Capital One brings sole deal to high-grade primary market; Capital One mostly flat; IBM firms

By Cristal Cody and Aleesia Forni

Virginia Beach, Feb. 10 - Capital One Financial Corp. subsidiary Capital One Bank (USA) NA was the lone issuer making its way to the high-grade primary market on Monday.

The bank priced $2 billion of senior notes in three tranches during the session.

A $250 million tranche of floaters due 2017 was priced at par to yield Libor plus 50 basis points, while $750 million of 1.2% three-year notes sold at Treasuries plus 58 bps.

There was also a $1 billion tranche of 2.25% notes due 2019 sold with a spread of Treasuries plus 78 bps.

Strong demand was seen for the sole high-grade deal, which was upsized from $1.75 billion as the floating-rate tranche was added on.

Capital One was able to price the two fixed-rate tranches around 12 bps tighter than original guidance and at the tight end of price talk.

Meanwhile, Bank Nederlandse Gemeenten announced guidance for a planned benchmark-sized offering of notes due 2017 in the mid-swaps plus "high teens" bps area, according to a market source.

The issue is expected to price on Tuesday.

Despite the lack of primary activity during the session, one market source noted a "positive tone to the market" on Monday.

Looking ahead to the rest of the week, the source said he predicts "not a whole lot" of action for the primary market on Tuesday.

Furthermore, he is expecting around $15 billion to $20 billion of supply for the week.

Investment-grade bond spreads traded mostly unchanged in quiet trading over the session, market sources said.

The Markit CDX North American Investment Grade series 21 index ended flat at a spread of 68 bps.

Capital One Bank's two tranches of notes traded flat to 1 bp better, a trader said.

In other trading on Monday, International Business Machines Corp.'s 3.625% notes due 2024 firmed 4 bps from where the issue priced on Thursday, a trader said.

Capital One upsizes

Capital One tapped the market for $2 billion of notes (A3/BBB+/A-) in three tranches on Monday, according to market sources.

The deal's size was increased from $1.75 billion, with a three-year tranche of floating-rate notes added.

The $250 million tranche of floaters due 2017 was priced at par to yield Libor plus 50 bps.

A second tranche was $750 million of 1.2% three-year notes sold at Treasuries plus 58 bps.

Pricing was at 99.959 to yield 1.214%.

There was also $1 billion of 2.25% notes due 2019 priced with a spread of Treasuries plus 78 bps, or 99.991, to yield 2.252%.

Both fixed-rate tranches priced at the tight end of talk.

Capital One Bank's 1.2% notes due 2017 firmed to 57 bps bid, 56 bps offered in aftermarket trading, according to a trader.

The 2.25% notes due 2019 traded flat at 78 bps bid, 75 bps offered in the secondary market.

Bookrunners were Barclays, Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC.

The financial services company is based in McLean, Va.

Bank Nederlandse sets talk

Bank Nederlandse Gemeenten announced a benchmark-sized offering of three-year notes (Aaa/AA+/AAA) on Monday to price on Tuesday, according to a market source.

Initial guidance for the Rule 144A and Regulation S deal is set in the mid-swaps plus "high teens" bps area.

The bookrunners are BofA Merrill Lynch, Deutsche Bank Securities, RBS Securities Inc. and TD Securities.

The local government funding agency is based in the Hague.

IBM firms

IBM's 3.625% notes due 2024 traded late Monday afternoon better at 91 bps bid, 90 bps offered, a trader said.

IBM sold $2 billion of the 10- year notes (Aa3/AA-/A+) at 95 bps over Treasuries on Thursday as part of a $4.5 billion four-part offering.

The information technology and computer company is based in Armonk, N.Y.

Bank/brokerage CDS costs mostly flat

Investment-grade bank and brokerage CDS prices were mostly unchanged, according to a market source.

Bank of America Corp.'s CDS costs were flat at 77 bps bid, 81 bps offered. Citigroup Inc.'s CDS costs ended unchanged at 82 bps bid, 86 bps offered. JPMorgan Chase & Co.'s CDS costs firmed 1 bp to 65 bps bid, 69 bps offered. Wells Fargo & Co.'s CDS costs were unchanged at 41 bps bid, 46 bps offered.

Merrill Lynch's CDS costs closed flat at 80 bps bid, 84 bps offered. Morgan Stanley's CDS costs were unchanged at 87 bps bid, 92 bps offered. Goldman Sachs Group, Inc.'s CDS ended flat at 93 bps bid, 98 bps offered.

Paul Deckelman contributed to this review.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.