Financials rush primary to close week; spreads tighten in secondary; GE Capital notes widen

By Aleesia Forni

New York, Jan. 22 – Morgan Stanley, Wells Fargo Bank NA, Royal Bank of Canada and TransCanada PipeLines Ltd. entered the primary market on Friday, taking advantage of more positive market conditions at the week’s close.

Morgan Stanley sold the day’s largest offering, pricing $5.5 billion of notes in three parts, all inside price guidance.

Wells Fargo attracted an order book that was around 1.5 times oversubscribed, and RBC sold $1.5 billion of 10-year contingent capital subordinated notes.

TransCanada sold Friday’s lone non-financial deal, offering a $1.25 billion new issue.

The market’s tone was “definitely a little better” on Friday, one market source noted, allowing the issuers to access the market to close out a volatile week.

In the secondary market, bonds from General Electric Capital Corp. traded wider after the company announced stronger-than-expected earnings but a decline in revenues.

High-grade credit spreads were tighter over the course of the session.

The Markit CDX North American Investment Grade 25 index firmed 4 basis points to a spread of 105 bps.

Funds see outflows

Lipper US Fund Flows reported an outflow of $442 million from corporate investment-grade bond funds for the week ended Jan. 13.

This follows the previous week’s $740 million of outflows, bringing the year-to-date total to $2.3 billion of outflows.

Morgan Stanley’s $5.5 billion

Morgan Stanley priced $5.5 billion of senior notes (A3/BBB+/A) in three- and 10-year tranches, according to a market source and an FWP filed with the Securities and Exchange Commission.

The sale includes $2 billion of 2.45% three-year notes sold at 99.933 to yield 2.473%, or Treasuries plus 137.5 bps.

There was also $500 million of three-year floating-rate notes sold at par to yield Libor plus 137.5 bps.

A $3 billion 3.875% 10-year tranche of notes sold at 99.795 to yield 3.9%, or Treasuries plus 185 bps area.

All tranches sold inside initial price thoughts.

Morgan Stanley & Co. LLC is the bookrunner.

The financial services company is based in New York City.

Wells Fargo brings bank notes

Wells Fargo priced $3.5 billion of senior bank notes (Aa2/AA-/AA) on Friday in two parts, according to a market source.

There was $1.5 billion of 1.65% two-year notes sold at Treasuries plus 80 bps. Pricing was at 99.971 to yield 1.665%.

The notes sold on top of guidance and inside initial talk set in the Treasuries plus 90 bps area.

Also, $2 billion of floating-rate two-year notes sold at par to yield Libor plus 74 bps. Talk was at the Libor equivalent to the fixed-rate tranche.

Proceeds will be used for general corporate purposes.

Wells Fargo Securities LLC was the bookrunner.

The bank is based in San Francisco.

RBC prices new issue

Royal Bank of Canada was in Friday’s market with a $1.5 billion offering of 4.65% non-viability contingent capital subordinated notes due Jan. 27, 2026 priced at 262.5 bps over Treasuries, according to an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.786 to yield 4.677%.

The notes sold inside initial price thoughts.

RBC Capital Markets LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Wells Fargo are the bookrunners.

Proceeds will be used for general banking purposes.

The financial services company is based in Toronto.

TransCanada two-parter

TransCanada PipeLines sold $1.25 billion of senior notes (A3/A-) in two tranches on Friday, according to a market source and a filing with the SEC.

A $400 million tranche of three-year notes sold at Treasuries plus 212.5 bps.

The notes sold tight of initial talk set in the 225 bps area over Treasuries.

Also, $850 million of 4.875% 10-year bonds sold at Treasuries plus 287.5 bps.

Initial talk was in the Treasuries plus 300 bps area.

Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC are the bookrunners.

Proceeds will be used for general corporate purposes and to repay short-term debt.

The natural gas and oil pipeline and storage company is based in Calgary, Alta.

GE Capital tightens

General Electric Capital’s 2.2% notes due 2020 traded at 47 bps bid late afternoon, 7 bps wider than where the paper traded on Thursday, according to a market source.

The issue priced on Jan. 6 in a $2 billion offering at Treasuries plus 75 bps.

The financial products and services subsidiary of General Electric Co. is based in Norwalk, Conn.

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