Bank of America, Ford price, primary spree continues; new issues tighten, Invesco firms 5 bps

By Cristal Cody and Aleesia Forni

Virginia Beach, Nov. 6 - The high-grade bond market saw another packed primary on Wednesday, with more than $10 billion of new paper priced during the session.

In one of the day's largest deals, Bank of America sold $2.5 billion of senior notes in two tranches.

The sale included $1 billion of floating-rate notes priced at par to yield Libor plus 47 basis points and $1.5 billion of 1.125% notes due 2016 priced at Treasuries plus 60 bps.

In another financial new issue, Japan Bank for International Cooperation priced $2.5 billion of guaranteed bonds in two parts on Wednesday.

The bank sold $2 billion of 1.75% notes due 2018 at Treasuries plus 49.4 bps and $500 million of floaters due 2018 at par to yield Libor plus 36 bps.

Ford Motor Credit Co. LLC sold $1 billion of 4.375% senior notes due 2023 with a spread of 178 bps over Treasuries, according to a syndicate source.

Elsewhere on Wednesday, Invesco Ltd. came to market to price a $1 billion issue of notes in two parts.

The sale included $600 million of 4% senior notes due 2024 priced at Treasuries plus 145 bps and $400 million of 5.375% notes due 2043 priced at 170 bps over Treasuries.

Leading the host of utility names hitting the market on Wednesday, Pacific Gas and Electric Co. came to the primary to sell $800 million of senior notes in two tranches.

Both tranches priced at the tight end of talk.

There was $300 million of 3.85% 10-year notes priced at Treasuries plus 123 bps and $500 million of 5.125% notes due 2043 sold at 133 bps over Treasuries.

Buckeye Partners LP brought $800 million of senior notes split evenly into two tranches on Wednesday, according to an informed source.

There was $400 million of 2.65% notes due 2018 sold at Treasuries plus 135 bps, while $400 million of 5.85% notes due 2043 sold at 215 bps over Treasuries.

In the European space, Dublin-based WPP Finance 2010 sold $500 million of 5.625% 30-year senior notes at Treasuries plus 200 bps.

The session also saw a split-rated deal from Lazard Group.

Lazard Group LLC brought a split-rate issue of $500 million of 4.25% senior notes due 2020 priced with a spread of 230 bps over Treasuries during the session.

Both Kentucky Utilities Co. and Louisville Gas and Electric Co. tapped the market to price $250 million each of 4.65% 30-year first mortgage bonds at Treasuries plus 90 bps.

In other primary action, Public Service Co. of New Hampshire sold $250 million of 10-year first mortgage bonds with a spread of Treasuries plus 90 bps.

It was also announced on Wednesday that Fannie Mae would forgo its issuance of benchmark notes on Wednesday.

Issuance has already surpassed earlier estimates of $20 billion to $25 billion of new supply for the week. High-grade issuers have tapped the market to sell more than $30 billion of new paper as of Wednesday.

Despite the flooding of new supply into the primary, a number of issuers were still able to price deals tight of initial guidance.

"Still seeing strong demand basically across the board," one market source said of the day's new deals after the session's close.

Activity in the high-grade primary is not expected to let up any time soon, sources say.

"Better get used to it," one syndicate source quipped of the busy Wednesday.

Investment-grade bonds ended mixed on the day with new issuance better in the secondary market, according to market sources.

"They're going out sideways," a trader said.

The Markit CDX North American Investment Grade series 21 index firmed 1 bps to a spread of 73 bps.

Invesco's new tranche of 4% notes tightened 5 bps in late aftermarket trading, a trader said.

In other secondary trading, Ford Motor Credit's 1.5% notes due 2017 tightened 3 bps.

WPP Finance's 5.625% notes traded about 2 bps better than issuance, a trader said.

BofA two-parter

Bank of America came to Wednesday's primary market to sell $2.5 billion of senior notes in two tranches, according to an informed source.

A $1 billion tranche of floating-rate notes priced at par to yield Libor plus 47 bps.

A $1.5 billion tranche of 1.125% notes due 2016 was priced at Treasuries plus 60 bps.

The notes priced in line with talk.

BofA Merrill Lynch was the bookrunner.

The financial services company is based in Charlotte, N.C.

JBIC sells $2.5 billion

In a deal announced on Tuesday, Japan Bank for International Cooperation came to market to price a $2.5 billion two-part offering of guaranteed bonds (Aa3/AA-/), according to an FWP filing with the Securities and Exchange Commission.

The deal included $2 billion of 1.75% notes due 2018 priced with a spread of Treasuries plus 49.4 bps, or 99.618, to yield 1.817%.

A $500 million tranche of five-year floating-rate notes was priced with a coupon of Libor plus 36 bps at par.

The securities are guaranteed by Japan.

BofA Merrill Lynch, BNP Paribas Securities Corp., Citigroup Global Markets Inc. and J.P. Morgan Securities plc were the joint bookrunners.

Proceeds will be used for the operation of the bank.

Japan Bank was last in the U.S. bond market with a $3.5 billion offering of notes in two tranches on July 23.

Ford new issue

Ford Motor Credit hit Wednesday's primary with a $1 billion issue of 4.375% 10-year senior notes (Baa3/BB+/BBB-) at a spread of 178 bps over Treasuries, according to a syndicate source and an FWP filing with the SEC.

The notes were talked in the area of Treasuries plus 180 bps and priced at 99.066 to yield 4.492%.

Ford Motor Credit's 1.5% notes due 2017 tightened to 95 bps bid, 90 bps offered in late trading on Wednesday, a trader said.

Barclays, Citigroup Global Markets, HSBC and Morgan Stanley & Co. LLC were the joint bookrunners.

Proceeds from the sale will be added to the general funds of Ford Credit and will be available for the purchase of receivables, for loans and for use in connection with the retirement of debt.

Ford Motor Credit is the financing arm of Dearborn, Mich.-based automaker Ford Motor Co.

Invesco senior notes

In other primary action, Invesco Ltd. - through Invesco Finance plc - priced $1 billion of senior notes (A3/A-/A-/) in two tranches on Wednesday, according to a market source and an FWP filing with the SEC.

The company sold $600 million of 4% senior notes due Jan. 30, 2024 at Treasuries plus 145 bps, or 99.284, to yield 4.085%.

A $400 million tranche of 5.375% notes due Nov. 30, 2043 priced with a spread of 170 bps over Treasuries. The notes priced at 98.298 to yield 5.491%.

BofA Merrill Lynch, Citigroup Global Markets and Morgan Stanley were the joint bookrunners.

Invesco's 4% notes due 2024 tightened to 140 bps bid in the secondary market, according to a trader.

Invesco, an Atlanta-based global investment management firm, intends to use the proceeds to repay all or a portion of the amount currently drawn on its existing credit facility and for general corporate purposes.

Buckeye prices tight

Buckeye Partners sold $800 million of senior notes (//BBB-) in two tranches on Wednesday, according to an informed source.

The company priced $400 million of 2.65% five-year notes with a spread of Treasuries plus 135 bps, or 99.823, to yield 2.688%.

The notes sold at the tight end of talk.

There was also $400 million of 5.85% 30-year notes sold at 215 bps over Treasuries, pricing in line with talk. Buckeye sold the notes at 98.581 to yield 5.952%.

Proceeds will be used as part of the cash consideration of the company's acquisition of 20 liquid petroleum products terminals from Hess Corp. and for general partnership purposes.

Barclays, SunTrust Robinson Humphrey Inc., Wells Fargo Securities LLC, Deutsche Bank Securities, JPMorgan and UBS Investment Bank were the joint bookrunners.

The refined petroleum products pipeline system is based in Houston.

PG&E brings two-part issue

The primary also saw Pacific Gas and Electric price $800 million of senior notes (A3/BBB/A-) in two tranches, according to a market source and an FWP filed with the SEC.

Both tranches priced at the tight end of talk.

A $300 million tranche of 3.85% 10-year notes was priced with a spread of Treasuries plus 123 bps.

Pricing was at 99.819 to yield 3.872%.

The company also priced $500 million of 5.125% senior notes due 2043 at 133 bps over Treasuries, or 99.847, to yield 5.135%.

Barclays, Goldman Sachs & Co., RBC Capital Markets and Wells Fargo Securities were the joint bookrunners.

The company plans to use proceeds to repay $400 million of its 6.25% senior notes due Dec. 1, 2013. Remaining proceeds from the offering will be used for general corporate purposes, including to repay a portion of the company's outstanding commercial paper.

The electric and natural gas utility is based in San Francisco.

Lazard sells $500 million

Lazard Group priced a $500 million split-rated issue of 4¼% seven-year senior notes (Ba2/BBB) at a 230 bps spread to Treasuries on Wednesday, according to an informed source.

The deal was whispered in the high 200 bps spread-range, the source said. Soon thereafter it launched and priced without formal guidance.

The notes came at a 99.671 reoffer price, with a yield of 4.305%.

Citigroup Global Markets and Goldman Sachs were the joint bookrunners.

Proceeds will be used to redeem all of the company's outstanding notes due 2015.

New York-based Lazard Group provides financial advisory and asset management services.

WPP new deal

Also on Wednesday, WPP Finance 2010 priced $500 million of 5.625% 30-year senior notes (Baa2/BBB/) with a spread of Treasuries plus 200 bps, according to an FWP filed with the SEC.

Pricing was at 97.455 to yield 5.805%.

In secondary trading, WPP Finance's 5.625% notes due 2043 firmed to 198 bps bid, 195 bps offered, a trader said.

Proceeds will be used for general corporate purposes such as the partial refinancing of debt maturing in 2014, including the 5.875% notes due June 15, 2014 and the 8% notes due Sept. 15, 2014.

BNP Paribas Securities, Citigroup Global Markets, Goldman Sachs, RBS Securities Inc. and Wells Fargo Securities were the joint bookrunners.

The communication services company is based in Dublin.

Kentucky Utilities' bonds

Kentucky Utilities sold $250 million of 4.65% 30-year first mortgage bonds at Treasuries plus 90 bps, according to a syndicate source and an FWP filed with the SEC.

The notes sold at 99.28 to yield 4.695%.

BNP Paribas Securities, Citigroup Global Markets, Goldman Sachs and Mitsubishi UFJ Securities (USA) Inc. were the joint bookrunners.

Proceeds will be used to repay short-term debt, including commercial paper borrowings, for capital expenditures and for other general corporate purposes.

The electric utility is based in Lexington, Ky.

Louisville Gas' $250 million

Meanwhile, Louisville Gas and Electric priced a $250 million sale of 4.65% first mortgage bonds due 2043 with a spread of Treasuries plus 90 bps, according to a syndicate source and an FWP filing with the SEC.

Pricing was at 99.28 to yield 4.695%.

Citigroup Global Markets, RBS Securities, SunTrust Robinson Humphrey and U.S. Bancorp Investments Inc. were the joint bookrunners.

Proceeds will be used to repay short-term debt obligations, for capital expenditures and for other general corporate purposes.

The regulated electric and natural gas utility is based in Louisville, Ky.

Public Service Co. 10-years

In another sale of first mortgage bonds, Public Service Co. of New Hampshire priced $250 million of bonds, series S, due 2023 with a spread of Treasuries plus 90 bps, according to an FWP filed with the SEC.

The mortgage bonds (A/A3/A) were priced at 99.634 to yield 3.544%.

Barclays and Mizuho Securities USA Inc. were the joint bookrunners.

Proceeds will be used to redeem the company's $89.25 million Business Finance Authority of the State of New Hampshire 4.75% pollution control revenue bonds, to refinance short-term debt and for general working capital purposes.

The subsidiary of Northeast Utilities is based in Manchester, N.H.

Fannie Mae passes on notes

Fannie Mae announced it would not utilize its Benchmark Notes announcement date on Wednesday, according to a press release.

The government-backed mortgage lender is based in Washington, D.C.

Bank/brokerage CDS costs flat

Investment-grade bank and brokerage CDS prices ended unchanged on Wednesday, according to a market source.

Bank of America Corp.'s CDS costs were flat at 99 bps bid, 103 bps offered. Citigroup Inc.'s CDS costs closed unchanged at 90 bps bid, 95 bps offered. JPMorgan Chase & Co.'s CDS costs went out at 84 bps bid, 89 bps offered. Wells Fargo & Co.'s CDS costs were flat at 53 bps bid, 57 bps offered.

Merrill Lynch's CDS costs ended unchanged at 98 bps bid, 103 bps offered. Morgan Stanley's CDS costs closed flat at 111 bps bid, 116 bps offered. Goldman Sachs Group, Inc.'s CDS costs were unchanged at 115 bps bid, 118 bps offered.

Paul Deckelman and Paul A. Harris contributed to this review.

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