Siemens sells $7.75 billion, joins Westpac, McDonald’s in primary; bank paper mixed

By Aleesia Forni and Cristal Cody

Virginia Beach, May 18 – Issuers stormed the primary market on Monday, pricing $17 billion of new investment-grade paper.

Siemens AG led the charge during the busy session, issuing a $7.75 billion six-tranche offering to help fund its acquisition of Dresser-Rand Group Inc.

The deal’s order book was more than 2.3 times oversubscribed.

The session also saw Westpac Banking Corp. bring to market $2.5 billion of bonds in three parts, all tight of initial price guidance.

McDonald’s Corp. and Credit Suisse Group Funding (Guernsey) Ltd. were each in the market with $2 billion new issues, respectively.

Also on Monday, Scripps Networks Interactive Inc. sold $1.5 billion of notes in three tranches, Emerson Electric Co. priced a $1 billion issue in two parts, and Entergy Texas Inc. offered $250 million of first mortgage bonds.

Sources are expecting the week’s issuance to be front-loaded ahead of the extended Memorial Day-holiday weekend, with around $25 billion of supply predicted to price.

Investment-grade bonds were mixed in trading over the day.

Bank of America Corp.’s 4% notes due 2025 traded nearly 10 basis points better from Friday.

Citigroup Inc.’s 3.3% senior notes due 2025 traded about 1 bp softer.

Goldman Sachs Group Inc.’s 3.5% notes due 2025 traded flat to 1 bp weaker.

JPMorgan Chase & Co.’s 3.125% notes due 2025 eased 4 bps during the session.

In other trading, AT&T Inc.’s notes (/BBB+/A-) were mostly unchanged.

The Markit CDX North American Investment Grade series 23 index was flat to about ½ bp wider at a spread of 63 bps.

Siemens acquisition financing

Siemens priced $7.75 billion of senior notes (A1/A+/) on Monday in six parts through its Siemens Financieringsmaatschappij NV unit, according to an informed source.

The company priced $1.25 billion of 1.45% notes due 2018 at 99.98 to yield 1.457%, or Treasuries plus 50 bps.

The notes sold at the tight end of guidance set in the Treasuries plus 55 bps area, tightened from initial talk set in the Treasuries plus 65 bps area.

A $500 million floating-rate note due 2018 priced at par to yield Libor plus 28 bps.

The notes were guided at the three-year note’s Libor equivalent.

The company also priced $1 billion of 2.15% notes due 2020 at Treasuries plus 65 bps. Pricing was at 99.868 to yield 2.178%.

Guidance was set in the Treasuries plus 70 bps area after having tightened from initial talk in the Treasuries plus 80 bps area.

There was $1.75 billion of 2.9% notes due 2022 priced at par with a spread of Treasuries plus 95 bps.

Pricing was at the tight end of the Treasuries plus 100 bps area guidance. Initial talk was set in the Treasuries plus 105 bps area.

Siemens also sold $1.5 billion of 3.25% notes due 2025 at 99.746 to yield 3.28%, or Treasuries plus 105 bps.

Guidance was set in the Treasuries plus 110 bps area after having tightened from initial talk set in the Treasuries plus 120 bps area.

Finally, $1.75 billion of 4.4% notes due 2045 sold at 99.258 to yield 4.445%, or Treasuries plus 140 bps.

Pricing was at the tight end of the Treasuries plus 145 bps area guidance. Initial talk was set in the range of Treasuries plus 155 bps to 160 bps.

Proceeds will be used for general corporate purposes, including the company’s acquisition of Dresser-Rand Group Inc.

The bookrunners were Barclays, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. and J.P. Morgan Securities LLC.

The sale was done via Rule 144A and Regulation S without registration rights.

The unit of engineering and electronics conglomerate Siemens AG provides capital for infrastructure and equipment as well as working capital for the company and its subsidiaries and is based in the Hague, the Netherlands.

Westpac three-parter

Also on Monday, Westpac Banking sold a $2.5 billion three-tranche offering of global notes (Aa2/AA-/), according to a market source.

The sale included $1 billion of 1.55% notes due 2018 priced with a spread of Treasuries plus 65 bps.

The notes sold tighter than initial talk set in the Treasuries plus low-70 bps area.

There was also $500 million of floating-rate notes due 2018 priced at Libor plus 43 bps.

The tranche was talked at the Libor equivalent to the three-year fixed-rate notes.

Also priced was $1 billion of 2.3% notes due 2020 at Treasuries plus 80 bps.

Initial talk was set in the Treasuries plus high-80 bps area.

BofA Merrill Lynch, Citigroup Global Markets and JPMorgan were the joint bookrunners.

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

The banking organization is based in Sydney, Australia.

McDonald’s offering

McDonald’s priced $2 billion of senior notes (A3/A-/BBB+) on Monday in five-, 10- and 30-year tranches, a market source said.

The company sold a $700 million issue of 2.2% notes due 2020 at Treasuries plus 70 bps.

Pricing was at 99.812 to yield 2.24%.

A second tranche was $700 million of 3.375% notes due 2025 priced at 99.848 to yield 3.393%, or Treasuries plus 115 bps.

Finally, $600 million of 4.6% notes due 2045 sold at 99.968 to yield 4.602%.

The notes sold with a spread of Treasuries plus 155 bps.

All three tranches sold at the tight end of price talk.

The bookrunners were BofA Merrill Lynch, Goldman Sachs, JPMorgan, Morgan Stanley & Co. LLC, Citigroup Global Markets, Mizuho Securities and Wells Fargo Securities LLC.

The Oak Brook, Ill.-based fast food chain plans to use proceeds for general corporate purposes.

Credit Suisse 30-year bonds

Credit Suisse Group Funding (Guernsey) priced $2 billion of 4.875% senior notes (A2/BBB+/A) due May 15, 2045 at Treasuries plus 187.5 bps on Monday, according to a market source.

The notes are guaranteed by Credit Suisse Group AG.

Pricing was at 99.673 to yield 4.896%.

The issue priced tighter than initial talk set in the range of Treasuries plus 190 bps to 195 bps.

Credit Suisse Securities (USA) LLC was the bookrunner.

The financial services company is based in Zurich.

Scripps three-parter

Monday’s primary also hosted Scripps Networks Interactive, which sold a $1.5 billion offering of senior notes (Baa1/BBB/BBB+) in tranches due 2020, 2022 and 2025, according to a market source and an FWP filed with the Securities and Exchange Commission.

A $600 million tranche of 2.8% five-year notes priced at 99.659 to yield 2.873%, or Treasuries plus 135 bps.

There was also $400 million of 3.5% seven-year notes priced with a spread of 160 bps over Treasuries. Pricing was at 99.69 to yield 3.55%.

A third tranche was $500 million of 3.95% 10-year notes priced at 99.81 to yield 3.973%, or Treasuries plus 175 bps.

BofA Merrill Lynch, JPMorgan, Wells Fargo Securities and MUFG were the bookrunners.

Proceeds will be used to fund the company’s acquisition of N-Vision BV and for general corporate purposes.

Scripps is a Knoxville, Tenn.-based lifestyle content and interactive services company.

Emerson Electric new issue

Emerson Electric was in Monday’s market with a $1 billion sale of senior notes (A2/A/A) due 2021 and 2025, according to a market source and an FWP filing with the SEC.

The company’s sale included $500 million of 2.625% notes due Dec. 1, 2021 priced at 99.94 to yield 2.635%, or Treasuries plus 110 bps.

A second tranche was $500 million of 3.15% notes due June 1, 2025 priced at 99.684 to yield 3.187%, or Treasuries plus 95 bps.

The bookrunners were JPMorgan, Citigroup Global Markets, Deutsche Bank Securities, Barclays, BNP Paribas Securities Corp. and HSBC Securities.

Proceeds will be used for general corporate purposes including repayment of commercial paper borrowings.

The engineering company is based in Ferguson, Mo.

Entergy Texas mortgage bonds

Entergy Texas sold $250 million of 5.15% 30-year first mortgage bonds (Baa1/A-/) at Treasuries plus 212.5 bps on Monday, according to an FWP filed with the SEC.

The notes sold in line with initial guidance.

Pricing was at 99.816 to yield 5.162%.

BofA Merrill Lynch, Morgan Stanley, Scotia Capital, SMBC Nikko and Wells Fargo Securities were the bookrunners.

Proceeds will be used to repay the company’s 3.6% first mortgage bonds due June 1, 2015 and for general corporate purposes.

Entergy Texas is a Beaumont, Texas-based energy provider.

EIB on deck

In forward calendar news, the European Investment Bank set price talk for a planned offering of three-year global notes (Aaa/AAA/AAA) in the area of mid-swaps minus 7 bps, according to a market source.

BofA Merrill Lynch, BNP Paribas Securities and JPMorgan are the bookrunners.

The lender for the European Union is based in Kirchberg, Luxembourg.

Bank of America improves

Bank of America’s 4% notes due 2025 tightened about 8 bps over the session to 187 bps bid, according to a market source.

Bank of America sold $2.5 billion of the notes (Baa2/A-/A) on Jan. 16 at Treasuries plus 225 bps.

The financial services company is based in Charlotte, N.C.

Citigroup eases

Citigroup’s 3.3% senior notes due 2025 widened about 1 bp to 137 bps bid on Monday from where the paper headed out on Friday, a source said.

Citigroup sold $1.5 billion of the notes (Baa2/A-/A) on April 22 at Treasuries plus 135 bps.

The investment bank is based in New York.

Goldman steady

Goldman Sachs’ 3.5% notes due 2025 traded flat to 1 bp softer at 143 bps bid, a market source said.

Goldman sold $800 million of the notes (Baa1/A-/A) at a spread of Treasuries plus 145 bps in a March 25 reopening of the issue.

Goldman originally priced $1.7 billion of the notes on Jan. 20 at Treasuries plus 170 bps.

The financial services company is based in New York City.

JPMorgan soft

JPMorgan Chase’s 3.125% notes due 2025 eased 4 bps to 122 bps bid on Monday, according to a market source.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Jan. 16 at 145 bps plus Treasuries.

The financial services company is based in New York City.

AT&T steady

AT&T’s 3.4% notes due 2025 were unchanged at 151 bps bid, a market source said.

The company sold $5 billion of the notes on April 23 at Treasuries plus 150 bps.

AT&T’s 4.75% bonds due 2046 eased about 1 bp over the session to 207 bps bid, the source said.

The company sold $3.5 billion of the bonds in the April 23 offering at a spread of Treasuries plus 215 bps.

The telecommunications company is based in Dallas.

Bank/brokerage CDS costs flat

Investment-grade bank and brokerage CDS prices were flat on Monday, according to a market source.

Bank of America’s CDS costs were unchanged at 65 bps bid, 68 bps offered. Citigroup’s CDS costs were also unchanged at 74 bps bid, 77 bps offered. JPMorgan’s CDS costs remained at 63 bps bid, 66 bps offered. Wells Fargo & Co.’s CDS costs were flat at 44 bps bid, 47 bps offered.

Merrill Lynch’s CDS costs were unchanged at 68 bps bid, 72 bps offered. Morgan Stanley’s CDS costs were also flat at 79 bps bid, 82 bps offered. Goldman Sachs Group’s CDS costs were unchanged at 83 bps bid, 86 bps offered.

Stephanie N. Rotondo contributed to this review.

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