Verizon raises $11 billion; Citibank, Humana, Penske price; high-grade credit spreads soften

By Cristal Cody

Tupelo, Miss., March 13 – Investment-grade issuers priced more than $15 billion of bonds on Monday as volume remains strong ahead of the Federal Reserve’s policy decision on Wednesday.

Verizon Communications Inc. sold $11 billion of notes in five parts.

Citibank, NA priced $2.5 billion of two-year notes in two tranches.

Humana Inc. brought a $1 billion two-tranche offering of notes.

Virginia Electric and Power Co. priced $750 million of 10-year senior notes.

Penske Truck Leasing Co., LP came with $500 million of 10-year senior notes.

Also, Fulton Financial Corp. brought $125 million of five-year senior notes to the primary market on Monday.

About $25 billion to $30 billion of bond volume is forecast for the week.

The Markit CDX North American Investment Grade index closed on Monday about 1 basis point weaker at a spread of 65 bps.

Verizon sells five tranches

Verizon Communications sold $11 billion of notes (Baa1/BBB+/A-) in five tranches on Monday, according to a market source.

The company priced $1.4 billion of five-year floating-rate notes at Libor plus 100 bps.

Verizon sold $1.85 billion of 3.125% five-year fixed-rate notes at a spread of Treasuries plus 110 bps.

The $3.25 billion tranche of 4.124% 10-year notes priced at a Treasuries plus 160 bps spread.

Verizon brought $3 billion of 5.25% 20-year notes at a spread of 210 bps over Treasuries.

The final $1.5 billion tranche of 5.5% 30-year notes was sold with a Treasuries plus 230 bps spread.

Barclays, BofA Merrill Lynch, Morgan Stanley & Co. LLC and RBC Capital Markets LLC were the bookrunners.

The company intends to use the proceeds to fund a tender offer that was announced Monday for 30 series of outstanding notes, according to a 424B2 filed with the Securities and Exchange Commission.

Any amounts remaining will be used for general corporate purposes, which may include financing some or all of Verizon’s acquisition of Yahoo! Inc. and discretionary contributions to its qualified pension plans.

Verizon is a New York City-based telecommunications company.

Citibank prices $2.5 billion

Citibank priced $2.5 billion of two-year notes (A1/A+/) in two tranches on Monday, according to a market source.

The company sold $1 billion of floating-rate notes due March 20, 2019 at Libor plus 34 bps.

Citibank priced $1.5 billion of 2% two-year fixed-rate notes at a spread of Treasuries plus 67 bps.

Citigroup Global Markets Inc. was the bookrunner.

Citibank is a Sioux Falls, S.D.-based commercial and consumer banking products and services company.

Humana sells $1 billion

Humana priced $1 billion of fixed-rate senior notes (Baa3/BB+/BBB) in two tranches on Monday, according to a market source and an FWP filing with the Securities and Exchange Commission.

Humana sold $600 million of 3.95% 10-year notes at 99.877 to yield 3.965% and a spread of Treasuries plus 135 bps.

The company priced $400 million of 4.8% 30-year notes at 99.905 to yield 4.806%. The notes due March 15, 2047 priced with a spread of 160 bps over Treasuries.

Both tranches priced on the tight side of guidance.

Bookrunners were J.P. Morgan Securities LLC, BofA Merrill Lynch, Morgan Stanley and U.S. Bancorp Investments Inc.

Proceeds will be used for general corporate purposes.

The health care and insurance company is based in Louisville, Ky.

Virginia Electric prints

Virginia Electric and Power priced $750 million of 3.5% series A 10-year senior notes with a spread of Treasuries plus 90 bps on Monday, according to an FWP filing with the SEC.

The notes due March 15, 2027 (A2/BBB+/A) priced at 99.908 to yield 3.511%.

Deutsche Bank Securities Inc., J.P. Morgan Securities and Wells Fargo Securities LLC were the bookrunners.

Proceeds will be used to repay short-term debt and for general corporate purposes.

The electric utility is based in Richmond, Va.

Penske brings notes

Penske Truck Leasing Co. and co-issuer PTL Finance Corp. priced $500 million of 4.2% 10-year senior notes with a spread of 160 bps over Treasuries on Monday, according to a market source.

The notes due April 1, 2027 (Baa2/BBB/BBB+) priced at the wide side of guidance of Treasuries plus 155 bps area, plus or minus 5 bps.

BofA Merrill Lynch, J.P. Morgan Securities, PNC Capital Markets LLC and Wells Fargo Securities were the bookrunners.

Proceeds from the sale will be used to repay outstanding debt and for general corporate purposes.

The global transportation services provider is based in Reading, Pa.

Fulton Financial prices

Fulton Financial (Baa1/BBB+/) sold $125 million of 3.6% five-year senior notes on Monday at 99.615 to yield 3.685%, according to an FWP filing with the SEC.

The notes due March 16, 2022 priced with a spread of Treasuries plus 155 bps.

Keefe, Bruyette & Woods, Inc. was the underwriter.

Proceeds will be used along with cash on hand to repay the company’s 5.75% subordinated notes due and payable on May 1, 2017. Any remaining proceeds will be used for general corporate purposes.

Fulton Financial is a financial holding company for regional banks based in Lancaster, Pa.

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