Citigroup, Royal Bank of Canada, Macquarie enter primary; AT&T soft; Verizon tightens

By Aleesia Forni and Cristal Cody

Virginia Beach, July 23 – The investment-grade primary market was dominated by financial issuers on Thursday, with Citigroup Inc., Royal Bank of Canada, Macquarie Bank Ltd. and Bank Nederlandse Gemeenten NV pricing new deals.

Citigroup sold the largest offering during the session, pricing $3 billion of notes in tranches due 2018 and 2045 following a strong earnings announcement earlier this week.

The self-led deal attracted $7.75 billion of orders.

Royal Bank of Canada and Macquarie Bank were each in the primary with $1.75 billion new issues.

Also on Thursday, Harley-Davidson Inc. sold $750 million of notes in two tranches at the tight end of initial price talk.

This week has hosted another impressive amount of new high-grade issuance, with roughly $45.7 billion of new paper hitting the primary, topping what was predicted to be around $35 billion to $40 billion of supply.

AT&T Inc.’s 3.4% notes due 2025 eased 1 basis point in secondary trading over the day. The company reported second-quarter earnings results late Thursday and said earnings per share were 58 cents a share compared to 68 cents a share in the same period a year ago. Second-quarter revenue was up 1.4% from the year-ago period at $33 billion.

In other secondary trading, Verizon Communications Inc.’s 3.5% notes due 2024 firmed 6 bps.

Apple Inc.’s 3.2% notes due 2025 traded 7 bps wider on the day.

The Markit CDX North American Investment Grade index eased 1 bp to a spread of 70 bps.

Citigroup sells $3 billion

Citigroup priced $3 billion of senior notes (Baa1/A-/A) in three tranches on Thursday, according to a market source.

The company issued $1.25 billion of 2.15% notes due 2018 at 99.974 to yield 2.159%, or Treasuries plus 110 bps.

The notes sold on top of talk after having firmed from initial price thoughts in the 125 bps area over Treasuries.

There was also $500 million of floaters due 2018 priced at par to yield Libor plus 88 bps.

Guidance was set at the Libor equivalent to the three-year fixed-rate notes.

A $1.25 billion tranche of notes due 2045 sold at 99.855 to yield 4.659% with a spread of 167 bps over Treasuries.

Pricing was on top of talk. Initial price guidance was set in the area of Treasuries plus 180 bps.

Citigroup Global Markets Inc. is the bookrunner.

Citigroup is based in New York.

Macquarie three-parter

Macquarie Bank, meanwhile, priced $1.75 billion of senior notes (A2/A/AA) in three tranches on Thursday, according to a market source.

The bank sold $750 million of 2.85% notes due 2020 at 99.861 to yield 2.88%.

The tranche sold with a spread of Treasuries plus 125 bps, at the tight end of guidance set in the 130 bps area over Treasuries.

Also priced was $500 million of floating-rate notes due 2020 at par to yield Libor plus 112 bps.

Price talk was set at the Libor equivalent to the five-year fixed-rate notes.

Finally, $500 million of 4% notes due 2025 sold at 99.853 to yield 4.018%, or Treasuries plus 175 bps.

The notes sold in line with talk set in the Treasuries plus 175 bps area.

Barclays, J.P. Morgan Securities LLC, Macquarie and Wells Fargo Securities LLC are the bookrunners for the Rule 144A and Regulation S deal.

The banking unit of Macquarie Group Ltd. is based in Sydney, Australia.

RBC new issue

In other primary happenings on Thursday, Royal Bank of Canada priced $1.75 billion of senior notes (Aa3/AA-/AA) in fixed- and floating-rate tranches due July 30, 2018, according to two separate FWP filings with the Securities and Exchange Commission.

There was $1.25 billion of 1.8% three-year notes priced at 99.988 to yield 1.804%, or Treasuries plus 75 bps, and $500 million of three-year floating-rate notes sold at par to yield Libor plus 54 bps.

RBC Capital Markets LLC, Citigroup Global Markets and Wells Fargo Securities were the bookrunners.

The financial services company is based in Toronto.

Harley-Davidson prices tight

Harley-Davidson sold the day’s sole non-financial offering, pricing $750 million of senior notes (A3/A-/A) in tranches due 2025 and 2045 on Thursday, according to a market source.

The Milwaukee-based motorcycle company sold a $450 million issue of 3.5% notes due 2025. The notes priced at 99.449 to yield 3.566%, or Treasuries plus 130 bps.

A $300 million 4.625% note due 2045 priced at 99.774 to yield 4.639%, or Treasuries plus 165 bps.

Both tranches sold at the tight end of talk.

Citigroup Global Markets, Goldman Sachs & Co. and JPMorgan are the bookrunners.

Proceeds will be used to fund repurchases of the company’s common stock from time to time under Harley-Davidson’s share repurchase programs.

BNG add-on

Bank Nederlandse Gemeenten priced a $475 million add-on to its existing floating-rate notes (Aaa/AA+/AA+) due July 14, 2017 to yield Libor plus 7 bps, according to a market source.

The issue’s total size is now $1,475,000,000, including $150 million priced on July 10 and $850 million priced on July 7.

BofA Merrill Lynch, Goldman Sachs and TD Securities were the lead managers.

The local government funding agency is based in the Hague, the Netherlands.

FHLB global bonds

Federal Home Loan Banks priced $3 billion of 0.75% two-year global bonds on Thursday at Treasuries plus 13.5 bps, according to a company news release.

Pricing was at 99.776 to yield 0.858%.

The bonds, which will mature on Aug. 28, 2017, priced at the tight end of talk set in the Treasuries plus 14 bps area.

Lead managers for the issue are Barclays, BofA Merrill Lynch and TD Securities (USA) LLC.

FHLBanks are 12 government-sponsored funding providers.

AT&T soft

AT&T’s 3.4% notes due 2025 traded 1 bp wider at 170 bps bid on Thursday, according to a market source.

The company sold $5 billion of the notes (/BBB+/A-) on April 23 at a spread of Treasuries plus 150 bps.

The telecommunications company is based in Dallas.

Verizon tighter

Verizon’s 3.5% notes due 2024 firmed 6 bps over the trading session to 149 bps bid, a market source said.

The company sold $2.5 billion of the notes (Baa1/BBB+/A-) on Oct. 22, 2014 at Treasuries plus 135 bps.

The telecommunications company is based in New York City.

Apple eases

Apple’s 3.2% notes due 2025 were weaker at 105 bps bid going out on Thursday, wider than where the bonds were quoted in the previous session at 98 bps bid, a market source said.

The company sold $2 billion of the 10-year notes (Aa1/AA+/) on May 6 at Treasuries plus 100 bps.

The computer and mobile communications device company is based in Cupertino, Calif.

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