Textron, Kroger price tight; Ares Capital adds on; new Kroger, Textron notes firm in trading

By Cristal Cody and Aleesia Forni

Virginia Beach, Jan. 23 - The brisk pace of issuance in the high-grade primary resumed on Thursday despite a somewhat weaker overall tone and widening spreads in the secondary.

Amphenol Corp. came to market with a $750 million issue of five-year 2.55% notes sold at Treasuries plus 100 basis points, according to a syndicate source.

Meanwhile, Textron Inc. priced $600 million of notes in two tranches to finance part of its acquisition of Beech Holdings LLC.

The issuer priced a $250 million issue of 3.65% seven-year notes with a spread of Treasuries plus 145. A $350 million tranche of 4.3% 10-year notes was sold at 155 bps over Treasuries.

In other primary action, Kroger Co. was out with $500 million of 10-year 4% senior notes on Thursday with a spread of Treasuries plus 125 bps.

A source close to the trade noted that the deal's order book was more than two times oversubscribed.

The session also saw Ares Capital Corp. price an upsized $150 million tap of its 4.875% senior notes due Nov. 30, 2018 at 102.7 to yield 4.25%, or Treasuries plus 266 bps.

Federal Home Loan Banks sold $3 billion of 0.375% two-year global bonds due Feb. 19, 2016 at Treasuries plus 9 bps.

The notes priced wide of talk, which was set at Treasuries plus 8.5 bps.

Development Bank of Japan Inc. brought $500 million of 2.125% notes due Jan. 30, 2019 at 36 bps over mid-swaps, according to an informed source.

There was also a $2 billion issue of five-year notes priced by the Province of Ontario on Thursday.

The issue sold in line with talk at mid-swaps plus 27 bps.

In other news from Canada, a $300 million green bond was priced by Export Development Canada, though details were not available at press time.

In the preferred market, JPMorgan Chase & Co. on Thursday priced an $850 million issue of fixed-rate perpetual preferred securities, a market source said.

The $25-par notes came to the market with a 6.7% dividend, matching talk that had been set at 6.7%.

More than $20 billion of high-grade supply has priced so far this week, besting some earlier expectations.

"With the way things are going, I think we could see some more activity [in the primary] tomorrow," one source said late Thursday.

However, another source said he believes the new issue market will be "shut down" to close the week.

Investment-grade bond volume was "pretty good at $12.8 billion," a source said.

High-grade bond spreads widened over Thursday's session, according to market sources.

The Markit CDX North American Investment Grade series 21 index eased 2 bps to a spread of 68 bps.

New issues were mostly better in late-day trading, market sources said.

Textron's 3.65% notes due 2021 and 4.3% notes due 2024 tightened 4 bps in the secondary market, a trader said Thursday afternoon.

Kroger's 4% notes due 2024 headed out tighter in aftermarket trading, a trader said.

FHLB global bonds price

FHLB priced a $3 billion issue of 0.375% global bonds due Feb. 19, 2016 on Thursday at Treasuries plus 9 bps, according to a company news release.

The notes sold wide of talk, which was set at Treasuries plus 8.5 bps.

Pricing was at 99.805 to yield 0.47%.

HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC and TD Securities (USA) LLC were the lead managers.

FHLBanks are 12 government-sponsored funding providers.

Ontario sells five-years

The Province of Ontario priced a $2 billion issue of five-year notes (Aa2/AA-/) at mid-swaps plus 27 bps on Thursday, according to a market source.

Pricing was in line with talk.

Full terms were not available at press time.

BofA Merrill Lynch, Deutsche Bank Securities Inc., Goldman Sachs & Co. and TD Securities were the joint bookrunners.

Proceeds will be used for general provincial purposes.

Amphenol upsizes

Amphenol priced an upsized $750 million offering of 2.55% five-year senior notes (Baa2/BBB/) with a spread of Treasuries plus 100 bps, according to a syndicate source and an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.846 to yield 2.583%.

Barclays, HSBC, Mitsubishi UFJ Securities (USA) Inc. and Wells Fargo Securities LLC ran the books.

Proceeds will be used to repay amounts under a revolving credit facility.

The designer, manufacturer and marketer of electric, electronic and fiber optic components is based in Wallingford, Conn.

Textron two-parter

Textron sold a $600 million two-part issue of notes (Baa3/BBB-/BBB-) in seven- and 10-year tranches, according to a syndicate source and an FWP filed with the SEC.

A $250 million issue of 3.65% notes due 2021 was sold with a spread of Treasuries plus 145 bps, or 99.836 to yield 3.676%.

There was also $350 million of 4.3% 10-year notes priced at 155 bps over Treasuries. The tranche sold at 99.801 to yield 4.324%.

In the secondary market, Textron's 3.65% notes due 2021 tightened to 141 bps bid, 139 bps offered, a trader said.

The 4.3% notes due 2024 firmed to 151 bps bid, 149 bps offered.

J.P. Morgan Securities LLC, BofA Merrill Lynch, Citigroup Global Markets Inc. and Mitsubishi UFJ were the joint bookrunners.

Proceeds will be used to finance a portion of the company's purchase of all outstanding equity interests in Beech Holdings LLC, the parent of Beechcraft Corp. If Textron does not complete the acquisition, proceeds will be used for general corporate purposes.

The multi-industry company has units including aircraft, defense and finance. It is based in Providence, R.I.

Kroger prices tight

Kroger priced a $500 million offering of 10-year 4% senior notes (Baa2/BBB/BBB) on Thursday with a spread of Treasuries plus 125 bps, according to a syndicate source and an FWP filing with the SEC.

The notes priced tighter than talk, which was set in the area of 130 bps over Treasuries area.

Pricing was at 99.796 to yield 4.025%.

Kroger's 4% notes due 2024 tightened to the 121 bps bid, 124 bps offered area in the secondary market, a trader said.

Citigroup Global Markets Inc., RBC Capital Markets LLC, Wells Fargo and RBS Securities Inc. were the bookrunners.

Proceeds will be used to refinance long-term debt that matured on Jan. 15 and for general corporate purposes.

Kroger is a Cincinnati-based grocery retailer.

DBJ prices $500 million

Development Bank of Japan priced $500 million of 2.125% notes (Aa3/AA-/) due Jan. 30, 2019 on Thursday at 36 bps over mid-swaps, according to an informed source.

The notes priced at the tight end talk, which was set in the area of mid-swaps plus 38 bps.

Pricing was at 99.962 to yield 2.133%.

Barclays, BNP Paribas Securities Corp. and Goldman Sachs were the joint bookrunners.

The financial services and investment company is based in Tokyo.

Ares adds on

Ares Capital sold an upsized $150 million add-on to its existing 4.875% senior notes due Nov. 30, 2018 at 102.7 to yield 4.25%, or Treasuries plus 266 bps, according to an informed source and a 497AD filed with the SEC.

The yield printed at the tight end of talk, which was set in the area of 4.3%, and the amount was increased from $100 million.

Proceeds will be used for general corporate purposes.

The bookrunners were BofA Merrill Lynch, JPMorgan and Barclays.

The original $600 million issue priced at Treasuries plus 366 bps on Nov. 14.

The specialty finance company is based in Los Angeles.

EDC sells green bond

Export Development Canada came to market on Thursday with $300 million of green bonds, its first green bond issuance, according to a news release.

"EDC's green bond program is an area where the interests of investors and EDC converge, one that we're looking to develop and grow into a regular part of our funding program," Ken Kember, senior vice president, finance, and chief financial officer, said in the release.

"The green bond is a nice balance to EDC's corporate focus on clean technology, an area that will feed new green bond issues in years to come."

JPMorgan and Skandinaviska Enskilda Banken AB were the joint bookrunners for the issue.

The government-backed agency for exporters is based in Ottawa.

JPMorgan prices preferreds

JPMorgan Chase on Thursday priced an $850 million issue of fixed-rate perpetual preferred securities, a market source said.

The $25-par notes came to the market with a 6.7% dividend, matching talk that had been set at 6.7%.

Other details were not immediately available on Thursday.

The issuer is a New York-based bank.

CDS costs rise

Investment-grade bank and brokerage credit default swap prices rose, according to a market source.

Bank of America Corp.'s CDS costs widened 4 bps to 79 bps bid, 83 bps offered. Citigroup Inc.'s CDS costs rose 5 bps to 76 bps bid, 80 bps offered. JPMorgan's CDS costs eased 3 bps to 68 bps bid, 72 bps offered. Wells Fargo & Co.'s CDS costs rose 2 bps 40 bps bid, 44 bps offered.

Merrill Lynch's CDS costs eased 4 bps to 81 bps bid, 85 bps offered. Morgan Stanley's CDS costs widened 6 bps to 91 bps bid, 96 bps offered. Goldman Sachs Group, Inc.'s CDS eased 3 bps to 91 bps bid, 95 bps offered.

Paul Deckelman and Christine Van Dusen contributed to this review

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