Starbucks prices $500 million new issue; Xerox stable; Time Warner softens; McDonald’s firms

By Cristal Cody

Tupelo, Miss., Feb. 1 – The investment-grade bond market got off to a slow start to February with one corporate issuer pricing an issue on Monday.

Starbucks Corp. sold $500 million of 2.1% five-year senior notes at a spread of 75 basis points over Treasuries.

Bonds were mixed in secondary trading, and credit spreads softened over the day.

Xerox Corp.’s 3.5% senior notes due 2020 were quoted unchanged on Monday. The company announced on Friday that it will split into two publicly traded companies. Fitch Ratings and Standard & Poor’s downgraded the company’s ratings on the plan.

Time Warner Inc.’s 3.875% notes due 2026 widened 7 bps on Monday.

McDonald’s Corp.’s senior notes firmed 1 bp to 2 bps in the secondary market.

The Markit CDX North American Investment Grade 25 index eased 3 bps to a spread of 104 bps.

Starbucks sells five-year deal

Starbucks sold $500 million of 2.1% five-year senior notes with a spread of 75 bps over Treasuries on Monday, according to an FWP filing with the Securities and Exchange Commission.

The notes (A2/A-/A) priced at 99.943 to yield 2.112%.

Goldman Sachs & Co., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the bookrunners.

Proceeds will be used for general corporate purposes.

Starbucks is a Seattle-based specialty coffee retailer.

Xerox unchanged

Xerox’s 3.5% senior notes due 2020 were unchanged at 222 bps bid, according to a market source.

The company sold $400 million of the notes (Baa2/BBB-/BBB-) on Aug. 17 at a spread of Treasuries plus 212.5 bps.

The maker of office machines is based in Norwalk, Conn.

Time Warner softens

Time Warner’s 3.875% notes due 2026 traded 7 bps weaker over the session to 208 bps bid, a market source said.

Time Warner sold $600 million of the notes (Baa2/BBB/ BBB+) on Nov. 17 at a spread of Treasuries plus 162.5 bps.

The media company is based in New York.

McDonald’s tightens

McDonald’s 3.7% notes due 2026 firmed 1 bp to 164 bps bid, according to a market source.

The company sold $1.75 billion of the notes (Baa1/BBB+/BBB+) on Dec. 2 at a spread of Treasuries plus 155 bps.

The fast food chain is based in Oak Brook, Ill.

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