UnitedHealth megadeal meets demand; Morgan Stanley mixed; Barclays paper tightens

By Aleesia Forni and Cristal Cody

Virginia Beach, July 20 – UnitedHealth Group Inc. sold a $10.5 billion behemoth bond to open the week on Monday in order to fund its planned acquisition of Catamaran Corp.

The eight-part deal attracted more than $40 billion of orders, with tranches pricing between 20 basis points to 25 bps tighter than initial price thoughts.

Morgan Stanley, meanwhile, priced $3 billion of senior notes following an earnings announcement earlier Monday that topped expectations.

The 10-year offering went straight to launch with a spread of Treasuries plus 175 bps following initial guidance in the 165 bps area over Treasuries.

Also on Monday, Synchrony Financial hit the primary with a $1 billion offering of 10-year bonds.

The deal’s order book was around two times oversubscribed.

Morgan Stanley’s existing notes were mixed in trading over the session.

Barclays plc’s 2.875% notes due 2020 tightened 7 bps in the secondary market.

Citigroup Inc.’s 3.3% senior notes due 2025 widened 7 bps from Friday.

The Markit CDX North American Investment Grade series 23 index headed out about ½ bp weaker at a spread of 66 bps.

UnitedHealth leads primary

UnitedHealth priced $10.5 billion of senior notes (A3/A+/A-) in eight tranches, all at the tight end of price guidance in Monday’s session, according to informed sources.

The company sold $750 million of 18-month floating-rate notes at par to yield Libor plus 45 bps.

A $750 million tranche of 1.45% two-year notes priced at 99.981 to yield 1.46%, or Treasuries plus 75 bps.

Also priced was $1.5 billion of 1.9% three-year notes at Treasuries plus 85 bps. Pricing was at 99.873 to yield 1.944%.

A $1.5 billion tranche of 2.7% five-year notes sold at 99.94 to yield 2.713% with a spread of Treasuries plus 100 bps.

The company also sold $1 billion of 3.35% seven-year notes at 99.877 to yield 3.37%. The notes sold with a spread of 125 bps over Treasuries.

A $2 billion tranche of 3.75% 10-year notes priced at 99.729 to yield 3.783%, or Treasuries plus 140 bps.

The sale also included a $1 billion tranche of 4.625% 20-year notes sold at 99.988 to yield 4.626% with a spread of Treasuries plus 150 bps.

Finally, $2 billion of 4.75% 30-year notes priced at 99.589 to yield 4.776%, or 165 bps over Treasuries.

Bookrunners are J.P. Morgan Securities LLC, Barclays, BofA Merrill Lynch, Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, UBS Securities LLC, BNY Mellon Capital Markets LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Goldman Sachs & Co.

The Minnetonka, Minn.-based diversified health company plans to use the proceeds from the offering to finance its acquisition of Catamaran.

Morgan Stanley taps market

The session also saw Morgan Stanley price $3 billion of 4% 10-year senior notes at Treasuries plus 165 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes (A3/A-/A) sold tighter than initial guidance.

Pricing was at 99.468.

Proceeds will be used for general corporate purposes.

Morgan Stanley was the bookrunner.

The financial services company is based in New York City.

Synchrony prices tight

Synchrony priced $1 billion of 4.5% 10-year senior notes (/BBB-/BBB-) at Treasuries plus 217 bps on Monday, according to a market source.

The notes sold at the tight end of the Treasuries plus 220 bps area price guidance, which had firmed from initial talk set in the range of Treasuries plus 220 bps to 225 bps.

BofA Merrill Lynch, Citigroup, Morgan Stanley and MUFG are the bookrunners.

Proceeds will be used to prepay outstanding amounts under the company’s bank term loan facility, to invest in liquid assets to further increase the size of its liquidity portfolio or for other additional uses.

Synchrony is a consumer financial services company based in Stamford, Conn.

Morgan Stanley mixed

Morgan Stanley’s 2.65% notes due 2020 firmed 2 bps from Friday to 103 bps bid, according to a market source on Monday.

Morgan Stanley sold $2.5 billion of the notes on Jan. 22 at Treasuries plus 130 bps.

The company’s 4.3% bonds due 2045 eased 1 bp to 167 bps bid in secondary trading.

Morgan Stanley sold $2.5 billion of the notes in the Jan. 22 offering at a spread of Treasuries plus 190 bps.

The financial services company is based in New York City.

Barclays tightens

Barclays’ 2.875% notes due 2020 tightened 7 bps over the day to 140 bps bid, according to a market source.

Barclays sold $1 billion of the notes (Baa3/BBB/A) on June 1 at Treasuries plus 142 bps.

The financial services company is based in London.

Citigroup wider

Citigroup’s 3.3% senior notes due 2025 eased 7 bps to 156 bps bid on Monday, a market source said.

Citigroup sold $1.5 billion of the notes (Baa2/A-/A) on April 22 at Treasuries plus 135 bps.

The investment bank is based in New York.

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