Synchrony sees demand; Fairfax, PSE&G do deals; Synchrony firms; Time Warner little changed

By Cristal Cody and Aleesia Forni

Virginia Beach, Aug. 6 – Synchrony Financial, Public Service Electric & Gas Co. and Fairfax (US) Inc. sold new deals on Wednesday during another solid session for high-grade bonds.

Synchrony’s new $3.6 billion four-part offering was the highlight of the session, pricing the upsized deal around 20 basis points better compared to initial price thoughts.

The offering “saw huge demand,” a source said, garnering an orderbook that was nearly five times oversubscribed.

The session also saw PSE&G bring a $500 million two-part offering and Fairfax sell $300 million of 10-year notes.

In other market action, Federal Home Loan Banks priced $3 billion of two-year global bonds at the tight end of price talk during the session.

Around $14 billion of new issuance has priced this week, closing in on what sources believed would be around a $15 billion week.

Investment-grade credit spreads stayed about a ½ basis point weaker over the session, a market source said.

Synchrony Financial’s tranches tightened in aftermarket trading, while PSE&G’s bonds also were active, a trader said.

The new notes from Fairfax were not seen in late afternoon trading.

Elsewhere in the secondary market, Time Warner Inc.’s senior notes (Baa2/BBB/BBB+) brought in May traded flat in little reaction to the withdrawal of a takeover offer, according to market sources.

Rupert Murdoch’s 21st Century Fox Inc. withdrew its acquisition offer following the close of business on Tuesday.

Time Warner rejected the company’s bid in July to acquire the media and entertainment company for about $80 billion in cash and stock.

Synchrony upsizes

Synchrony Financial sold on Wednesday an upsized $3.6 billion offering of senior notes in four parts, according to a market source and a company press release.

There was $500 million of 1.875% senior notes due 2017 sold with a spread of Treasuries plus 100 bps.

A second tranche was $1.1 billion of 3% five-year notes priced at Treasuries plus 140 bps.

The company also sold $750 million of 3.75% notes due 2021 at 165 bps over Treasuries.

Finally, $1.25 billion of 4.25% notes due 2024 priced at Treasuries plus 180 bps.

Synchrony Financial’s 1.875% notes due 2017 tightened to 94 bps bid in aftermarket trading, according to a trader.

The company’s 3% notes due 2019 were quoted in the secondary market better at 135 bps bid.

The tranche of 3.75% notes due 2021 headed out at 163 bps bid, the trader said.

Synchrony Financial’s 4.25% notes due 2024 were bid at 174 bps as the session closed, the trader said.

Barclays, BofA Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are the bookrunners.

Proceeds will be used to invest in liquid assets to further increase the size of the company’s liquidity portfolio.

Synchrony is a consumer financial services company based in Stamford, Conn.

PSE&G prices tight

Public Service Electric & Gas sold $500 million of secured medium-term notes (Aa3/A/A+), series J, in two parts, according to a market source and separate FWP filings with the Securities and Exchange Commission.

The sale included $250 million of 2% five-year notes priced at 99.796 to yield 2.043%, or Treasuries plus 40 bps.

A second tranche was $250 million of 3.15% 10-year bonds sold at 99.821 to yield 3.171%, or Treasuries plus 70 bps.

Both tranches sold at the tight end of talk.

Public Service Electric & Gas’ 2% notes due 2019 traded at 38 bps bid, 36 bps offered, a trader said.

The tranche of 3.15% notes due 2024 were seen in the secondary market at 68 bps bid, 67 bps offered.

The bookrunners were Credit Suisse Securities, RBS Securities Inc., RBC Capital Markets LLC and Wells Fargo Securities LLC.

Proceeds will be used for general corporate purposes.

PSE&G is a Newark, N.J.-based utility.

FHLB global bonds

Federal Home Loan Banks priced $3 billion of 0.5% two-year global bonds at Treasuries plus 15 bps, according to a market source.

The notes sold at the tight end of talk, which was set in the area of Treasuries plus 15.5 bps.

Lead managers for this issue were Barclays, HSBC Securities (USA) Inc. and Morgan Stanley.

FHLBanks are 12 government-sponsored funding providers.

Fairfax offering

Fairfax (US), a wholly owned subsidiary of Fairfax Financial Holdings Ltd., priced $300 million of 4.875% 10-year notes at 253 bps over Treasuries on Wednesday, a market source said.

Pricing was at 99.026.

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

BofA Merrill Lynch was the bookrunner.

Toronto-based Fairfax Financial is a financial services holding company that owns property and casualty insurance and reinsurance and investment management subsidiaries.

Time Warner unchanged

Time Warner’s 2.1% notes due 2019 traded unchanged from Monday at 62 bps offered, a market source said.

The notes edged up to 99.79 to yield 2.166% on Wednesday from 99.33 to yield 2.247% earlier in the day, according to a market source.

Time Warner sold $650 million of the five-year notes at Treasuries plus 60 bps, or 99.948, to yield 2.111%, on May 20.

The company’s 3.55% notes due 2024 traded flat at 122 bps offered, according to the market source.

The 10-year notes ended mostly unchanged at 99.86 to yield 3.689% from 99.85 to yield 3.567% on Tuesday.

Time Warner sold $600 million of the notes at Treasuries plus 135 bps, or 99.908, to yield 3.561% in the May offering.

The media and entertainment company is based in New York.

Bank/brokerage costs flat to higher

Investment-grade bank and brokerage CDS prices were unchanged to higher, according to a market source.

Bank of America Corp.’s CDS costs unchanged at 74 bps bid, 77 bps offered. Citigroup Inc.’s CDS costs fell 1 bp to 71 bps bid, 74 bps offered. JPMorgan Chase & Co.’s CDS costs increased 1 bp to 61 bps bid, 64 bps offered. Wells Fargo & Co.’s CDS costs were also 1 bp higher at 48 bps bid, 53 bps offered.

Merrill Lynch’s CDS costs were flat at 78 bps bid, 82 bps offered. Morgan Stanley’s CDS costs ended 1 bp wider at 80 bps bid, 85 bps offered. Goldman Sachs Group, Inc.’s CDS costs were 1 bp higher at 89 bps bid, 90 bps offered.

Paul Deckelman contributed to this review.

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