Brown-Forman brings day’s lone new issue; AT&T tightens; Verizon stable; Apple soft

By Aleesia Forni and Cristal Cody

Virginia Beach, June 24 – Brown-Forman Corp. was the only issuer to enter the investment-grade primary market on Wednesday.

The day’s lone deal from Brown-Forman was upsized to $500 million and sold around 10 basis points tight of initial price thoughts.

Also on Wednesday, Business Development Corp. of America announced plans to bring a $150 million offering of five-year senior notes to market.

Despite the lack of activity, the market’s tone remains constructive. One source noted that Tuesday’s jumbo $10 billion acquisition trade from H.J. Heinz Co. was “holding up well” during Wednesday’s session.

So far this week, the primary has hosted roughly $13.5 billion of new issuance.

Investment-grade bonds were mixed in secondary trading over the day, while credit spreads leaked wider at the open and headed out weak, sources said.

The Markit CDX North American Investment Grade series 23 index eased 1 bp to a spread of 66 bps.

In the secondary market, AT&T Inc.’s 3.4% notes due 2025 traded 2 bps tighter.

Apple Inc.’s 3.2% notes due 2025 eased 2 bps.

Verizon Communications Inc.’s 3.5% notes due 2024 were flat in late afternoon trading.

Brown-Forman prices

Brown-Forman sold an upsized $500 million of 4.5% 30-year senior notes (A1/A-/A+) on Wednesday at Treasuries plus 145 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

Pricing was at 98.122 to yield 4.616%.

The notes sold at the tight end of price guidance set in the Treasuries plus 150 bps area after being initially talked in the area of Treasuries plus 155 bps.

The deal was increased from $350 million.

The bookrunners are Barclays, Bank of America Merrill Lynch, Citigroup Global Markets Inc., U.S. Bancorp Investments Inc., Deutsche Bank Securities Inc. and Wells Fargo Securities LLC.

Proceeds will be used for general corporate purposes, which may include retiring existing debt including commercial paper, acquisitions, repurchases of common stock, dividends, funding of pension plan obligations, additions to working capital and capital expenditures.

The global spirits maker is based in Louisville, Ky.

Business Development on deck

Business Development Corp. of America is planning to price a $150 million offering of senior notes (Kroll: BBB) due 2020, according to a filing with the SEC.

The notes will feature a make-whole call at Treasuries plus 50 bps and then a par call one month prior to maturity.

Keefe, Bruyette & Woods and UBS Securities LLC are the bookrunners.

William Blair and Ladenburg Thalmann are the co-managers.

The notes will be Rule 144A for life.

Proceeds will be used to make investments in portfolio companies in accordance with investment objectives and for general corporate purposes.

New York-based Business Development was established to provide capital primarily in the form of senior secured loans to middle-market enterprises. It invests in both the debt and equity of private middle-market companies.

AT&T stronger

AT&T’s 3.4% notes due 2025 firmed 2 bps to 161 bps bid, according to a market source.

The company sold $5 billion of the notes (/BBB+/A-) on April 23 at a spread of Treasuries plus 150 bps.

The telecommunications company is based in Dallas.

Verizon unchanged

Verizon’s 3.5% notes due 2024 were unchanged at 144 bps bid in secondary trading, a market source said.

The company sold $2.5 billion of the notes (Baa1/BBB+/A-) on Oct. 22, 2014 at Treasuries plus 135 bps.

The telecommunications company is based in New York City.

Apple eases

Apple’s 3.2% notes due 2025 eased 2 bps to 94 bps bid over the day, a market source said.

The company sold $2 billion of the 10-year notes (Aa1/AA+/) on May 6 at Treasuries plus 100 bps.

The computer and mobile communications device company is based in Cupertino, Calif.

Bank/brokerage CDS costs flat

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

Bank of America Corp.’s CDS costs were flat at 76 bps bid, 71 bps offered. Citigroup Inc.’s CDS costs were unchanged at 78 bps bid, 81 bps offered. JPMorgan Chase & Co.’s CDS costs were also flat at 66 bps bid, 69 bps offered. Wells Fargo & Co.’s CDS costs remained at 50 bps bid, 53 bps offered.

Merrill Lynch’s CDS costs were flat at 72 bps bid, 75 bps offered. Morgan Stanley’s CDS costs ended unchanged at 79 bps bid, 82 bps offered. Goldman Sachs Group, Inc.’s CDS costs were flat at 87 bps bid, 90 bps offered.

Paul Deckelman contributed to this review.

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