BofA prices after delay, downgrade; ECB disappoints markets; Dollar General, Pfizer firm

By Aleesia Forni

New York, Dec. 3 – Bank of America NA priced its previously delayed bank note offering on Thursday during a tumultuous day for global markets.

The session saw the European Central Bank ramp up efforts to boost Europe’s sluggish economy, though the stimulus failed to meet the market’s expectations, sending the euro surging and stocks and bonds tumbling.

Despite the volatile backdrop, Analog Devices, Inc., Royal Bank of Canada and BAE Systems Holdings Inc. were all able to price new deals at the tightest side of guidance levels.

The activity pushes the week’s new issuance level to more than $31 billion, blowing away earlier supply predictions of around $20 billion.

Investment-grade bonds were mixed in secondary trading over the day, while credit spreads weakened.

Intel’s existing senior notes traded 2 basis points softer to 1 bp better on the long end.

Dollar General Corp.’s 4.15% senior notes due 2025 firmed 3 bps on Thursday after tightening 2 bps in Wednesday’s session.

Bank of America Corp.’s 3.875% senior notes due 2025 headed out about 3 bps wider.

Pfizer Inc.’s 3.4% senior notes due 2024 continued to trade better since the company's announcement in late November that it will acquire Dublin-based Allergan plc in a deal valued at $160 billion.

The Markit CDX North American Investment Grade 25 index eased 2 bps to end the day at a spread of 84 bps.

BofA delays deal

Bank of America sold a $1.6 billion issue of three-year fixed- and floating-rate notes on Thursday after the deal was delayed earlier this week, market sources said.

The self-led note offering, which was originally slated for Wednesday pricing, was shelved on news of Standard & Poor’s downgrade of the credit ratings of holding companies behind eight systematically important U.S. banks, with Bank of America Corp. among them.

The company was cut by the agency to BBB+ from A-.

S&P reported that these actions reflect the uncertainty of the U.S. government's likelihood of providing extraordinary support to the banking system if it came under stress.

Sources noted a concern that the banks would be affected by the rating change, hence the deal’s delay.

However, bank spreads seemed to have little reaction to the news, with a market source quoting them mostly unchanged to 1 bp wider overall during the session.

BofA pricing details

Included in Bank of America NA’s new deal (A1/A/A+) was $1.25 billion of 2.05% three-year senior bank notes sold at par with a spread of Treasuries plus 80 bps, a market source said.

The tranche came at the tight side of guidance, which was set in the 80 bps to 85 bps range following talk in the 85 bps area over Treasuries.

A $350 million tranche of floating-rate senior bank notes sold at par to yield Libor plus 76 bps.

The floaters were talked at the Libor equivalent to the fixed-rate tranche.

BofA Merrill Lynch was the bookrunner.

The Charlotte, N.C.-based financial services company plans to use proceeds for general corporate purposes.

RBC two-parter

In another financial new issue, Royal Bank of Canada priced $1.5 billion of three-year senior notes (Aa3/AA-/AA) in fixed- and floating-rate tranches on Thursday, a market source said.

A $1.25 billion 2% tranche sold at 99.977 to yield 2.008%, or Treasuries plus 73 bps, at the tight end of the Treasuries plus 75 bps area talk.

And $250 million of floating-rate notes sold at par to yield Libor plus 70 bps.

Guidance was at the Libor equivalent to the fixed-rate notes.

Bookrunners were RBC Capital Markets LLC, UBS Securities LLC and Wells Fargo Securities LLC.

Royal Bank of Canada is a Toronto-based financial services company.

Analog 10-, 30-year bonds

Analog Devices sold a $1.25 billion offering of senior notes (A3/A-) in 10- and 30-year tranches on Thursday, according to a market source and an FWP filing with the Securities and Exchange Commission.

The Norwood, Mass.-based company priced $850 million of 3.9% 10-year bonds at Treasuries plus 160 bps. The issue sold at a price of 99.77 to yield 3.928%.

And $400 million of 5.3% bonds due 2045 priced at 99.553 to yield 5.33%, or 225 bps over Treasuries.

Both tranches came at the tight end of guidance.

There is a change-of-control put at 101%.

J.P. Morgan Securities LLC, BofA Merrill Lynch, Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC are the bookrunners.

The maker of circuits for electronic equipment will use the proceeds from the offering to redeem $375 million of notes due 2016 and for general corporate purposes.

BAE prices tight

BAE Systems Holdings priced on Thursday $1.5 billion of senior notes in new and reopened tranches, a market source said.

The sale (Baa2/BBB+/BBB+) included $500 million of 2.85% five-year notes priced with a spread of 117 bps over Treasuries.

Also, $750 million of 3.85% 10-year notes sold at 167 bps over Treasuries.

A $250 million tap of the company’s existing 4.75% notes due Oct. 7, 2044 sold at Treasuries plus 195 bps.

The original $300 million issue priced at a spread of Treasuries plus 160 bps on Sept. 30.

All tranches sold at the tight end of guidance.

Proceeds will be used for general corporate purposes.

The bookrunners are BofA Merrill Lynch, Citigroup Global Markets Inc., JPMorgan, Barclays, Mizuho Securities and RBC Capital Markets LLC.

The multinational aerospace and defense company is based in London.

Intel new issue

Also on Thursday, Intel Corp. sold $915 million of 4.7% 30-year senior notes at par, according to an FWP filing with the Securities and Exchange Commission.

Cathay United Bank Co., Ltd., MasterLink Securities Corp. and Yuanta Securities Co., Ltd. are the bookrunners.

The notes are callable at par plus accrued interest on Dec. 14, 2018 and each Dec. 14 thereafter.

Proceeds will be used to fund the costs for the company’s acquisition of Altera Corp.

Intel is a semiconductor chip maker based in Santa Clara, Calif.

Intel mixed

Intel’s 3.7% notes due 2025 eased 2 bps to 101 bps bid on Thursday, according to a market source.

Intel sold $2.25 billion of the notes on July 22 at a spread of Treasuries plus 140 bps.

The company’s 4.9% bonds due 2045 firmed 1 bp to 156 bps bid.

The bonds priced in a $2 billion tranche in the July 22 offering at Treasuries plus 185 bps.

Dollar General firms

Dollar General’s 4.15% senior notes due 2025 firmed 3 bps to 205 bps bid, a market source said.

Dollar General priced $500 million of the notes (Baa3/BBB) on Oct. 15 at a spread of Treasuries plus 215 bps.

The discount retailer is based in Goodlettsville, Tenn.

Bank of America eases

Bank of America’s 3.875% senior notes due 2025 traded about 3 bps weaker at 141 bps bid in late afternoon secondary trading, a source said.

Bank of America sold $2.5 billion of the notes (Baa1/A-/A) on July 27 at a spread of Treasuries plus 167 bps.

Pfizer better

Pfizer’s 3.4% notes due 2024 firmed 3 bps during the session to 82 bps bid, according to a market source.

Pfizer sold $1 billion of the notes (A1/AA/) on May 13, 2014 at Treasuries plus 80 bps.

The biopharmaceutical company is based in New York City.

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