FedEx, National Rural Utilities issue bonds; Kraft Heinz, Burlington Northern firm

By Aleesia Forni and Cristal Cody

Virginia Beach, Oct. 20 – FedEx Corp. and National Rural Utilities Cooperative Finance Corp. joined a trio of lenders bringing new deals to the investment-grade primary, as more weak data out of China weighed on the market.

China reported on Tuesday that its economy grew by 6.9% during the third quarter compared to the previous year, falling below the targeted 7% and making for a “sluggish” day in the high-grade space, one market source said.

In the primary, FedEx garnered around $3.5 billion of orders for its new $1.25 billion issue, pricing the deal around 25 basis points tight of initial talk.

National Rural Utilities was the session’s only other corporate deal, pricing $750 million of collateral trust bonds in two parts.

Elsewhere on Tuesday, KfW sold a $4 billion three-year global note at the tight end of talk, while Inter-American Development Bank priced $500 million of floaters and Bank Nederlandse Gemeenten NV priced a $1.75 billion three-year note.

Investment-grade bonds were mixed in secondary trading over the session.

Kraft Heinz Co.’s 3.95% notes due 2025 (Baa3/BBB-/) traded 4 bps tighter on Tuesday.

Burlington Northern Santa Fe LLC’s debentures (A3/BBB+) tightened 2 bps to 3 bps in the secondary market.

Duke Energy Progress Inc.’s first mortgage bonds (Aa2/A/A+) were mixed, with the short end firmer on the day.

The Markit CDX North American Investment Grade 25 index ended 1 bp weaker at a spread of 81 bps.

The high-grade index has ranged from a low spread of 60.7 bps to a high spread of 94.8 bps over the past 12 months, according to a Barclays Bank plc report on Tuesday.

KfW sells $4 billion

KfW priced $4 billion of 1.125% three-year global notes (Aaa/AAA/AAA) at mid-swaps plus 17 bps on Tuesday, according to a market source and an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.865 with a spread of 25.2 bps over Treasuries.

The issue sold at the tight end of the mid-swaps plus 19 bps area talk.

The bookrunners are BofA Merrill Lynch, BNP Paribas Securities Corp. and Goldman Sachs & Co.

The German government-owned development bank is based in Frankfurt.

BNG prices tight

Also on Tuesday, Bank Nederlandse Gemeenten priced $1.75 billion of 1.25% three-year notes (Aaa/AA+) at mid-swaps plus 29 bps, according to a market source.

The issue was sold at the tight end of guidance set in the mid-swaps plus 30 bps area.

The bookrunners for the Rule 144A and Regulation S deal are Morgan Stanley & Co. LLC, Nomura, RBC Capital Markets LLC and TD Securities.

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

FedEx sells new issue

FedEx priced $1.25 billion of 4.75% 30-year senior notes (Baa1/BBB) on Tuesday at Treasuries plus 187.5 bps, at the tight end of the Treasuries plus 190 bps area guidance, according to a market source and a filing with the SEC.

The notes sold at 99.079 to yield 4.808%.

Initial talk was in the range of Treasuries plus 210 bps to 215 bps.

Mizuho Securities, Morgan Stanley, Wells Fargo Securities LLC, Citigroup Global Markets Inc., Goldman Sachs, Regions Securities LLC and SunTrust Robinson Humphrey, Inc. are the joint bookrunners.

FedEx intends to use the proceeds from the offering for working capital and general corporate purposes.

Located in Memphis, Tenn., FedEx is a shipping and logistics management company.

National Rural two-parter

And National Rural Utilities priced $750 million of collateral trust bonds (A1/A/A+) in two tranches on Tuesday, according to a market source and two FWP filings with the SEC.

There was $350 million of 2.3% five-year notes sold at 99.798 to yield 2.343%, or Treasuries plus 95 bps.

Pricing was at the tight end of guidance set in the Treasuries plus 100 bps area following talk set in the Treasuries plus 115 bps area.

A $400 million 3.25% tranche of 10-year notes priced at 120 bps over Treasuries. Pricing was at 99.762 to yield 3.278%.

Guidance was in the 125 bps area over Treasuries, having firmed from initial talk set in the 145 bps area over Treasuries.

J.P. Morgan Securities LLC, KeyBanc Capital Markets, Mizuho Securities, SunTrust Robinson Humphrey, RBC Capital Markets LLC and U.S. Bancorp Investments Inc. are the bookrunners.

Proceeds will be used for general corporate purposes, including the repayment of short-term debt, primarily consisting of commercial paper, and to fund the repayment of $350 million of 1.9% collateral trust bonds due Nov. 1, 2015.

The market lender for electric cooperatives is based in Herndon, Va.

IADB floaters price

Inter-American Development Bank, meantime, priced $500 million of floating-rate global notes (Aaa/AAA) due Jan. 16, 2018 on Tuesday in line with talk at Libor plus 6 bps, according to a market source.

BofA Merrill Lynch, Citigroup and Goldman Sachs are the joint bookrunners.

The issuer provides financing for Latin American and Caribbean countries and is based in Washington, D.C.

Kraft Heinz firms

Kraft Heinz’s 3.95% notes due 2025 headed out 4 bps better in secondary trading on Tuesday at 146 bps bid, a market source said.

The notes priced in a $2 billion tranche on June 23 at 155 bps plus Treasuries ahead of the merger of Heinz and Kraft.

The combined food and beverage company is based in Pittsburgh and Northfield, Ill.

Burlington Northern improves

Burlington Northern’s 3.65% debentures due 2025 firmed 2 bps to 131 bps bid in secondary trading, a market source said.

The company sold $350 million of the bonds on Aug. 13 at a spread of Treasuries plus 148 bps.

Burlington Northern’s 4.7% debentures due 2045 traded 3 bps tighter at 167 bps bid on Tuesday.

The debentures priced in a $650 million tranche in the Aug. 13 offering at Treasuries plus 185 bps.

Burlington Northern Santa Fe is a holding company for railroad transportation subsidiaries based in Fort Worth, Texas.

Duke Energy mixed

Duke Energy’s 3.25% notes due 2025 firmed 2 bps to 96 bps bid, according to a market source.

The company sold $500 million of the notes on Aug. 10 at a spread of Treasuries plus 105 bps.

Duke Energy’s 4.2% bonds due 2045 eased 2 bps during the session to 118 bps bid.

The bonds were sold in a $700 million tranche in the Aug. 10 sale at Treasuries plus 130 bps.

Raleigh, N.C.-based Duke Energy Progress is an electricity distributor in North Carolina and South Carolina.

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