Philip Morris, Korea Housing tap market; PepsiCo details $2.5 billion deal; Cytec notes firm

By Aleesia Forni and Cristal Cody

Tupelo, Miss., Feb. 26 - Philip Morris International Inc., Korea Housing Finance Corp. and Cytec Industries Inc. kept pricing action going on Tuesday as the tone improved over the day, market sources said.

"It was pretty soft this morning, but it's coming back around now, so things are feeling a bit better," one bond source said.

Another source noted that much of the market was focused early in the day on Federal Reserve chairman Ben Bernanke's testimony to the Senate Banking Committee.

In the day's new offerings, Philip Morris International brought $1.85 billion of senior notes in three tranches late in the afternoon.

Korea Housing Finance sold $500 million of covered bonds in its third cross-border covered bond deal.

Cytec Industries tapped the market for $400 million in an offering of 10-year senior notes.

Details of PepsiCo Inc.'s $2.5 billion three-tranche offering of senior notes sold Monday also emerged on Tuesday.

A trader quoted Cytec's notes 9 basis points better in the secondary market near the end of the day's trading.

Philip Morris' notes due 2023 and 2043 were trading at 91 bps offered and 118 bps offered, respectively, the trader added.

In bank paper, JPMorgan Chase & Co.'s 6.3% notes due 2019 closed the session better on Tuesday, while the 7.625% notes due 2019 from Bank of America Corp. widened.

Investment-grade bank and brokerage credit default swap costs rose on the session.

Bank of America's CDS costs widened 5 bps to 124 bps bid, 128 bid. Citi's costs were 2 bps wider at 114 bps bid, 118 bps offered. JPMorgan's costs rose 3 bps to 82 bps bid, 86 bps offered. Wells Fargo's costs rose 3 bps to 73 bps bid, 77 bps offered.

Merrill Lynch's CDS costs were 3 bps wider at 108 bps bid, 118 bps offered. Morgan Stanley's costs were unchanged at 140 bps bid, 145 bps offered. Goldman Sachs' costs rose 1 bp to 132 bps bid, 137 bps offered.

Philip Morris' $1.85 billion

Philip Morris International (A2/A/A) sold $1.85 billion of senior notes in three tranches on Tuesday, according to a syndicate source.

The offering included $400 million of two-year floating-rate notes priced at par to yield Libor plus 5 bps, on the lower end of spread guidance of 5 bps to 10 bps.

Philip Morris also priced $600 million of 2.625% notes due March 6, 2023 at 98.199 to yield 2.833%, or a spread of 95 bps plus Treasuries. The notes were talked to price in the high 90 bps area.

The notes were quoted at 91 bps offered near the end of the day.

In the last tranche, the company sold $850 million of 4.125% bonds due March 4, 2043 at 97.197 to yield 4.292%. The bonds priced at a spread of 120 bps plus Treasuries, on the lower end of guidance of the 120 bps to 125 bps area.

A trader quoted the bonds at 118 bps offered.

Barclays, Citigroup Global Markets Inc., Goldman Sachs & Co., HSBC Securities (USA) Inc. and Societe Generale were the lead managers.

Proceeds will be added to general funds.

The producer of cigarette and tobacco products is based in New York.

Korea Housing sells bonds

Korea Housing Finance sold $500 million of 1 5/8% covered bonds due Sept. 15, 2018 at 99.308 to yield 1.757% in its third cross-border covered bond offering on Tuesday, according to a syndicate source.

The bonds (Aa1//) priced at a spread of Treasuries plus 100 bps, on the lower end of guidance set at Treasuries plus 100 bps to 105 bps.

Nomura Securities was the bookrunner. Citigroup and Standard Chartered Bank were the joint lead managers for the Rule 144A and Regulation S notes.

The housing finance company is based in Seoul, South Korea.

Cytec prices $400 million

Cytec Industries priced $400 million of 3.5% senior notes due April 1, 2023 at 99.303 to yield 3.583% on Tuesday, according to a FWP filing with the Securities and Exchange Commission.

The notes (Baa2/BBB/) priced at a spread of 170 bps over Treasuries.

One trader saw the notes at 161 bps bid, 160 bps offered near the end of the session.

Citigroup, RBS Securities Inc. and Wells Fargo Securities LLC were the joint bookrunners. Credit Agricole Securities (USA) Inc., Scotia Capital (USA) Inc., SMBC Nikko Capital Markets Ltd. and Mitsubishi UFJ Securities (USA), Inc. were senior co-managers. Co-managers were PNC Capital Markets LLC, U.S. Bancorp Investments, Inc. and TD Securities (USA) LLC.

Proceeds will be used to redeem the company's 4.6% notes due 2013 and to purchase up to $125 million of its 6% notes due 2015 and up to $50 million of the outstanding 8.95% notes due 2017.

The specialty chemicals and materials company is based in Woodland Park, N.J.

PepsiCo prices three tranches

PepsiCo on Tuesday detailed its $2.5 billion three-tranche offering of senior notes (Aa3/A-/A) that priced on Monday.

In the first tranche, the company sold $625 million of floating-rate notes due Feb. 26, 2016 at par to yield Libor plus 21 bps, according to an FWP filing with the SEC.

PepsiCo sold $625 million of 0.7% fixed-rate notes due Feb. 26, 2016 at 99.965 to yield 0.712%, or a spread of 35 bps plus Treasuries.

In the last tranche, the company sold $1.25 billion of 2.75% fixed-rate notes due March 1, 2023 at 99.904 to yield 2.761%, or a spread of 87 bps plus Treasuries.

BNP Paribas Securities Corp., J.P. Morgan Securities LLC and BofA Merrill Lynch were the bookrunners. Co-managers were Loop Capital Markets LLC, Mizuho Securities (USA) Inc. and U.S. Bancorp.

Proceeds will be used for general corporate purposes, including repayment of commercial paper.

The food and beverage company was last in the U.S. bond market with a $2.5 billion sale in three tranches on Aug. 8, 2012.

PepsiCo is based in Purchase, N.Y.

Mayo Clinic sells $300 million

Also in the market on Tuesday, the Mayo Clinic sold $300 million of 4% taxable bonds due Nov. 15, 2047 at par, a bond source said.

The series 2013 bonds (Aa2/AA/) priced at 95 bps over Treasuries, on the wider end of spread guidance of 90 bps to 95 bps plus Treasuries.

BofA Merrill Lynch and Wells Fargo were the lead managers.

Proceeds will be used for eligible corporate purposes.

The hospital system is based in Rochester, Minn.

JPMorgan tighter

The secondary market saw JPMorgan's $3 billion 6.3% notes due 2019 tighten 4 bps to 160 bps bid on Tuesday.

JPMorgan priced the 10-year bonds on April 16, 2009 at 305 bps over Treasuries.

Bank of America weaker

Meanwhile, Bank of America's 7.625% notes due 2019 widened 8 bps to 206 bps bid.

The bank priced $2.5 billion of the notes on May 8, 2009 at 410 bps over Treasuries.

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