ING U.S., John Deere sell as earnings continue; spreads open tighter, flat to close session

By Aleesia Forni and Andrea Heisinger

New York, July 23 - A hodgepodge of corporate names brought mostly small trades to the investment-grade bond market Tuesday, including Citigroup Inc., ING U.S. Inc. and John Deere Capital Corp.

Citi priced $500 million of five-year floating-rate notes, while ING U.S. brought a $400 million sale of 30-year bonds privately.

John Deere Capital sold $500 million of two-year floaters after the size was increased from $300 million.

Japan Bank for International Cooperation tapped the market for $3.5 billion of notes in two tranches. The sale, which was announced Monday, consisted of five-year notes and 10-year bonds.

Sales from sovereign names kept rolling into the high-grade market.

International Finance Corp. sold $500 million of three-year floating-rate notes.

Earnings were again at the forefront of headlines and market attention. Apple Inc., which sold a mammoth $17 billion of bonds in a single issue earlier this year, announced numbers after the close, beating analyst expectations.

Otherwise, syndicate desks saw a lack of corporate bonds as Yankee issuers took up the space.

"Not too exciting out there, but it is the summer," one source said.

JPMorgan Chase & Co. released terms of its $1.5 billion sale of $1,000-par series R fixed-to-floating noncumulative perpetual preferred stock sold Monday.

Come Tuesday at midday, a trader said he saw a block of shares offered at 102.5. However, at the close, the issue was quoted at par bid, 100.25 offered.

In secondary market action, sources observed the high-grade bond market open on a positive note on Tuesday, with one trader noting that bond spreads were 2 basis points to 5 bps better.

"As the day progressed, spreads were generally unchanged on lower volume as flows were balanced," the trader said.

The Markit CDX Series 20 North American Investment Grade index was 3 bps wider on the day at a spread of 75 bps.

The trader added that credit default swaps spreads declined 1 bps to 2 bps overall in the investment-grade space.

Meanwhile, the new ING U.S. notes "tightened throughout the day" on Tuesday and closed the session 6 bps tighter.

Elsewhere in the preferred stock market, International Shipholding Corp. announced an offering of $100-par series B cumulative redeemable perpetual shares.

The $130 million deal of 7.875% series C fixed-to-floating noncumulative perpetuals from Synovus Financial Corp., brought late Monday, was seen by a trader at $25.50 at midday.

At the close, a source pegged the shares at $25.65 bid.

"It's not a common name, and it's cheaply priced," the source said of the deal's good showing. "Since the May/June scare, underwritings are being done a little more carefully."

John Deere upsizes

John Deere Capital priced an upsized $500 million of two-year floating-rate notes (A2/A/) at par to yield Libor plus 12 bps, a market source said.

The size was increased from $300 million, the source added.

The bookrunners were Deutsche Bank Securities Inc. and Mitsubishi UFJ Securities (USA) Inc.

John Deere Capital was last in the U.S. bond market with a $1 billion sale in two tranches on March 6. That offering included a two-year floating-rate note priced at a coupon of Libor plus 7 bps.

The funding arm of agriculture and industrial equipment maker Deere & Co. is based in Moline, Ill.

ING U.S. sells long bond

ING U.S. sold $400 million of 5.7% 30-year senior notes (Baa3/BBB-/) at a spread of Treasuries plus 215 bps, a source away from the trade said.

A trader saw the notes closing at 209 bps bid, 203 bps offered.

The sale was done under Rule 144A and Regulation S.

Credit Suisse Securities (USA) LLC, Deutsche Bank and Goldman Sachs & Co. were active bookrunners. Passives were Citigroup Global Markets Inc. and RBS Securities Inc.

Proceeds are being used for general corporate purposes including repayment of some debt.

The U.S. arm of Amsterdam-based financial services company ING Groep N.V. has its headquarters in New York.

Citigroup does fives

Citigroup sold $500 million of five-year floating-rate notes (Baa2/A-/A) during the day's session at par to yield Libor plus 104 bps, according to an FWP filing with the Securities and Exchange Commission.

Bookrunner was Citigroup Global Markets.

The financial services company is based in New York.

Japan Bank prices $3.5 billion

Japan Bank for International Cooperation priced $3.5 billion of guaranteed bonds (Aa3/AA-/) in two tranches, a market source said.

A $2.5 billion tranche of 1.75% five-year notes sold at a spread of Treasuries plus 56.6 bps.

There was also $1 billion of 3.375% 10-year notes priced at 88.5 bps over Treasuries.

The notes will be guaranteed by Japan.

Barclays, Daiwa Capital Markets Europe, Deutsche Bank and Goldman Sachs International were bookrunners.

Proceeds are being used for the operation of JBIC.

Japan Bank was last in the U.S. bond market with a $2 billion offering of five-year notes on July 11, 2012.

The financial aid institution backed by the Japanese government is based in Tokyo.

IFC's floater

International Finance sold $500 million of three-year floating-rate notes (Aaa/AAA/AAA) at par to yield one-month Libor plus 2 bps, a market source said.

Bookrunners were Credit Suisse, Deutsche Bank and Nomura Securities International Inc.

The World Bank member and lender to the private sector in developing countries is based in Washington, D.C.

Aeromexico's secureds

Grupo Aeromexico S.A.B. de C.V., through unit SPV Mexican Aircraft Finance IV, LLC, priced $117.4 million of 2.537% secured notes due 2025 on Tuesday. The notes are guaranteed by the Export-Import Bank of the United States, according to a press release.

Bookrunners were Citigroup and J.P. Morgan.

Proceeds will be used to refinance two Boeing 737-800 aircraft that were delivered in June and July and to finance one Boeing 737-800 aircraft to be delivered in August.

It was the first time a company from Mexico's private sector will fund its transactions through bonds guaranteed by the Ex-Im Bank and issued via capital markets, according to the release.

"This financing structure is unprecedented among Mexican private-sector companies," said Andres Conesa, chief executive officer of Grupo Aeromexico. "Grupo Aeromexico is therefore one of the few players in the country to have access to such a source of funds with a highly competitive cost. The transaction also reaffirms the Ex-Im Bank's importance as a strategic partner for Aeromexico's long-term sustainable growth in the coming years."

Grupo Aeromexico, a holding company for commercial aviation, is based in Mexico City.

International's $100-par

International Shipholding announced an offering of $100-par series B cumulative redeemable perpetual preferred stock.

Price talk is around 9%, according to a trader.

Incapital is the structuring agent. Also working on the deal are DNB Markets, Sterne Agee & Leach, Euro Pacific Capital Inc. and Regions Securities LLC.

The Mobile, Ala.-based company has applied to list the new securities on the New York Stock Exchange.

Proceeds will be used for general corporate purposes and working capital. That may include repaying debt and financing certain vessel investments.

International Shipholding is a provider of maritime transportation services to commercial and governmental customers.

JPMorgan details terms

JPMorgan Chase gave terms of its $1.5 billion of 6% $1,000-par series R fixed-to-floating noncumulative perpetual preferreds (expected ratings: Ba1/BBB/BBB-) in an FWP filed with the Securities and Exchange Commission on Tuesday.

Price talk was 6.125% to 6.25%, a source said Monday.

The preferreds will be issued as depositary shares representing a 1/10th interest.

JPMorgan Securities LLC was the bookrunner.

The preferreds will be fixed at 6% through Aug. 1, 2023, at which time the dividend begins to float at Libor plus 330 bps.

The shares will not be listed.

Proceeds will be used for general corporate purposes.

JPMorgan is a New York-based banking institution.

Bank, broker CDS costs rise

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

Bank of America Corp.'s CDS costs were 4 bps higher at 104 bps bid, 109 bps offered. Citigroup's CDS costs increased 3 bps to 101 bps bid, 106 bps offered. JPMorgan's CDS costs rose 3 bp to 80 bps bid, 85 bps offered. Wells Fargo & Co.'s CDS costs were also 3 bp higher at 63 bps bid, 68 bps offered.

Merrill Lynch's CDS costs rose 4 bps to 91 bps bid, 101 bps offered. Morgan Stanley's CDS costs increased 1 bp to 134 bps bid, 139 bps offered. Goldman Sachs Group, Inc.'s CDS costs were 2 bps higher at 121 bps bid, 126 bps offered.

Stephanie N. Rotondo and Paul Deckelman contributed to this review.

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