 99.739 to yield 3.742%.

JPMorgan, KeyBanc Capital Markets and RBC Capital Markets LLC were the bookrunners.

The bonds are guaranteed by Corporate Office Properties Trust.

Proceeds are being used to repay borrowings under the company's unsecured revolving credit facility and one of its outstanding term loans, to fund the expected redemption of its series H preferred shares and for general corporate purposes

Corporate Office Properties was last in the market with $250 million of 5.25% senior notes due 2024 priced with a spread of Treasuries plus 250 bps on Sept. 9, 2013.

The real estate investment trust for suburban office properties is based in Columbia, Md.

NRW sets talk

NRW.Bank is in Wednesday's market with a $1 billion offering of three-year notes, according to an informed source.

The Regulation S notes are being talked at mid-swaps plus 11 bps.

Deutsche Bank Securities Inc., Morgan Stanley, Daiwa Securities and RBC Capital Markets are the joint bookrunners.

The financial development products and services company is based in Dusseldorf, Germany.

FHLB passes

The Federal Home Loan Bank System said it would not issue Global Notes on its May 14 announcement date, according to market sources.

The government-sponsored banks for financial institutions are based in Washington, D.C.

DirecTV stronger

DirecTV's 4.45% notes due 2024 (Baa2/BBB/) were seen offered early Wednesday at 133 bps offered and later in the day around 135 bps offered, a trader said.

The notes headed out at 106.63, up from 104.14 in morning trading and 103.76 on Tuesday, according to a market source.

DirecTV Holdings and co-issuer DirecTV Financing Co. sold $1.25 billion of the 10-year notes on March 17 at 99.63 to yield 4.496%, or a spread of Treasuries plus 180 bps.

The digital entertainment company is based in El Segundo, Calif.

AT&T lower

AT&T's 3.9% notes due 2024 traded at 105 bps bid, 100 bps offered on Wednesday, a trader said.

The notes fell to 102.18 going out from 103.23 on Tuesday, according to a market source.

The company priced $1 billion of the 10-year notes (A3/A- /A) on March 5 at 99.696 to yield 3.937%, or a spread of Treasuries plus 125 bps.

The telecommunications company is based in Dallas.

Bank/brokerage CDS flat to higher

Investment-grade bank and brokerage CDS prices were unchanged to higher, according to a market source.

Bank of America Corp.'s CDS costs were flat at 64 bps bid, 67 bps offered. Citigroup Inc.'s CDS costs ended unchanged at 68 bps bid, 71 bps offered. JPMorgan Chase & Co.'s CDS costs eased 1 bp to 53 bps bid, 56 bps offered. Wells Fargo & Co.'s CDS costs were flat at 33 bps bid, 36 bps offered.

Merrill Lynch's CDS costs eased 1 bp to 69 bps bid, 73 bps offered. Morgan Stanley's CDS costs rose 1 bp to 71 bps bid, 74 bps offered. Goldman Sachs Group, Inc.'s CDS costs eased 1 bp to 80 bps bid, 83 bps offered.

Paul Deckelman contributed to this review.

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