BofA brings $5 billion; Kommunalbanken, CSX also price; BofA, JPMorgan, Goldman stable

By Aleesia Forni and Cristal Cody

Virginia Beach, April 16 – Bank of America Corp. led the charge for the high-grade bond market on Thursday, pricing $5 billion of notes in three parts following its earnings report earlier this week.

The bank’s Wednesday report fell short of analysts’ expectations, though it showed an increase in year-over-year profits.

Bank of America sold $2 billion of five-year senior notes, along with $2.5 billion of 10-year and $500 million of 30-year subordinated notes.

All three tranches sold tight compared to initial price thoughts.

Elsewhere on Thursday, Kommunalbanken AS sold a $1 billion offering of 10-year notes, though details of the sale were unavailable at press time.

The session also hosted an upsized $600 million 35-year new issue from CSX Corp. and a new $300 million sale from Willow No. 2 (Ireland) plc.

Thursday’s primary action pushes the week’s total supply past expectations to $17.4 billion.

In the preferred market, Goldman Sachs Group Inc. announced plans to sell $1,000-par series M fixed-to-floating rate noncumulative perpetual preferreds.

Price talk was 5.5%, a trader reported.

“They’ll probably push that,” he noted.

Bank and financial paper headed out mostly flat, while credit spreads were modestly softer on Thursday, sources said.

The Markit CDX North American Investment Grade series 23 index eased 1 basis point to a spread of 62 bps.

Bank of America’s 4% notes due 2025 were unchanged in secondary trading.

JPMorgan Chase & Co.’s 3.125% notes due 2025 traded flat on the day.

Goldman Sachs Group’s 3.5% notes due 2025 were stable.

BofA sells senior, sub notes

Bank of America priced $5 billion of notes on Thursday in three tranches, according to a market source.

The sale included $2 billion of 2.25% five-year senior notes (Baa2/A-/A) priced at 99.789 to yield 2.295%, or Treasuries plus 100 bps.

The notes were guided in the 115 bps area over Treasuries.

A $2.5 billion 3.95% 10-year subordinated note (Baa3/BBB+/BBB+) sold with a spread of Treasuries plus 210 bps. The notes priced at 99.705 to yield 3.986%.

Guidance was set in the 220 bps area over Treasuries.

A $500 million 4.75% 30-year subordinated note (Baa3/BBB+/BBB+), which was added following the deal’s announcement, sold at 99.873 to yield 4.758%, or 220 bps over Treasuries.

Guidance was set in the 225 bps area over Treasuries.

BofA Merrill Lynch was the bookrunner.

Proceeds will be used for general corporate purposes.

The financial services company is based in Charlotte, N.C.

CSX upsizes

CSX priced an upsized $600 million of 3.95% 35-year senior notes (Baa1/BBB+) to yield 145 bps over Treasuries on Thursday, according to a market source and an FWP filed with the Securities and Exchange Commission.

The issuer was expected to sell $500 million of notes.

Pricing was at 99.098 to yield 3.998%.

The notes sold at the tight end of guidance set in the 150 bps area over Treasuries after having firmed from initial talk in the area of 160 bps over Treasuries.

Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and UBS Securities LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes, which may include repayment of debt, repurchases of CSX’s common stock, capital investment, working capital requirements, improvements in productivity and other cost reductions at CSX’s major transportation units.

The transportation company is based in Jacksonville, Fla.

Willow subordinated notes

Willow No. 2 (Ireland) sold $300 million of 4.25% subordinated notes due Oct. 1, 2045 at 217.7 bps over mid-swaps on Thursday, a market source said.

Pricing was at 99.946.

The notes are guaranteed by Zurich Insurance Group Ltd.

BofA Merrill Lynch and Barclays are bookrunners.

The provider of financial services and insurance is based in Zurich.

Goldman’s new $1,000-pars

In addition to releasing earnings, Goldman also came out with a $2 billion offering of 5.375% $1,000-par series M fixed-to-floating rate noncumulative perpetual preferred stock on Thursday.

A market source said the issue freed to trade just ahead of the bell, at which time there was a 100.5 bid for paper.

Goldman Sachs & Co. ran the books.

The dividend will be fixed until May 10, 2020, when it will begin floating at Libor plus 392.2 bps.

Goldman can redeem the shares beginning May 10, 2020 or upon a regulatory capital treatment event at par plus accrued dividends.

The preferreds will not be listed on any exchange.

Proceeds will be used to provide funds for operations and for general corporate purposes.

Bank of America unchanged

Bank of America’s 4% notes due 2025 headed out flat over the session at 203 bps bid, a market source said.

Bank of America sold $2.5 billion of the notes (Baa2/A-/A) on Jan. 16 at Treasuries plus 225 bps.

The financial services company is based in Charlotte, N.C.

JPMorgan flat

JPMorgan Chase’s 3.125% notes due 2025 were unchanged at 119 bps bid in the secondary market, a source said.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Jan. 16 at Treasuries plus 145 bps.

The financial services company is based in New York City.

Goldman stable

Goldman Sachs’ 3.5% notes due 2025 were flat at 144 bps bid, according to a market source.

Goldman sold $800 million in a reopening of the notes (Baa1/A- /A) on March 25 at Treasuries plus 145 bps. The notes originally priced in a $1.7 billion offering on Jan. 20 at 170 bps plus Treasuries.

The financial services company is based in New York City.

Bank/broker CDS costs flat

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

Bank of America’s CDS costs were unchanged at 61 bps bid, 64 bps offered. Citigroup Inc.’s CDS costs were flat at 71 bps bid, 74 bps offered. JPMorgan Chase’s CDS costs remained at 59 bps bid, 62 bps offered. Wells Fargo & Co.’s CDS costs were also flat at 39 bps bid, 42 bps offered.

Merrill Lynch’s CDS costs remained at 64 bps bid, 69 bps offered. Morgan Stanley’s CDS costs were flat at 71 bps bid, 74 bps offered. Goldman Sachs Group’s CDS costs were flat at 79 bps bid, 82 bps offered.

Stephanie N. Rotondo contributed to this review.

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