Thomson Reuters, State Street, Ares price as market activity spikes; Potomac Electric tightens

By Cristal Cody and Aleesia Forni

Virginia Beach, Nov. 14 - The pace of the high-grade primary market picked up on Thursday, with eight issuers pricing roughly $5 billion of supply during the session.

Thomson Reuters Corp. brought the largest deal of the session, selling an upsized $1.5 billion three-part issue of senior notes.

The company priced $550 million of 1.3% senior notes due 2017 at Treasuries plus 90 basis points and $600 million of 4.3% 10-year notes at 170 bps over Treasuries. There was also a $350 million tranche of 5.65% notes due 2043 sold with a spread of Treasuries plus 195 bps.

State Street Corp. also came to the primary market on Thursday. The company priced $1 billion of 3.7% 10-year senior notes at Treasuries plus 105 bps.

In a deal announced last week, Ares Capital Corp. priced $600 million of 4.875% senior notes with a spread of Treasuries plus 366 bps.

Meanwhile, Black Hills Corp. brought an upsized $525 million issue of 4.25% 10-year senior notes to Thursday's primary, selling the notes with a spread of 160 bps over Treasuries.

Maxim Integrated Products Inc. sold a $500 million issue of 2.5% senior notes due 2018 with a spread of Treasuries plus 125 bps.

The session also saw Wisconsin Public Service Corp. price $450 million of 4.752% notes due 2044 at Treasuries plus 90 bps.

In other primary action, GATX Corp. sold an upsized $300 million issue of 2.5% long five-year notes with a spread of Treasuries plus 125 bps.

Potomac Electric Power Co. (Pepco) priced $150 million of 4.95% first mortgage bonds due 2043 at Treasuries plus 115 bps.

Also on Thursday, Federal Home Loan Banks priced $3 billion of 0.625% three-year Global bonds at Treasuries plus 13 bps.

Issuance so far this week has reached roughly $14.9 billion, just shy of earlier predictions of a $15 billion to $20 billion week.

Investment-grade bonds were mixed over the day in secondary trading, according to market sources.

The Markit CDX North American Investment Grade series 21 index ended unchanged at a spread of 72 bps.

In the secondary market, Potomac Electric's 4.95% 30-year bonds came in more than 25 bps, according to a market source.

GATX's 2.5% notes due 2024 and Maxim Integrated Products' 2.5% notes due 2018 both edged 1 bp tighter in late afternoon trading.

Thompson Reuters' three tranches of notes traded 2 bps to 5 bps better headed toward the close, a trader said.

State Street's 3.7% notes due 2023 traded wrapped around issuance, according to a trader.

Reuters prices tight

Thomson Reuters was in Thursday's market with an upsized $1.5 billion sale of senior notes (//BBB+) in three tranches, according to a market source and an FWP filing with the Securities and Exchange Commission.

The deal included $550 million of 1.3% senior notes due 2017 sold with a spread of Treasuries plus 90 bps, or 99.528 to yield 1.449%.

Another tranche was $600 million of 4.3% 10-year notes that priced at 170 bps over Treasuries. The notes sold at 99.381 to yield 4.377%.

Finally, $350 million of 5.65% notes due 2043 priced at Treasuries plus 195 bps. Pricing was at 98.046 to yield 5.788%.

All three tranches priced at the tight end of talk.

Thompson Reuters' tranche of 1.3% notes due 2017 traded at 87 bps bid, 83 bps offered, a trader said.

The 4.3% notes due 2023 headed out better at 165 bps bid, 161 bps offered.

The 5.65% bonds due 2043 firmed to 193 bps bid, 188 bps offered.

Barclays, BofA Merrill Lynch, Goldman Sachs & Co. and J.P. Morgan Securities LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes, including funding the redemption of the company's $800 million of 5.7% notes due October 2014 and to finance share repurchases.

The information services provider is based in New York City.

State Street brings $1 billion

Meanwhile, State Street hit Thursday's market with a $1 billion issue of 3.7% senior notes (A1/A+/A+) due 2023 priced with a spread of Treasuries plus 105 bps, according to a market source.

The notes sold at 99.76 to yield 3.729%.

Pricing was at the tight end of talk.

The notes traded flat at 105 bps bid, 100 bps offered, a trader said.

Morgan Stanley, BofA Merrill Lynch and Goldman Sachs were the joint bookrunners.

The company plans to use proceeds from the offering for general corporate purposes, which may include working capital, capital expenditures, funding potential future acquisitions, investments in or loans to subsidiaries, refinancing of outstanding debt, refinancing of outstanding capital securities, share repurchases, dividends and satisfaction of other obligations.

The Boston-based financial holding company last priced bonds in a $1.5 billion two-part offering of senior notes on May 8.

Ares sells notes

Ares Capital sold a $600 million issue of 4.875% senior notes (//BBB) due 2018 on Thursday with a spread of Treasuries plus 366 bps, according to a syndicate source and an FWP filing with the SEC.

Pricing was at 99.448 to yield 5%.

The notes priced on top of talk, which was set to yield in the area of 5%.

Ares Capital's 4.875% notes due 2018 headed out at 101 offered, a trader said.

Proceeds will be used to repay outstanding debt and for general corporate purposes.

The bookrunners were BofA Merrill Lynch, JPMorgan, Barclays, Morgan Stanley, Wells Fargo Securities LLC and SunTrust Robinson Humphrey Inc.

The specialty finance company is based in Los Angeles.

Black Hills new issue

Thursday's new issue market also saw Black Hills sell an upsized $525 million issue of 4.25% 10-year senior notes (Baa2/BBB/BBB) at Treasuries plus 160 bps, according to an FWP filing with the SEC.

Pricing was at 99.53 to yield 4.308%.

Credit Suisse Securities (USA) LLC, JPMorgan, RBC Capital Markets LLC and U.S. Bancorp Investments Inc. were the joint bookrunners.

Proceeds will be used to repay the company's outstanding $250 million of 9% senior notes due 2014 and for general corporate purposes, which may include the repayment of other debt.

The energy company is based in Rapid City, S.D.

Maxim prices $500 million

Maxim Integrated Products priced a $500 million issue of 2.5% senior notes due 2018 with a spread of Treasuries plus 125 bps, according to a market source and an FWP filing with the SEC.

The notes (Baa1/BBB+/) priced at 99.559 to yield 2.595%.

The notes were quoted later in the secondary market at 124 bps bid, 121 bps offered, according to a trader.

BofA Merrill Lynch, Stifel, Nicolaus & Co. Inc. and Morgan Stanley were the joint bookrunners.

Proceeds from the offering will be used for general corporate purposes, including acquisitions, and to repurchase shares of the company's common stock.

The San Jose, Calif.-based maker of analog integrated circuits last came to the primary market on March 11, 2013 to price $500 million of 3.375% 10-year notes. They were sold at a spread of 145 bps over Treasuries.

Wisconsin Public Service deal

Wisconsin Public Service brought a $450 million issue of 4.752% senior notes (Aa3/A/) due Nov. 1, 2044 to the primary market on Thursday with a spread of Treasuries plus 90 bps, according to an informed source and an FWP filing with the SEC.

Pricing was at par.

Deutsche Bank Securities Inc., Mizuho Securities USA Inc., Scotia Capital (USA) Inc., Goldman Sachs, Mitsubishi UFJ Securities (USA) Inc. and U.S. Bancorp were the joint bookrunners.

Proceeds will be used to partially finance the cost of the company's acquisition of Fox Energy Center, to refund outstanding long-term debt, to pay costs of construction or acquisition of other utility capital assets, to retire short-term debt and for other general corporate utility purposes.

The subsidiary of Integrys Energy Group, Inc. is based in Green Bay, Wis.

GATX prices tight

Also on Thursday, GATX priced an upsized $300 million issue of 2.5% senior notes (Baa2/BBB/BBB) due March 15, 2019 with a spread of Treasuries plus 125 bps, according to a market source and an FWP filing with the SEC.

The notes sold at the tight end of talk, which was set in the area of Treasuries plus 130 bps.

Pricing was at 99.463 to yield 2.609%.

GATX's 2.5% notes due 2024 edged tighter to 124 bps bid, 120 bps offered, a trader said.

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

The co-managers were BMO Capital Markets Corp., Mitsubishi UFJ, U.S. Bancorp and Wells Fargo.

Proceeds will be used to repay the $50 million outstanding balance under an unsecured floating-rate term loan due March 18, 2014 and for general corporate purposes, including working capital and capital expenditures.

There is a change-of-control put at 101%.

The transportation leasing service company is based in Chicago.

Pepco mortgage bonds

Potomac Electric Power brought a $150 million issue of 4.95% first mortgage bonds (A3/A/A-) due Nov. 15, 2043 to Thursday's primary, according to an FWP filing with the SEC.

The notes sold with a spread of Treasuries plus 115 bps, or 99.259 to yield 4.998%.

The bonds traded stronger going out at 87 bps bid, 84 bps offered, a trader said.

Barclays, BofA Merrill Lynch, Credit Suisse and Scotia Capital were the joint bookrunners.

Mischler Financial Group Inc. and Ramirez & Co. Inc. were the co-managers.

The company intends to use the proceeds from the offering to repay outstanding commercial paper and for general corporate purposes.

Potomac Electric, a utility based in Washington, D.C., was last in the U.S. bond market with a $250 million sale of 30-year first mortgage bonds on March 11.

CDS costs decline

Investment-grade bank and brokerage CDS prices declined on Thursday, according to a market source.

Bank of America Corp.'s CDS costs firmed 3 bps to 96 bps bid, 99 bps offered. Citigroup Inc.'s CDS costs tightened 3 bps to 91 bps bid, 94 bps offered. JPMorgan Chase & Co.'s CDS costs were unchanged at 84 bps bid, 87 bps offered. Wells Fargo & Co.'s CDS costs firmed 1 bp to 52 bps bid, 56 bps offered.

Merrill Lynch's CDS costs tightened 2 bps to 96 bps bid, 101 bps offered. Morgan Stanley's CDS costs declined 4 bps to 106 bps bid, 109 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 2 bps to 115 bps bid, 118 bps offered.

Paul Deckelman contributed to this review

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