BofA brings jumbo deal; RBS, Unicredit also price; financial paper firms in secondary market

By Cristal Cody and Aleesia Forni

Virginia Beach, March 27 - Bank of America Corp. sold a four-part $7.6 billion megadeal on Thursday during what had been a mostly quiet week for the investment-grade primary market.

The bank priced $850 million of floaters due 2019 to yield Libor plus 87 basis points and $2.5 billion of 2.65% five-year notes priced at Treasuries plus 87 bps.

There was also $2.75 billion of 4% notes due 2024 priced at 137 bps over Treasuries.

A $1.5 billion tranche of 30-year bonds also priced at Treasuries plus 137 bps.

All four tranches sold at the tight end of talk, according to a market source, and the deal's orderbook was more than two times oversubscribed.

Also during the session, Royal Bank of Scotland Group plc came to market with a $1 billion offering of senior notes in three-year fixed- and floating-rate tranches on Thursday, a syndicate source said.

The bank priced a $300 million issue of floating-rate notes to yield Libor plus 94 bps and a $700 million tranche of 1.875% notes priced with a spread of Treasuries plus 105 bps.

Also during the session, UniCredit SpA sold $1.25 billion of 8% perpetual tier 1 notes at par.

The session also saw Nederlandse Waterschapsbank NV sell a $300 million add-on to its floating-rate notes due Feb. 14, 2018 at 100.124 to yield Libor plus 20 bps, a market source said.

The notes have a coupon of Libor plus 23 bps.

The total issue size is now $800 million.

Due largely to Bank of America's megadeal, the week's total new issuance has now topped $15 billion.

"Fairly quiet week, but the [market's] tone remains positive," one source said late Thursday.

High-grade bonds traded mostly better on the day, while new financial paper headed out tighter, according to market sources.

The Markit CDX North American Investment Grade series 22 index firmed 1 bps to a spread of 71 bps.

Bank of America's three tranches of notes traded as much as 7 bps tighter in aftermarket trading, a trader said.

Royal Bank of Scotland's new offering of 1.875% notes due 2017 firmed in late day trading, according to a trader.

Citigroup Inc.'s paper traded slightly weaker, while the company's shares fell $2.71, or 5.4%, to $47.45 on Thursday after failing the Federal Reserve's annual bank stress test, according to market sources.

The New York City-based financial services company's 1.35% senior notes due 2017 (Baa2/A-/A), priced on March 4 in a $1 billion offering at 99.959 to yield 1.364%, ended at 99.55 from 99.7 on Wednesday, a source said.

BofA megadeal

Bank of America priced $7.6 billion of senior notes in four tranches on Thursday, a market source said.

There was $850 million of floating-rate notes priced at par to yield Libor plus 87 bps.

The sale also included $2.5 billion of 2.65% five-year notes priced at 99.972 to yield 2.656%, or Treasuries plus 87 bps.

A third tranche was $2.75 billion of 4% notes due 2024 priced at 137 bps over Treasuries.

The notes sold at 99.625 to yield 4.065%.

Finally, $1.5 billion of 30-year bonds priced at Treasuries plus 137 bps, or 99.906, to yield 4.881%.

Bank of America's 2.65% notes due 2019 tightened in the secondary market to 90 bps bid, 88 bps offered, a trader said.

The tranche of 4% notes due 2024 firmed to 134 bps bid, 132 bps offered, according to a trader.

Bank of America's 4.875% bonds due 2044 traded better at 132 bps bid.

BofA Merrill Lynch was the sole bookrunner.

Bank of America is a financial services company based in Charlotte, N.C.

RBS sells two-parter

Royal Bank of Scotland Group priced $1 billion of senior notes (Baa2/BBB+/A) in fixed- and floating-rate tranches due 2017 on Thursday, according to a syndicate source.

The bank sold $300 million of floating-rate notes at par to yield Libor plus 94 bps.

A second tranche was $700 million of 1.875% notes priced with a spread of Treasuries plus 105 bps, or 99.838, to yield 1.931%.

Royal Bank of Scotland's 1.875% notes due 2017 tightened to 94 bps bid in the secondary market, a trader said.

Proceeds from the offering will be used for general corporate purposes.

RBS Securities Inc. was the bookrunner and was joined by BofA Merrill Lynch and Morgan Stanley & Co. LLC as joint lead managers.

The financial services company is based in Edinburgh.

UniCredit offers perpetuals

UniCredit priced $1.25 billion of 8% perpetual tier 1 notes at par, according to a syndicate source.

UniCredit, Citigroup Global Markets Inc., HSBC Securities, Societe Generale and UBS Securities LLC were the joint bookrunners.

The banking and financial services company is based in Rome and Milan, Italy.

Nederlandse Waterschapsbank prices

Nederlandse Waterschapsbank NV priced a $300 million tap of its existing floating-rate notes (Aaa/AA+/) due Feb. 14, 2018 at 100.124 to yield Libor plus 20 bps, according to a market source.

The notes have a coupon of Libor plus 23 bps.

Credit Suisse Securities and TD Securities managed the Rule 144A and Regulation S sale.

The total issue size is now $800 million, including $350 million priced on Feb. 7 and $150 million priced on Feb. 20.

The issuer provides loans to municipalities and other public programs and is based in the Hague, Netherlands.

Bank/brokerage CDS rise

Investment-grade bank and brokerage CDS prices rose, according to a market source.

Bank of America's CDS costs widened 5 bps to 67 bps bid, 70 bps offered. Citigroup's CDS costs eased 3 bps to 80 bps bid, 83 bps offered. JPMorgan Chase & Co.'s CDS costs rose 1 bp to 54 bps bid, 59 bps offered. Wells Fargo & Co.'s CDS costs eased 1 bp to 38 bps bid, 41 bps offered.

Merrill Lynch's CDS costs widened 5 bps to 72 bps bid, 75 bps offered. Morgan Stanley's CDS costs eased 2 bps to 88 bps bid, 93 bps offered. Goldman Sachs Group, Inc.'s CDS costs rose 2 bps to 97 bps bid, 102 bps offered.

Paul Deckelman contributed to this review.

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