Primary slows with deals from CRH, OeKB, NRW; Verizon tightens on AOL acquisition plans

By Aleesia Forni and Cristal Cody

Virginia Beach, May 12 – CRH America Inc., Oesterreichische Kontrollbank AG and NRW Bank were the only names pricing new investment-grade deals on Tuesday, while the bulk of potential issuers chose to remain on the sidelines amidst volatile Treasuries.

Despite the market backdrop, CRH sold both tranches of its new $1.75 billion offering at the tight end of price talk, and the deal attracted more than $5 billion of orders.

Oesterreichische Kontrollbank also sold a new $1.5 billion offering of two-year notes on Tuesday at the tight end of guidance, while NRW Bank sold $1 billion of three-year notes.

Two sovereign issuers, the Province of Ontario and Finland, each announced plans to price respective bond offerings later this week.

Players predict the pace of issuance to resume on Wednesday, with one source calling for a “very large” day.

In total, the investment-grade primary market has seen more than $14.93 billion of supply so far this week.

Verizon Communications Inc.’s bonds (Baa1/BBB+/A-) tightened over the session following the company’s early morning announcement that it will acquire AOL Inc. for $4.4 billion in cash.

The bonds traded modestly softer ahead of the announcement.

AT&T Inc.’s bonds (Baa1/BBB+/A-) traded mostly better on the day.

Microsoft Corp.’s 2.7% notes due 2025 improved 1 basis point but remained wider than issuance.

The three-month Libor yield was stable at 28 bps.

The Markit CDX North American Investment Grade series 23 index was mostly unchanged at a spread of 65 bps.

CRH brings $1.75 billion

CRH America was in Tuesday’s market with a $1.75 billion offering of 10- and 30-year bonds (Baa2/BBB+/), according to an informed source.

The company’s sale included a $1.25 billion 3.875% note due May 18, 2025 priced at 99.877 to yield 3.89%, or Treasuries plus 165 bps.

A second tranche was $500 million of 5.125% notes due May 18, 2045 priced at 98.777 to yield 5.206%, or Treasuries plus 220 bps.

Both tranches sold at the tight end of price talk.

The bookrunners for the Rule 144A and Regulation S deal were Santander, BofA Merrill Lynch, Barclays and Credit Agricole.

Proceeds will be used to repay debt.

The manufacturer and supplier of building materials is based in Atlanta.

OeKB offering

Elsewhere on Tuesday, Oesterreichische Kontrollbank priced a $1.5 billion offering of two-year notes on Tuesday at mid-swaps minus 3 bps, or Treasuries plus 24.9 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes (Aaa/AA+/) were talked in the mid-swaps minus 2 bps area.

Pricing was at 99.812.

Citigroup Global Markets Inc. and HSBC Securities are the bookrunners.

The export and financial services company for Austrian businesses is based in Vienna.

NRW Bank offer

NRW Bank priced a $1 billion issue of 1.375% notes due Aug. 20, 2018 on Tuesday at mid-swaps plus 6 bps, according to a market source.

Pricing was in line with talk.

The notes sold at an issue price of 99.987 to yield 1.38%.

Bookrunners for the Regulation S deal are BofA Merrill Lynch, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and RBS Securities Inc.

The bank is based in Dusseldorf, Germany.

Ontario plans five-year notes

The Province of Ontario is in the market with a planned benchmark offering of five-year bonds, according to a market source.

The notes are guided in the high-teens area over mid-swaps.

Proceeds from the sale will be used for general provincial purposes.

The bookrunners are Barclays, BMO Capital, Citigroup Global Markets and HSBC Securities.

Finland eyes sale

Finland also joined the forward calendar on Thursday, announcing plans to sell a benchmark offering of notes (Aaa/AA+/), according to a market source.

Price talk is set in the area of mid-swaps minus 8 bps.

The sale is being done via Rule 144A and Regulation S.

BofA Merrill Lynch, Citigroup Global Markets, Goldman Sachs & Co. and HSBC are the bookrunners.

Verizon tightens

Verizon’s 3.5% notes due 2024 firmed 3 bps to 128 bps bid, according to a market source.

The company sold $2.5 billion of the notes on Oct. 22 at a spread of Treasuries plus 135 bps.

Verizon’s 4.15% notes due 2024 tightened 8 bps to 127 bps bid, the source said.

Verizon sold $1.25 billion of the notes on March 10, 2014 at Treasuries plus 140 bps.

The telecommunications company is based in New York City.

AT&T firms

AT&T’s 3.9% notes due 2024 traded late afternoon at 129 bps bid, tighter than where the notes were seen at 135 bps bid on Monday, a market source said.

AT&T sold $1 billion of the notes on March 5, 2014 at Treasuries plus 125 bps.

The telecommunications company is based in Dallas.

Microsoft improves

Microsoft’s 2.7% notes due 2025 firmed 1 bp to 81 bps bid, a market source said.

Microsoft sold $2.25 billion of the notes (Aaa/AAA/) on Feb. 9 at 75 bps over Treasuries.

The computer software company is based in Redmond, Wash.

Bank/brokerage CDS costs flat

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

Bank of America Corp.’s CDS costs were unchanged at 66 bps bid, 69 bps offered. Citigroup Inc.’s CDS costs were flat at 75 bps bid, 78 bps offered. JPMorgan Chase & Co.’s CDS costs remained at 63 bps bid, 66 bps offered. Wells Fargo & Co.’s CDS costs were also flat at 44 bps bid, 47 bps offered.

Merrill Lynch’s CDS costs remained at 69 bps bid, 74 bps offered. Morgan Stanley’s CDS costs were down 1 bp to 80 bps bid, 83 bps offered. Goldman Sachs Group, Inc.’s CDS costs were also down 1 bp at 86 bps bid, 89 bps offered.

Paul Deckelman contributed to this review.

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