Onslaught of new deals hits primary; Wells Fargo mostly flat; Florida Power & Light eases

By Aleesia Forni and Cristal Cody

Virginia Beach, Sept. 2 – The investment-grade primary saw an onslaught of supply on Tuesday, kicking off what is expected to be a busy month of September.

Financial names including Wells Fargo Bank, NA, Bank of Tokyo-Mitsubishi UFJ, NRW.Bank, Lloyds Bank plc and Capital One NA led the charge of new deals pricing following the Labor Day holiday.

Details of Bank of Tokyo Mitsubishi’s and Wells Fargo’s sales were unavailable at press time.

The session also saw Marathon Petroleum Corp. price a $1.95 billion offering during the session.

Meanwhile, Plains All American Pipeline, LP and PAA Finance Corp. sold an upsized $750 million of senior notes.

The session also saw smaller-sized deals price from Florida Power & Light Co., Packaging Corp. of America and Alleghany Corp.

American Airlines, Inc. joined the forward calendar on Tuesday, announcing price talk for a planned $957 million offering of class A and class B pass-through certificates.

In other news on Tuesday, a pair of new deals hit the primary preferred stock market on Tuesday, both of which came from Bank of America Corp.

CU Inc. tapped the Canadian bond markets with a C$1 billion offering of 4.085% 30-year debentures (/A/DBRS: A) priced at par to yield a spread of 144 basis points over the Government of Canada benchmark.

Additional Canadian issuance is expected over the week following a late summer dearth of new deals, a source said.

“The market is expecting a fair bit,” the source said. “We’ve come through bank earnings, and they do have borrowing needs. Other utilities have big capital programs, and we could see a telecom issuer. There’s a number of roadshows in the coming weeks, mostly on the high-yield side, but there are indirect signs we’ll see some more issuance in the next few days.”

The Markit CDX North American Investment Grade series 22 index headed out flat to modestly softer at a spread of 57 bps.

In aftermarket trading, Packaging Corp.’s 3.65% notes due 2024 traded wrapped around issuance to 1 bp softer, traders said.

Florida Power & Light’s 4.05% bonds due 2044 eased 2 bps on the bid side in the secondary market, according to a trader.

Plains All American Pipeline’s 3.6% notes due 2024 firmed 1 bp, a trader said.

In other new issue trading, Wells Fargo’s notes due 2024 traded flat to 1 bp tighter, according to traders.

Wells Fargo’s tranche of notes due 2017 traded at 46 bps bid, a trader said.

Wells Fargo’s offering of notes due 2024 traded in the aftermarket at 92 bps bid, 90 bps offered, one trader said. The notes headed out at 91 bps bid, 88 bps offered, according to another trader.

Marathon Petroleum’s long bonds also were active in aftermarket trading, traders said.

Alleghany’s offering of 30-year senior notes and Lloyds Bank’s five-year notes offering priced late in the day and were not seen in late afternoon trading, according to traders.

Marathon three-parter

Marathon Petroleum priced $1.95 billion of senior notes in three tranches, according to a company release.

The sale included $750 million of 3.625% notes due 2024 priced at 99.641.

There was also $800 million of 4.75% notes due 2044 sold at 98.862.

A $400 million tranche of 5% notes due 2054 priced at 98.77.

Marathon Petroleum’s notes due 2024 were not active in late afternoon secondary trading, according to traders.

The company’s tranche of notes due 2044 were quoted in the secondary market trading at 161 bps offered to 163 bps offered.

MUFG, RBS Securities Inc., Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, Barclays, J.P. Morgan Securities LLC, BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities, LLC acted as joint bookrunners for the offering.

Proceeds will be used to fund the company’s pending acquisition of Hess Retail Holdings LLC through its wholly owned subsidiary, Speedway LLC.

Marathon Petroleum is a crude oil refiner based in Findlay, Ohio.

Capital One new issue

Capital One NA priced $1.75 billion of notes (A3/BBB+/A-) in tranches due 2017 and 2019, according to an informed source.

The sale included 1.5% three-year notes due Sept. 5, 2017 priced at 99.892 to yield 1.537%.

A second tranche was a 2.4% five-year note priced at 99.631 to yield 2.479%.

Full details of the sale were unavailable at press time.

Barclays, Citigroup Global Markets, Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. were the bookrunners.

The financial services company is based in McLean, Va.

Lloyds Bank brings $1 billion

Lloyds Bank plc sold $1 billion of 2.35% senior notes (A1/A/A) due 2019 on Tuesday, according to a market source.

Pricing was at 99.972 to yield 2.356%.

The notes are guaranteed by Lloyds Banking Group plc.

BofA Merrill Lynch, Citigroup Global Markets, Deutsche Bank Securities Inc., Lloyds Securities LLC and Wells Fargo Securities were the underwriters.

Proceeds will be used for general corporate purposes.

The retail bank is based in London.

Plains All American upsizes

Plains All American Pipeline and PAA Finance were in Tuesday’s market with an upsized $750 million issue of 3.6% senior notes due 2024 at Treasuries plus 120 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

Pricing was at the tight end of talk.

The notes (Baa2/BBB/) sold at 99.842 to yield 3.618%.

Plains All American Pipeline’s 3.6% notes due 2024 tightened to 119 bps bid, 116 bps offered, a trader said.

Proceeds will be used to repay outstanding borrowings under the company’s commercial paper program and for general partnership purposes.

DNB Markets Inc., Mizuho Securities USA Inc., JPMorgan, Barclays, BNP Paribas Securities Corp. and BofA Merrill Lynch are the joint bookrunners.

The oil and natural gas transportation, production and storage company is based in Houston.

Florida P&L mortgage bonds

Florida Power & Light priced $500 million of 4.05% 30-year first mortgage bonds (Aa2/A/AA-) on Tuesday with a spread of Treasuries plus 90 bps, an informed source said.

Pricing was at the tight end of talk.

The notes sold at 99.67 to yield 4.069%.

Florida Power & Light’s 4.05% bonds due 2044 traded wider on the bid side at 92 bps bid, 88 bps offered, according to a trader.

The bookrunners were JPMorgan, Mizuho Securities, Morgan Stanley, RBC Capital Markets LLC, RBS Securities and UBS Securities.

Proceeds from the sale will be added to the company’s general funds, which will be used for corporate purposes, including to repay short-term borrowings, to repay, redeem or repurchase outstanding debt and to finance the acquisition or construction of additional electric facilities and capital improvements to and maintenance of existing facilities.

Florida Power & Light is a Juno Beach, Fla.-based electric utility.

Packaging Corp. prices tight

Packaging Corp. of America sold $400 million of 3.65% senior notes (Baa3/BBB/) due 2024 with a spread of Treasuries plus 127 bps, according to a market source and an FWP filed with the SEC.

The notes sold at the tight end of talk.

Pricing was at 99.716 to yield 3.684%.

Packaging Corp.’s 3.65% notes due 2024 traded mostly wrapped around issuance at 127 bps bid, 124 bps offered, a trader said. The notes were quoted ending the day at 128 bps bid, 124 bps offered, according to a trader at another desk.

BofA Merrill Lynch, Wells Fargo Securities and Deutsche Bank Securities are the bookrunners.

Proceeds will be used to repay a portion of the company’s term loan due October 2018.

The containerboard and corrugated products producer is based in Lake Forest, Ill.

Alleghany brings 30-years

Alleghany sold $300 million of 4.9% senior notes (Baa2/BBB/) due 2044 on Tuesday with a spread of Treasuries plus 178 bps, according to an informed source and an FWP filed with the SEC.

The notes sold at the tight end of talk.

Pricing was at 99.314 to yield 4.944%.

BMO Capital Markets, Goldman Sachs, Morgan Stanley and U.S. Bancorp Investments Inc. were the bookrunners.

Proceeds will be used to redeem a portion of Transatlantic Holdings, Inc.’s 5.75% senior notes due December 2015.

Alleghany is a New York City-based property and casualty insurer.

American Airlines pass-throughs

American Airlines announced a $956,884,000 offering of class A and class B pass-through certificates, series 2014-1, in a filing with the SEC on Tuesday.

The deal includes $741,460,000 of class A certificates (/A/) with a final expected regular distribution date of Oct. 1, 2026.

Price talk for the class A certificates is set in the 3.75% area, according to a market source.

There is also $215,424,000 of class B certificates with a final expected regular distribution date of Oct. 1, 2022.

The class B certificates are talked in the 4.75% area, a market source said.

Goldman Sachs is the structuring agent and lead bookrunner.

Credit Suisse Securities, Deutsche Bank Securities, Morgan Stanley, Citigroup Global Markets, BofA Merrill Lynch, Barclays, BNP Paribas Securities, Credit Agricole Securities and JPMorgan are the bookrunners.

Proceeds will be used to acquire equipment notes that will be issued to finance the purchase of five Airbus A319-112 aircraft delivered new to American in 2013, seven Airbus A321-231 aircraft delivered new to American in 2014 and five Boeing 777-323ER aircraft delivered new to American from 2012 to 2014.

The commercial airline, which is a subsidiary of AMR Corp., is based in Fort Worth.

BofA prices preferreds

Bank of America came to the preferred market on Tuesday with a couple of new issues.

The Charlotte, N.C.-based bank sold $1 billion of 6.625% series W noncumulative perpetual preferreds on Tuesday. The deal was originally expected to be $250 million, talked between 6.75% and 6.875%.

“It’s trading well,” a trader said early in the session, seeing an early gray market of $24.85.

Just prior to pricing, the trader pegged the paper at $24.77 bid, $24.80 offered.

Another market source quoted the preferreds at $24.77 bid, $24.83 offered.

Additionally, the bank sold $2 billion of 6.25% $1,000-par series X fixed-to-floating-rate noncumulative perpetual preferreds.

Ahead of pricing, a trader saw the issue at 101 in the gray market.

The preferreds will be fixed until Sept. 5, 2024, at which point they will float at Libor plus 370.5 bps.

BofA Merrill Lynch is the sole bookrunner on both offerings. Neither deal was contingent upon the other.

Proceeds will be used for general corporate purposes.

Stephanie N. Rotondo, Paul A. Harris contributed to this review.

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