International Paper, BNP, HCP, Southern Power price; bank, financial paper mixed

By Aleesia Forni and Cristal Cody

Virginia Beach, May 14 – International Paper Co., BNP Paribas SA, HCP Inc. and Southern Power Co. issued new bonds on Thursday, continuing the week’s high-grade primary market frenzy.

The market hosted a $2 billion issue of senior notes from International Paper, which sold in three parts between 10 basis points to 20 bps tight of initial price thoughts.

BNP Paribas came to market with $1.5 billion of five-year senior notes at the tight end of guidance.

HCP sold its new upsized $750 million offering of 10-year notes on Thursday in order to fund planned acquisitions.

Elsewhere, Southern Power attracted nearly $1.5 billion of orders for its new $650 million issue of notes sold in tranches due 2018 and 2020.

Utility companies Wisconsin Electric Power Co. and Arizona Public Service Co. each sold bond offerings at the tight end of talk on Thursday.

In other primary happenings, Federal Home Loan Banks priced $3 billion of two-year global bonds, Ally Financial Inc. priced an upsized $1.4 billion of senior notes, and Rabobank Nederland sold $1 billion of notes due 2025.

Not all potential issuers were met with a strong reception on Thursday.

Fossil Group Inc. withdrew a planned $300 million offering of senior notes due 2025 during the session in a sale that was originally Wednesday’s business.

Despite this, one source noted that “the market was strong today,” as $10.85 billion of investment-grade paper hit the tape.

In total, the week has absorbed more than $42 billion of new issuance.

In the secondary market, financial paper was mixed during the session.

“Other than energy, financials have been the top performer year to date following the recent steepening of the curve,” RBC Capital Markets, LLC analysts said in a note on Thursday.

Energy bonds have returned 1.2% year to date, while financial paper has returned 0.67%, according to the note.

The Markit CDX North American Investment Grade series 23 index tightened 2 bps to a spread of 64 bps on Thursday.

Goldman Sachs Group Inc.’s paper (Baa1/A-/A) traded flat to 2 bps tighter over the day.

Bank of America Corp.’s 4% notes due 2025 eased 2 bps.

Morgan Stanley’s 2.65% notes due 2020 softened 1 bp in trading.

Wells Fargo & Co.’s 2.15% senior notes due 2020 tightened 1 bp.

JPMorgan Chase & Co.’s 3.125% notes due 2025 widened 5 bps.

JPMorgan Chase said in a form 8-K filing with the Securities and Exchange Commission on Thursday that it was nearing the end of discussions with the U.S. Department of Justice and the Federal Reserve Board of Governors to resolve investigations of its foreign exchange sales and trading activities.

“Those discussions, while not completed, are nearing conclusion, and the firm understands that any resolution acceptable to DOJ would require that the firm plead guilty to an antitrust charge,” JPMorgan said in the filing.

International Paper sells $2 billion

International Paper priced a $2 billion issue of senior notes (Baa2/BBB/) in tranches due 2026, 2035 and 2046 on Thursday, according to a market source.

There was a $700 million 3.8% note due Jan. 15, 2026 priced at 99.569 to yield 3.849%, or Treasuries plus 160 bps.

The notes sold at the tight end of the Treasuries plus 165 bps area, which had tightened from Treasuries plus 180 bps to 185 bps.

A second tranche was $600 million of 5% notes due Sept. 15, 2035 priced at 99.289 to yield 5.057%, or Treasuries plus 200 bps.

The issue sold at the tight end of talk set in the Treasuries plus 205 bps area. Initial guidance was set in the Treasuries plus 210 bps area.

Finally, $700 million of 5.15% notes due May 15, 2046 sold at 99.13 to yield 5.207%.

The notes sold with a spread of Treasuries plus 215 bps.

Guidance was set in the Treasuries plus 220 bps area, which had firmed from Treasuries plus 225 bps to 230 bps.

BofA Merrill Lynch, Citigroup Global Markets Inc., Mizuho Securities USA Inc., BBVA Securities, BNP Paribas Securities Corp., Credit Agricole CIB, Deutsche Bank Securities, J.P. Morgan Securities LLC, Regions Securities LLC and SMBC Nikko were the joint bookrunners.

Proceeds will be used to fund a tender offer.

Based in Memphis, International Paper is a paper manufacturing and distributing company.

BNP prices tight

Also on Thursday, BNP Paribas sold $1.5 billion of 2.375% five-year senior notes at Treasuries plus 93 bps, a market source said.

The notes (A1/A+) priced at 99.738 to yield 2.431%.

Price guidance was set in the 95 bps area over Treasuries.

BNP Paribas Securities was the bookrunner.

The financial services company is based in Paris.

Rabobank new issue

Rabobank Nederland priced $1 billion of 3.375% bonds (Aa2/A+/) due May 21, 2025 at Treasuries plus 115 bps, according to a market source.

Barclays, Goldman Sachs & Co., JPMorgan and Morgan Stanley & Co. LLC were the bookrunners.

The financial services company is based in Utrecht, the Netherlands.

FHLB global notes

Federal Home Loan Banks priced $3 billion of 0.625% two-year global bonds on Thursday at Treasuries plus 11 bps, according to a company release.

Pricing was at 99.917 to yield 0.666%.

Lead managers for the issue were Citigroup Global Markets, Deutsche Bank Securities New York and Wells Fargo Securities LLC.

FHLBanks are 12 government-sponsored funding providers.

HCP upsizes

In other new issue happenings, HCP priced an upsized $750 million issue of 4% 10-year senior notes (Baa1/BBB+/BBB+) with a spread of Treasuries plus 185 bps, according to an informed source and an FWP filing with the Securities and Exchange Commission.

Pricing was at 99.126 to yield 4.107%.

The notes sold on top of guidance, which had firmed from initial talk set in the 190 bps area over Treasuries.

Goldman Sachs, JPMorgan, Morgan Stanley and Wells Fargo Securities were the joint bookrunners.

Proceeds will be used to fund the company’s acquisitions of senior housing communities from Chartwell Retirement Residents and a medical office building. Proceeds may also be used for general corporate purposes.

The real estate investment trust for the health-care industry is based in Long Beach, Calif.

Southern Power two-parter

Southern Power was in the market on Thursday with a $650 million offering of senior notes in two parts, according to an informed source and two separate FWP filings with the SEC.

A $350 million tranche of 1.5% series 2015A notes due 2018 priced at 99.796 to yield 1.569%, or Treasuries plus 65 bps.

The company also sold $300 million of 2.375% series 2015B notes due 2020 priced with a spread of 85 bps over Treasuries. Pricing was at 99.981 to yield 2.379%.

Both tranches priced at the tight end of price guidance.

BofA Merrill Lynch, Mizuho Securities, SunTrust Robinson Humphrey Inc. and UBS Securities LLC were the bookrunners.

Proceeds will be used to repay the company’s $525 million of series 2003A senior notes. Any remaining net proceeds will be used to repay short-term debt and for general corporate purposes.

Based in Atlanta, Southern Power is a holding company for electric utilities throughout the South.

Ally upsizes

Ally Financial sold an upsized $1.4 billion issue of senior notes (/BB+/BB+) in two tranches on Thursday, according to a market source.

The company sold $1 billion of 3.6% three-year notes at 99.437 to yield 3.8%, or Treasuries plus 289.5 bps.

Pricing was at the tight end of guidance, set 3.85%, plus or minus 5 bps.

A second tranche was $400 million of 4.625% seven-year notes that priced at 98.387 to yield 4.9%, or Treasuries plus 295 bps.

The notes sold at the tight end of guidance set at 4.95%, plus or minus 5 bps.

A planned three-year floating-rate tranche was dropped prior to the deal’s launch.

Citigroup Global Markets, Deutsche Bank Securities, Goldman Sachs and Morgan Stanley were the joint bookrunners.

The notes were junk-rated but were sold on investment-grade desks.

Proceeds will be used to fund tender offers for the company’s 8% senior guaranteed notes due 2020, its 7.5% senior guaranteed notes due 2020, its 8% senior notes due 2031, its 5.5% senior guaranteed notes due 2017 and its 6.25% senior guaranteed notes due 2017.

Ally is a Charlotte, N.C.-based automotive financial services company.

Arizona Public 10-years

Also on Thursday, Arizona Public Service priced $300 million of 3.15% 10-year senior notes (A3/A-/A-) at Treasuries plus 95 bps, according to an informed source and an FWP filed with the SEC.

Pricing was at 99.474 to yield 3.212%.

The bookrunners are BNY Mellon Capital Markets LLC, JPMorgan, MUFG and U.S. Bancorp Investments Inc.

Proceeds will be used to repay short-term borrowings, including commercial paper and credit facility borrowings.

Arizona Public Service is an electric utility based in Phoenix and a subsidiary of Pinnacle West Capital Corp.

Wisconsin Electric debentures

Wisconsin Electric Power sold $250 million of 3.1% 10-year debentures (A1/A-/A+) on Thursday to yield Treasuries plus 85 bps, according to an FWP filing with the SEC.

Pricing was at 99.897 to yield 3.112%.

Morgan Stanley, MUFG, RBC Capital Markets and BMO Capital Markets are the joint bookrunners.

Proceeds will be used to repay short-term debt and for working capital and other corporate purposes.

Milwaukee-based Wisconsin Electric Power is a subsidiary of the Wisconsin Energy Corp.

Fossil pulls deal

Fossil Group withdrew a planned $300 million offering of senior notes due 2025 on Thursday, according to a market source.

The sale was originally Wednesday’s business and was then pushed back to Thursday.

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

The company planned to use the proceeds to repay debt under a revolving credit facility.

Fossil is a fashion accessories designer and marketer based in Richardson, Texas.

Goldman flat to better

Goldman Sachs’ 2.6% notes due 2020 firmed 2 bps to 100 bps bid in secondary trading, a market source said.

Goldman sold a $700 million add-on to the notes on March 25 at Treasuries plus 112 bps. The notes originally priced in a $1 billion offering on Jan. 20 at 135 bps over Treasuries.

Goldman Sachs’ 3.5% notes due 2025 traded flat at 144 bps bid, the source said.

Goldman sold $800 million of the notes in the March reopening at a spread of Treasuries plus 145 bps.

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

The financial services company is based in New York City.

Bank of America soft

Bank of America’s 4% notes due 2025 eased 2 bps to 198 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.

JPMorgan weaker

JPMorgan Chase’s 3.125% notes due 2025 were quoted 5 bps weaker at 125 bps bid, according to a market source.

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

The financial services company is based in New York City.

Morgan Stanley eases

Morgan Stanley’s 2.65% notes due 2020 traded 1 bp weaker at 94 bps bid, according to a market source.

Morgan Stanley sold $2.5 billion of the notes (Baa2/A-/A) on Jan. 22 at Treasuries plus 130 bps.

The financial services company is based in New York City.

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