Visa brings $16 billion megadeal to high-grade bond market; bank, financial paper widens

By Aleesia Forni and Cristal Cody

New York, Dec. 9 – Visa Inc. entered Wednesday’s high-grade primary market with its debut bond offering, pricing $16 billion of bonds in six parts.

Proceeds from the highly anticipated jumbo deal will be used to help fund a portion of the purchase price for the acquisition of Visa Europe Ltd.

The deal, which is the fifth-largest offering brought to the high-grade market this year, priced after the issuer stood down on Tuesday due to unfavorable market conditions.

One source noted that the market’s tone was “looking a little better” on Wednesday following the turbulent start to the week and the no-print Tuesday session.

In the day’s only other reported new issue, Bank of Nova Scotia sold $1.25 billion of subordinated notes at the tight side of guidance.

In total, issuers have printed more than $24.85 billion of supply so far this week.

Investment-grade bank and financial paper traded mostly softer during Wednesday’s session.

JPMorgan Chase & Co.’s 4.25% subordinated notes due 2027 eased 4 basis points.

Goldman Sachs Group Inc.’s notes were flat to weaker in the secondary market.

Bank of America Corp.’s 3.875% senior notes due 2025 eased about 1 bp.

Citigroup Inc.’s 4.45% subordinated notes due 2027 traded 2 bps weaker.

HSBC Holdings plc’s 4.25% subordinated notes due 2025 were quoted 5 bps softer.

Morgan Stanley’s 4% senior notes due 2025 widened 8 bps over the day.

The Markit CDX North American Investment Grade 25 index was unchanged to modestly softer going out at a spread of 86 bps.

Visa sells $16 billion

Visa saw solid demand for its $16 billion offering of senior notes (A1/A+) that priced in six parts on Wednesday, according to an informed source.

The order book was more than 2.8 times oversubscribed.

Tranches of the offering sold between 20 bps to 23 bps tight of the midpoint of initial price thoughts.

There was a $1.75 billion tranche of 1.2% two-year notes sold at 99.947 to yield 1.227%, or Treasuries plus 30 bps.

Guidance was in the Treasuries plus 33 bps area, having tightened from the Treasuries plus 50 bps area.

A $3 billion 2.2% tranche of five-year notes sold with a spread of 57 bps over Treasuries. Pricing was at 99.915 to yield 2.218%.

The notes came at the tight side of guidance set in the Treasuries plus 60 bps area. Initial talk was in the Treasuries plus 80 bps area.

The company also sold $2.25 billion of 2.8% seven-year notes at 99.861 to yield 2.822% with a spread of Treasuries plus 82 bps.

Pricing was at the tight end of the Treasuries plus 85 bps area guidance, tightened from talk in the Treasuries plus 105 bps area.

A $4 billion 3.15% tranche of 10-year notes sold at 99.634 to yield 3.193%, or Treasuries plus 97 bps.

Price guidance was set in the Treasuries plus 100 bps area. Initial talk was in the Treasuries plus 120 bps area.

And a $1.5 billion tranche of 4.15% 20-year bonds sold at Treasuries plus 117 bps. The notes sold at 99.865 to yield 4.16%.

The notes priced at the tight end of the Treasuries plus 120 bps area initial guidance and inside talk set in the Treasuries plus 140 bps area.

Finally, $3.5 billion of 4.3% 30-year bonds sold at 99.833 to yield 4.31% with a spread of Treasuries plus 132 bps.

Guidance was in the Treasuries plus 135 bps area and tight of talk in the Treasuries plus 155 bps area.

BofA Merrill Lynch, Goldman Sachs & Co., J.P. Morgan Securities LLC, U.S. Bancorp Investments Inc., Wells Fargo Securities LLC, Barclays, Citigroup Global Markets Inc., HSBC Securities (USA) Inc., MUFG, RBC Capital Markets LLC and Standard Chartered Bank are the bookrunners.

The San Francisco-based operator of a retail electronic payments network plans to use proceeds to fund the acquisition of Visa Europe Ltd. and for general corporate purposes.

Bank Nova subordinated notes

Bank of Nova Scotia priced $1.25 billion of 4.5% 10-year subordinated notes (A3/BBB+) on Wednesday at Treasuries plus 230 bps, according to an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.992 to yield 4.501%.

The notes came at the tight side of the Treasuries plus 235 bps area guidance and inside initial talk in the 245 bps area over Treasuries.

Bookrunners were Citigroup, Goldman Sachs, JPMorgan, Scotia Capital (USA) Inc. and UBS Securities LLC.

Proceeds will be used for general corporate purposes.

The financial services company is based in Toronto.

JPMorgan softens

JPMorgan Chase’s 4.25% subordinated bonds due 2027 eased 4 bps to 201 bps bid in late afternoon secondary trading, a market source said.

JPMorgan Chase sold $2 billion of the bonds (Baa1/A-/A) on Sept. 23 at a spread of Treasuries plus 215 bps.

Goldman weak

Goldman’s 4.25% subordinated notes due 2025 traded 4 bps wider to head out at 206 bps bid, according to a market source.

Goldman sold $2 billion of the notes (Baa2/BBB+/A-) on Oct. 16 at a spread of Treasuries plus 230 bps.

The company’s 4.75% bonds due 2045 (A3/A-/A) were unchanged at 173 bps bid.

The bonds were sold in a $1.75 billion tranche in the Oct. 16 deal at 192 bps over Treasuries.

The financial services company is based in New York City.

Bank of America mostly flat

Bank of America’s 3.875% senior notes due 2025 traded about 1 bp weaker at 141 bps bid on Wednesday, a market source said.

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

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

Citi notes ease

Citigroup’s 4.45% subordinated notes due 2027 eased 2 bps in secondary trading to 225 bps bid, according to a market source.

Citigroup sold $1.5 billion of the notes (Baa3/ BBB+/A-) in an Oct. 23 add-on at a spread of 233 bps over Treasuries. The $2 billion tranche originally priced on Sept. 23 at Treasuries plus 235 bps.

The financial services company is based in New York.

HSBC paper eases

HSBC’s 4.25% notes due 2025 widened 5 bps over the day to 197 bps bid, according to a market source.

HSBC sold $1.5 billion of the notes (A2/A+) on Aug. 10 at a spread of Treasuries plus 212 bps.

The banking and financial services company is based in London.

Morgan Stanley widens

Morgan Stanley’s 4% notes due 2025 were quoted 8 bps wider at 142 bps bid on Wednesday, a market source said.

Morgan Stanley sold $3 billion of the notes (A3/A-/A) on July 20 at Treasuries plus 165 bps.

The financial services company is based in New York City.

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