Chevron brings monster trade, joins Ingersoll, O'Reilly Auto; spreads in secondary market firm

By Aleesia Forni and Andrea Heisinger

New York, June 17 - The week got off to a strong start with a blockbuster sale from Chevron Corp. leading a modest number of issuers tapping Monday's market.

Chevron sold $6 billion of bonds in four tranches, besting the $3 billion trade from Rio Tinto Finance (USA) plc that reinvigorated the primary on Friday.

Chevron's sale was upsized from $5.6 billion, with the possibility of two floating-rate tranches discarded after tepid interest from investors, sources said.

The sale includes fixed-rate notes due 2016, 2018, 2020 and 2023.

Elsewhere in the primary, Ingersoll-Rand Global Holding Co. Ltd. privately priced $1.55 billion of bonds in three parts. The size was increased from benchmark, with guidance coming in 20 basis points on two of the tranches. The sale includes maturities of a long five-year note, 10-year notes and 30-year bonds.

The Ingersoll sale saw between 35 bps and 40 bps new issue concession on the two shorter-dated tranches.

There was about $8.8 billion of investor demand, leaving the sale more than five-and-a-half times oversubscribed. The long five-year tranche garnered about $3.3 billion of investor interest, the 10-year notes saw about $2.9 billion of demand, and the 30-year bonds had about $2.6 billion of interest, a source said.

O'Reilly Automotive, Inc. priced $300 million of 10-year notes in a sale with a do-not-grow provision on it.

A $500 million offering of five-year notes was sold under Rule 144A and Regulation S by MetLife Global Funding I. Terms of the sale were not available at press time.

Issuers accessed the market Monday as a window of upbeat sentiment opened. Some were also likely trying to get in ahead of Tuesday's start of a two-day Federal Reserve Federal Open Market Committee meeting.

The market was ruffled the past two weeks after Fed chairman Ben Bernanke made comments that some interpreted to mean quantitative easing measures could be scaled back later in 2013.

Bernanke is expected to speak after the conclusion of the meeting on Wednesday, which the markets will be watching closely.

"It's going to be a stop-and-go week," a source said of issuance. "Depends on what the market looks like."

The Markit CDX North American Investment Grade index was 1 bp tighter at a spread of 82 bps on Monday.

Spreads in the secondary market were also tighter on Monday, sources said, with the new deal from Chevron trading better near the end of the session.

The recent deal from Rio Tinto also firmed on the day.

Investment-grade bank and brokerage credit default swap costs were tighter on Monday, according to a market source.

Bank of America Corp.'s CDS costs were 2 bps tighter at 109 bps bid, 112 bps offered. Citigroup Inc.'s CDS costs were 1 bp tighter at 99 bps bid, 103 bps offered. JPMorgan Chase & Co.'s CDS costs declined 1 bp to 81 bps bid, 84 bps offered. Wells Fargo & Co.'s CDS costs were unchanged at 60 bps bid, 70 bps offered.

Merrill Lynch's CDS costs declined 2 bps to 95 bps bid, 105 bps offered. Morgan Stanley's CDS costs tightened 1 bp to 140 bps bid, 145 bps offered. Goldman Sachs Group, Inc.'s CDS costs were also 1 bp tighter at 130 bps bid, 135 bps offered.

Chevron prices tight

Chevron priced $6 billion of bonds (Aa1/AA/) in four tranches during the day's session, a market source said.

The size was increased from $5.6 billion. Plans for possible tranches of floating-rate notes due 2016 and 2018 were scrapped, as there was not enough investor interest, the source said.

There was $750 million of 0.889% three-year notes sold at a spread of Treasuries plus 40 bps. The size of the tranche was increased from $350 million, a source said. Initial talk was in the Treasuries plus 70 bps area, and it was later revised to the 55 bps area.

A trader quoted the notes 2 bps tighter at 38 bps bid, 34 bps offered.

A $2 billion tranche of 1.718% five-year notes was priced at 65 bps over Treasuries. Initial guidance was in the 90 bps area and was later in the 75 bps area.

The notes were seen at 64 bps bid, 60 bps offered.

The $1 billion tranche of 2.427% seven-year notes was sold at a spread of Treasuries plus 85 bps. Guidance was initially in the120 bps area, with later talk in the 95 bps area.

The notes had firmed 2 bps near the day's close to 83 bps bid, 79 bps offered.

Finally, there was $2.25 billion of 3.191% 10-year bonds priced at 100 bps over Treasuries. Initial talk was in the 130 bps area, with guidance in the 110 bps area later.

Barclays, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes including refinancing a portion of commercial paper borrowings.

Chevron last tapped the U.S. bond market with a $4 billion offering in two parts on Nov. 28, 2012. That trade included a 1.104% five-year note priced at Treasuries plus 47 bps and a 2.355% 10-year tranche with a spread of 72 bps over Treasuries.

The petroleum, chemical, mining, power and energy company is based in San Ramon, Calif.

Ingersoll's three tranches

Ingersoll-Rand Global Holding sold $1.55 billion of senior notes (Baa2/BBB/) in three tranches, an informed source said.

The sale includes $350 million of 2.875% long five-year notes priced at a spread of Treasuries plus 185 bps. Whispers were in the Treasuries plus 210 bps area, with talk coming in 20 bps to the 190 bps area, plus or minus 5 bps.

A $700 million tranche of 4.25%10-year notes sold at a spread of Treasuries plus 210 bps. Initial guidance was in the 225 bps area, with talk later in the 215 bps area, plus or minus 5 bps.

Finally, there was $500 million of 5.75% 30-year bonds priced at Treasuries plus 245 bps. There were whispers in the 262.5 bps area, with guidance later in the 250 bps area, plus or minus 5 bps.

The notes were sold under Rule 144A and Regulation S.

Bookrunners were BofA Merrill Lynch, Citigroup Global Markets Inc., Goldman Sachs & Co. and JPMorgan.

There is a guarantee on the issue by Ingersoll-Rand plc, Ingersoll-Rand Co. Ltd. and Ingersoll-Rand International Holding Ltd.

Proceeds are being used to fund the redemption of IR Global's existing $600 million of 6% senior notes due 2013 and, to the extent of any remaining proceeds, to fund the redemption of the issuer's $655 million of 9.5% Senior Notes due 2014 and/or to fund expenses related to the company's previously announced spin-off of its commercial and residential security businesses.

Ingersoll was last in the U.S. bond market with a $655 million offering of 9.5% five-year notes priced at par on March 31, 2009.

O'Reilly's 10-year

O'Reilly Automotive was in the market with a $300 million sale of 3.85% 10-year senior notes (Baa3/BBB/) priced at a spread of 170 bps over Treasuries, a market source said.

BofA Merrill Lynch and Wells Fargo were active bookrunners. Passives were JPMorgan and U.S. Bancorp Investments Inc.

Proceeds are being used for general corporate purposes.

The sale is guaranteed by O'Reilly Automotive Stores, Inc., Ozark Automotive Distributors, Inc., Greene County Realty Co., O'Reilly II Aviation Corporation, Ozark Services, Inc., Ozark Purchasing, LLC, CSK Auto Corporation, CSK Auto, Inc., Cskauto.com, Inc. and OC Holding Company, LLC.

The Springfield, Mo.-based auto parts retailer was last in the U.S. bond market with a $300 million offering of 3.8% 10-year notes sold at 200 bps over Treasuries on Aug. 16, 2012.

Morgan Stanley floaters

Morgan Stanley priced $250 million of global medium-term floating-rate notes due 2014 (Baa1/A-/A) at par to yield Libor plus 95 bps, according to an FWP filing with the Securities and Exchange Commission.

The sale was done Friday.

Morgan Stanley was bookrunner.

The financial services company is based in New York City.

Rio Tinto firms

The recent fixed-rate notes offering from Rio Tinto traded better on Monday, one trader said.

The company priced an upsized $3 billion offering of senior notes in four parts on Friday.

The $1 billion of 1.375% three-year notes traded 1 bp better at 95 bps bid, 91 bps offered.

Rio Tinto sold the notes at a spread of Treasuries plus 100 bps.

Meanwhile, the $1.25 billion of 2.25% notes due 2018, which were sold at a spread of Treasuries plus 140 bps, were quoted 2 bps tighter at 137 bps bid, 132 bps offered.

Friday's sale also included a $250 million tranche of two-year floating-rate notes sold at par to yield Libor plus 55 bps and $500 million of three-year floaters priced at par to yield Libor plus 84 bps.

The metals and mining company is based in London and Melbourne, Australia.

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