United Technologies sells $11 billion; McDonald’s, Zoetis tap primary market; Apache eyed

By Cristal Cody

Tupelo, Miss., Aug. 13 – United Technologies Corp. dominated high-grade primary action on Monday with an $11 billion seven-part offering of senior notes that priced on the tight side of guidance.

Two other reported issuers also priced notes.

McDonald’s Corp. reopened two existing issues and priced a new 30-year bond in a $1.8 billion deal during the session.

Zoetis Inc. brought $1.5 billion of senior notes in four tranches to the primary market.

In other activity, Black Hills Corp. (Baa2/BBB+/BBB+) remarketed notes, while Apache Corp. (Baa3/BBB/BBB) held fixed-income investor calls via BofA Merrill Lynch, Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC, according to market sources.

A deal also remains in the pipeline from Elanco Animal Health Inc. (Baa3/BB+/), which held fixed-income investor calls on Thursday for a potential $2.5 billion offering of senior notes to finance the Greenfield, Ind.-based animal health products company’s spin-off from Eli Lilly & Co., according to a market source.

Citigroup Global Markets Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities are the arrangers.

About $25 billion to $30 billion of deal volume is expected by syndicate sources this week following more than $33 billion of new issuance last week.

The Markit CDX North American Investment Grade 30 index was modestly softer on the day at a spread of 62 basis points.

United Technologies prices

United Technologies priced $11 billion of senior notes (Baa1/BBB+) in seven tranches on the tight side of guidance on Monday, according to a market source.

The $750 million tranche of floating-rate notes due Aug. 16, 2021 priced at Libor plus 65 bps.

United Technologies also sold $1 billion of three-year fixed-rate notes with a spread of Treasuries plus 70 bps.

It also priced $2.25 billion of 3.65% five-year notes at a 90 bps over Treasuries spread.

The $1.5 billion tranche of 3.95% seven-year notes were sold with a Treasuries plus 115 bps spread.

In the $3 billion long 10-year tranche, the company priced 4.125% notes at a spread of 125 bps over Treasuries.

United Technologies sold $750 million of 4.45% long 20-year notes with a Treasuries plus 145 bps spread.

The final $1.75 billion tranche of 4.625% notes due Nov. 16, 2048 priced at a 160 bps over Treasuries spread.

The deal also included a second tranche of floating-rate notes. Final pricing details on that tranche were not immediately available.

BofA Merrill Lynch, HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC, BNP Paribas Securities Corp., Deutsche Bank Securities Inc., Goldman Sachs and Mizuho Securities USA Inc. were the bookrunners.

United Technologies is a Hartford, Conn.-based company that provides technology products and services to the building and aerospace industries.

McDonald’s prints $1.8 billion

McDonald’s came with $1.8 billion of senior medium-term notes (Baa1/BBB+/) in three tranches, including two add-ons, on Monday, according to a market source and an FWP filing with the Securities and Exchange Commission.

McDonald’s priced a $500 million tap of its 3.35% notes due April 1, 2023 at 99.657 to yield 3.43%, or a spread of Treasuries plus 68 bps.

The notes originally priced on March 14 in a $500 million issue at 99.962 to yield 3.358%, or a spread of Treasuries plus 75 bps. The total outstanding is now $1 billion.

McDonald’s also priced a $550 million reopening of its 3.8% notes due April 1, 2028 at a Treasuries plus 98 bps spread, or 99.501 to yield 3.862%.

The company originally sold $500 million of the 10-year notes at 99.891 to yield 3.813%, or a Treasuries plus 100 bps spread, in the March 14 offering. The total outstanding is now $1.05 billion.

In the new issue tranche, McDonald’s sold $750 million of 4.45% 30-year notes at 99.521 to yield 4.479%, or a spread of 143 bps over Treasuries.

McDonald’s priced all the tranches on the tight side of guidance and better than initial talk.

Goldman Sachs, J.P. Morgan Securities, BofA Merrill Lynch, and Mizuho Securities were the bookrunners.

The fast food chain is based in Chicago.

Zoetis brings $1.5 billion

Zoetis placed $1.5 billion of senior notes (Baa1/BBB/) in four tranches on Monday, according to an FWP filing with the SEC.

The company sold $300 million of three-year floating-rate notes at par to yield Libor plus 44 bps.

In the fixed-rate tranche due Aug. 20, 2021, the company priced $300 million of 3.25% notes at a spread of 60 bps over Treasuries. The notes priced at 99.887 to yield 3.29%.

Zoetis sold $500 million of 3.9% 10-year notes with a Treasuries plus 105 bps spread, or 99.811 to yield 3.923%.

Finally, the company placed $400 million of 4.45% 30-year notes at a Treasuries 145 bps spread. The notes priced at 99.295 to yield 4.493%.

Barclays, Citigroup Global Markets, J.P. Morgan Securities, BofA Merrill Lynch, MUFG, BNP Paribas Securities, Goldman Sachs, HSBC Securities and TD Securities (USA) LLC were the bookrunners.

Parsippany, N.J.-based Zoetis makes animal health medicines and vaccines.

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