Total Capital sells $3 billion, Discover Bank prices tight; new issues trade mostly better

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 5 - Total Capital International, Discover Bank and Genworth Holdings Inc. were among companies that priced new issues on Monday amidst what one market participant called a "fairly positive" market tone.

"Seems like things have settled down [in the market]," another syndicate source said early Monday of the reason issuers chose to head to the primary market.

One market source noted that the market will see a "light data week" following last week, which saw the release of the Federal Open Market Committee statements and non-farm payroll report.

A total of seven issuers hit Monday's high-grade primary market, selling roughly $4.7 billion of bonds.

Total Capital priced the day's largest deal, selling $3 billion of notes in a four-part offering of fixed- and floating-rate notes.

The company sold $500 million of 1% notes due 2016 at Treasuries plus 50 basis points.

There was also a $1 billion tranche of 2.125% notes due 2018 priced at Treasuries plus 75 bps.

A $500 million tranche of floating-rate notes due 2018 was priced at a spread of Libor plus 57 bps.

Total also sold $1 billion of 3.7% notes due 2024 at Treasuries plus 110 bps.

Discover Bank came to market pricing a $500 million issue of 4.2% notes due 2023 at 160 bps over Treasuries, according to a syndicate source.

Price talk was set at 165 bps over Treasuries.

Talk had originally "tightened about 15 [bps]" from earlier guidance, one syndicate source said at mid-afternoon on Monday.

In other primary action, Genworth priced an upsized $400 million issue of 4.9% 10-year notes at a spread of Treasuries plus 230 bps, according to a syndicate source.

There was also a $325 million issue of first mortgage bonds from Consumers Energy Co.

The 3.375% first mortgage bonds were sold at a spread of Treasuries plus 73 bps.

Meanwhile, Westinghouse Air Brake Technologies Corp. (Wabtec) priced $250 million of 4.375% 10-year notes at a spread of 175 bps over Treasuries during the session.

Monday's session also saw a new deal from Western Gas Partners LP, which sold $250 million of 2.6% senior notes due 2018 at Treasuries plus 123 bps.

In the preferred market space, Allstate Corp. announced a $1,000-par deal on Monday.

The insurance company said it was selling series B fixed-to-floating-rate subordinated debentures due 2053.

A trader said he was hearing price talk of 5.875% to 6%, though he had not seen any markets for the paper. That's not unusual, as most $1,000-par issues tend to get locked up in institutional hands early on.

The new notes will not be listed.

New issues priced over the day were seen "tightening up a little bit" in secondary trading going out, a trader said.

"Everything's been a little credit specific with a few names that have leaned a little bit wider, but in general on the low volume, things tend to be better."

Otherwise, the secondary market was "extremely quiet with not much activity," the trader said.

Consumers Energy's 3.375% first mortgage bonds sold on Monday firmed 2 bps, while Genworth's new senior notes due 2023 tightened 4 bps.

Total Capital's three-tranche offering of notes ended flat to better in the secondary market, according to a trader.

The Markit CDX Series 20 North American Investment Grade index ended unchanged at a spread of 73 bps.

Total Capital four-parter

Monday's primary saw Total Capital sell the day's largest deal with a four-part $3 billion offering of notes, according to a market source.

The company sold $500 million of 1% notes due 2016 at Treasuries plus 50 bps.

There was also a $1 billion tranche of 2.125% notes due 2018, which priced at Treasuries plus 75 bps and a $500 million tranche of floating-rate notes due 2018, which was priced at a spread of Libor plus 57 bps.

Total Capital also priced a $1 billion issue of 3.7% notes due 2024, which was sold at Treasuries plus 110 bps.

Full terms were not available at press time.

In trading, Total Capital's 1% notes due 2016 firmed to 47 bps bid, 44 bps offered. The tranche of 2.125% notes due 2018 ended 1 bp better at 74 bps bid, 72 bps offered. The 3.7% notes due 2024 closed unchanged at 110 bps bid, 108 bps offered.

BofA Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, BNP Paribas Securities Corp. and Mitsubishi UFJ Securities are the joint bookrunners.

Proceeds will be used for general corporate purposes.

The oil and gas company's notes are guaranteed by parent company Total SA, based in Courbevoie, France.

Discover Bank prices tight

In other primary action, Discover Bank priced a $500 million issue of 4.2% notes due 2023 at 160 bps over Treasuries, according to a syndicate source.

Talk was set at Treasuries plus 165 bps.

The notes priced at 99.612 to yield 4.248%.

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

The issuer of the Discover credit card and unit of Discover Financial Services is based in Chicago.

Genworth prices $400 million

Genworth Holdings priced an upsized $400 million of 4.9% 10-year notes during Monday's session at a spread of Treasuries plus 230 bps, according to a syndicate source.

Original issue size was $300 million.

The company sold the notes at 99.686 to yield 4.94%.

Genworth's new senior notes tightened 4 bps to 226 bps bid, 224 bps offered.

Barclays, Goldman Sachs & Co. and JPMorgan are the joint bookrunners.

The company plans to use proceeds, together with cash on hand, to redeem a majority of its outstanding 4.95% senior notes due 2015 and for general corporate purposes, which may include repaying debt.

The notes will be guaranteed by Genworth Financial Inc.

The financial security company is based in Richmond, Va.

Consumers Energy prices

Elsewhere in Monday's primary market, Consumers Energy priced $325 million 3.375% first mortgage bonds at Treasuries plus 73 bps, according to a syndicate source and an FWP filing with the Securities and Exchange Commission.

The notes priced at 99.949 to yield 3.381%.

Consumers Energy's first mortgage bonds firmed to 71 bps bid, 69 bps offered.

Citigroup Global Markets, RBC Capital Markets LLC, Scotia Capital (USA) Inc. and SunTrust Robinson Humphrey Inc. were the joint bookrunners.

The company plans to use proceeds from the offering for general corporate purposes.

Consumers Energy is an electric and gas utility based in Jackson, Miss.

Western Gas sells $250 million

Western Gas priced $250 million of 2.6% senior notes due 2018 on Monday at Treasuries plus 123 bps, according to a market source and an FWP filing with the SEC.

The notes priced at 99.879 to yield 2.626%.

Proceeds will be used to repay the amount outstanding under the company's revolving credit facility.

Wells Fargo Securities LLC, U.S. Bancorp Investments Inc., DNB Markets, Inc., Scotia Capital (USA) Inc. and SG Americas Securities LLC were the joint bookrunners.

The midstream energy asset company is based in the Woodlands, Texas.

Wabtec offers 10-years

The primary market also saw Wabtec price $250 million 4.375% 10-year notes at a spread of 175 bps over Treasuries, according to a FWP filing with the SEC.

The notes priced at 99.879 to yield 4.39%.

BofA Merrill Lynch, JPMorgan and PNC Capital Markets LLC were the joint bookrunners.

The company plans to use the proceeds from the offering for general corporate purposes.

Wabtec is a Wilmerding, Pa.-based maker of railroad equipment.

CDS costs decline

Investment-grade bank and brokerage credit default swap costs were mostly lower on the day, according to a market source.

Bank of America Corp.'s CDS costs fell 1 bp to 106 bps bid, 111 bps offered. Citigroup Inc.'s CDS costs declined 1 bp to 100 bps bid, 105 bps offered. JPMorgan Chase & Co.'s CDS costs fell 1 bp to 75 bps bid, 79 bps offered. Wells Fargo & Co.'s CDS costs ended flat at 62 bps bid, 67 bps offered.

Merrill Lynch's CDS costs fell 1 bp to 94 bps bid, 104 bps offered. Morgan Stanley's CDS costs ended 1 bp lower at 134 bps bid, 139 bps offered. Goldman Sachs Group, Inc.'s CDS costs dropped 1 bp to 125 bps bid, 130 bps offered.

Paul Deckleman contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.