New York, Sept. 7 - Issuance in the investment-grade bond market exploded on Wednesday making it one of the highest-volume days in recent memory.
There were large multi-tranche sales from Daimler AG unit Daimler Finance North America, France Telecom SA, Time Warner Cable Inc., Schlumberger Ltd. units Schlumberger Norge SA and Schlumberger Investment SA, and Toronto-Dominion Bank.
Smaller offerings came from H.J. Heinz Co., Wisconsin Electric Power Co., Pacific Gas & Electric Co., Xcel Energy Inc. and Entergy Texas, Inc.
Many of the day's issuers have not tapped the market since 2009 or 2010 and were lured in by record-low Treasury yields and high investor demand.
There was a massive $3 billion offering in four parts from Schlumberger - made even larger after a tranche of floating-rate notes was added to the deal. Three of the tranches had about $10.5 billion total demand on the books.
Daimler Finance had a similarly huge sale totaling $3.25 billion in four parts priced under Rule 144A and Regulation S. Terms for the deal were not available at press time.
Food product company Heinz priced an upsized $700 million of notes in two parts. The deal size was increased from $500 million. The sale included a $300 million tranche of five-year notes and $400 million of 10-year paper.
TD Bank sold $5 billion of covered bonds in two parts after upsizing one of the tranches. The deal size was initially $4 billion split evenly between the two tranches, but the five-year notes were increased.
France Telecom sold $2 billion of notes split evenly between five- and 10-year maturities.
Another telecom and internet company - Time Warner Cable - priced $2.25 billion of paper in 10- and 30-year tranches. It was the company's first sale since 2010.
Minneapolis-based Xcel Energy sold $250 million of 30-year bonds to repay short-term debt.
Another small utility sale came from Pacific Gas & Electric which priced $250 million of 10-year notes. Wisconsin Electric sold $300 million of 10-year debentures. It was the first time the company sold debt since late 2009.
Entergy Texas priced $75 million of 10-year first mortgage bonds in an offering announced late in the day.
Overall trading volume was stronger on Wednesday, up more than 35% to $11 billion.
"New issues are trading better for the most part," a trader said. "Time Warner Cable drove some of the other cable names wider on the issue announcement - probably 3 to 10 basis points wider on the name."
Time Warner Cable's new bonds firmed but the existing bonds widened 5 bps to 12 bps in trading on the deal.
The new energy bonds all traded "basically 2 basis points better from the break," a trader said. The sector was seen closing 5 bps to 10 bps stronger on the day.
Confidence in corporate bonds improved on Wednesday. The Markit CDX Series 16 North American high-grade index firmed 5 basis points to a spread of 122 bps.
| Confidence in the financial sector also improved. | A trader saw bank credit default swaps | costs unchanged to as much as 30 bps lower. | Bank of America was 30 bps lower at 315 bps bid, 330 bps offered. | Citigroup was in by 15 bps at 215 bps bid, 225 bps offered. J.P. Morgan was in by 15 bps at 120 bps bid, 125 bps offered.
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| He also saw the brokerage firm and investment bank CDS costs lower. Merrill Lynch was lower by 30 bps at 360 bps bid, 380 bps offered, while | Morgan Stanley was 10 bps lower at 305 bps bid, 315 bps offered.
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| Treasuries were moderately lower on the longer end of the curve. The 10-year note yield rose to 2.04% from 1.98%. The 30-year bond yield rose 9 basis points to 3.36%.
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| Over $17 billion in new bonds
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| The second day of the short week saw $17.08 billion in new corporate bonds price in the high-grade market including several deals that were sized in the multi-billion dollars.
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| A market source said after the close that there was "a huge calendar on tap for today" - including several deals from companies that decided to stand down on Tuesday and wait for the market to get better.
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| Encouraging headlines about the jobs stimulus plan expected to be outlined in president Barack Obama's speech on Thursday, along with favorable record-low Treasury yields persuaded issuers to pile into the market.
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| "The market was great today," the market source said.
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| The wealth of new paper isn't expected to be a one-day phenomenon.
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| "We're going to keep seeing it tomorrow and from here on," a source said.
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| Schlumberger's massive deal
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| Schlumberger Ltd. units Schlumberger Norge and Schlumberger Investment priced an upsized $3 billion of bonds (A1/A+) in four different parts, a source close to the trade said.
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| There was roughly $2.5 billion in demand for each of the five-year notes, the source said. The 10-year tranche was more than three times oversubscribed with about $5.5 billion on the books.
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| Schlumberger Norge sold $500 million of 1.95% five-year notes priced at a spread of Treasuries plus 108 bps.
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| There were three notes priced by Schlumberger Investment.
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| A $300 million tranche of three-year floating-rate notes was added to the sale and priced at par to yield Libor plus 55 bps.
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| This arm also priced $600 million of 1.95% five-year notes at Treasuries plus 108 bps.
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| The third part was $1.6 billion of 3.3% 10-year notes priced at a spread of Treasuries plus 130 bps.
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| Active bookrunners for both of the five-year notes were Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Mitsubishi UFJ Securities (USA) Inc.
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| Bookrunners for the three-year floaters were Citigroup and J.P. Morgan.
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| Active bookrunners for the 10-year notes were Citigroup, J.P. Morgan and Deutsche Bank Securities Inc.
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| All of the notes are guaranteed by Schlumberger Ltd.
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| The deal was done under Rule 144A and Regulation S.
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| Proceeds are being used for general corporate purposes, including debt repayment.
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| The company last sold debt on Jan. 5.
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| In the secondary market, Schlumberger's new notes due 2016 traded tighter at 105 bps bid, 100 bps offered.
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| The oilfield services company is based in Houston, Paris and The Hague, Netherlands.
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| Heinz upsizes
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| H.J. Heinz sold an upsized $700 million of debt (Baa2/BBB+/BBB) in two tranches, according to a market source.
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| The size was increased from a planned $500 million based on high demand from investors, the source said.
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| The $300 million of 2% five-year notes were priced at a spread of Treasuries plus 110 bps. They were talked in the 120 bps area and sold tighter than that level.
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| A second tranche was $400 million of 3.125% 10-year notes sold at 125 bps over Treasuries. The notes were priced tighter than guidance in the 135 bps area.
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| Bookrunners were J.P. Morgan Securities LLC, BNP Paribas Securities Corp. and HSBC Securities (USA) Inc.
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| Proceeds will be used for general corporate purposes, including repayment of commercial paper.
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| Heinz was last in the market when its H.J. Heinz Finance Co. unit sold $250 million of 7.125% 30-year bonds at 270 bps over Treasuries on July 22, 2009.
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| H.J. Heinz's bonds were flat to about 1 bp better in the secondary market, a trader said. The notes due 2016 were seen in early afternoon trading at 110 bps bid, 105 bps offered. The notes due 2021 traded at 124 bps bid, 119 bps offered.
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| The food product maker is based in Pittsburgh, Pa.
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| TD Bank's $5 billion
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| Toronto-Dominion Bank priced an upsized $5 billion of covered bonds (Aaa/AA-) in two maturities, a market source said.
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| The size was increased from $4 billion after the five-year tranche was fattened to $3 billion from $2 billion.
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| The $2 billion of 0.875% three-year notes were priced at a spread of mid-swaps plus 26 bps or Treasuries plus 58.4 bps.
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| A second part was $3 billion of 1.625% five-year notes sold at mid-swaps plus 44 bps or 73.4 bps over Treasuries.
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| Bookrunners were Barclays Capital Inc., Deutsche Bank Securities Inc., RBS Securities Inc. and TD Securities (USA) LLC.
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| TD Bank was last in the market on July 20 with a $2.5 billion sale of two-year floating-rate notes.
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| The bank and financial services company is based in Toronto.
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| Time Warner sells long bonds
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| Time Warner Cable sold $2.25 billion of notes (Baa2/BBB/BBB) in two parts, a source away from the offering said.
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| The $1 billion of 4% 10-year notes were priced at a spread of Treasuries plus 210 bps. They were sold tighter than talk for a spread in the 215 bps area.
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| A second part was $1.25 billion of 5.5% 30-year bonds sold at 232 bps over Treasuries. They were priced at the low end of guidance in the 235 bps area.
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| Bank of America Merrill Lynch, Goldman Sachs & Co. and J.P. Morgan Securities LLC were active bookrunners.
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| Proceeds are being used for general corporate purposes, including debt repayment.
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| The deal is guaranteed by subsidiaries TW NY Cable Holding Inc. and TW Entertainment Co., LP.
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| Time Warner Cable' existing notes widened in the secondary market along with the sector after the company priced the new deal, a trader said.
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| The company's existing 4.125% senior notes due 2021, sold in November 2010 at a spread of Treasuries plus 155 bps, traded 5 bps wider on the day at 195 bps bid, 185 bps offered.
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| The company's 5.875% 30-year debentures, also sold in November at a 180 bps over Treasuries spread, traded 12 bps wider at 225 bps bid, 220 bps offered.
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| The new notes due 2021 traded tighter at 204 bps bid, 200 bps offered. The 30-year bonds also were stronger at 229 bps bid, 226 bps offered.
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| The entertainment company is based in New York City.
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| France Telecom offers $2 billion
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| France Telecom sold $2 billion of notes (A3/A-/A-) in two tranches, a source close to the sale said.
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| A $1 billion tranche of 2.75% five-year notes was priced at a spread of Treasuries plus 195 bps.
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| The second part was $1 billion of 4.125% 10-year notes sold at a spread of 220 bps over Treasuries.
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| Bookrunners were Bank of America Merrill Lynch, Citigroup Global Markets and J.P. Morgan Securities LLC.
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| Proceeds will be used for general corporate purposes.
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| France Telecom was last in the market exactly one year ago when it priced $750 million of 2.125% five-year notes at 82 bps over Treasuries on Sept. 7, 2010.
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| The telecommunications company is based in Paris.
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| Pacific Gas sells 10-years
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| Pacific Gas & Electric priced $250 million of 3.25% 10-year senior notes (A3/BBB+) were priced to yield Treasuries plus 130 bps, an informed source said.
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| Bookrunners were Citigroup Global Markets Inc., Morgan Stanley & Co. LLC and Williams Capital Group, LP.
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| Proceeds are being used to redeem $200 million of pollution control bonds maturing on Dec. 1, 2016, to pay a redemption premium of $4 million on the bonds to the redemption date and for general corporate purposes including repayment of a portion of commercial paper.
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| In trading, Pacific Gas & Electric's notes due 2021 firmed 2 bps to 128 bps bid, 125 bps offered, according to a trader.
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| The electric and natural gas utility is based in San Francisco.
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| Wisconsin Electric prices
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| Wisconsin Electric Power priced $300 million of 2.95% 10-year debentures (A2/A-/A+) to yield Treasuries plus 105 bps, according to an FWP filing with the Securities and Exchange Commission.
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| Bookrunners were Barclays Capital Inc., BNP Paribas Securities Corp. and Deutsche Bank Securities Inc.
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| Proceeds are being used to repay short-term debt, for working capital and general corporate purposes.
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| The company last priced bonds in a $250 million sale of 4.25% 10-year notes on Dec. 8, 2009 at Treasuries plus 90 bps.
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| Wisconsin Electric's notes edged tighter to 102 bps bid, 97 bps offered in the secondary market, a trader said.
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| The electric, natural gas and steam utility subsidiary of Wisconsin Energy Corp. is based in Milwaukee.
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| Xcel's $250 million deal
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| Xcel Energy priced $250 million of 4.8% 30-year senior notes (Baa1/BBB+/BBB+) to yield Treasuries plus 150 bps, according to an FWP filing with the SEC.
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| Bookrunners were Barclays Capital Inc., Morgan Stanley & Co. LLC and RBS Securities Inc.
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| Proceeds are being used to repay short-term debt borrowings and for other general corporate purposes.
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| Xcel last sold debt in a $550 million deal of 4.7% 10-year notes priced at Treasuries plus 120 bps on May 10, 2010.
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| The public utility holding company is based in Minneapolis.
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| Entergy unit's 10-year
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| Entergy Texas priced $75 million of 4.1% 10-year first mortgage bonds (Baa2/BBB+) to yield Treasuries plus 210 bps, according to an FWP filing with the SEC.
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| Bookrunners were Credit Suisse Securities (USA) LLC and KeyBanc Capital Markets Inc.
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| Proceeds are being used for general corporate purposes.
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| The utility subsidiary of Entergy Corp. is based in New Orleans.
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| Paul Deckelman contributed to this report
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