High-grade primary market quiet early in week, swells mid-week on supply from banks

By Devika Patel

Knoxville, Tenn., Jan. 25 – The primary investment-grade bond market was initially quiet before bank and financial issuers finally emerged mid-week to lift total supply. The market quieted down by Friday, which saw no new deals pricing or announced.

A total of 10 reported deals were announced and priced during the week.

On Tuesday, Toronto-based Royal Bank of Canada priced $600 million of senior floating-rate notes (A2/A/AA) and Liberty Property LP, a Malvern Pa.-based real estate investment trust, priced $350 million of 4.375% 10-year senior notes (Baa1/BBB/BBB).

For Wednesday, JPMorgan Chase & Co. (A2/A-/AA-) sold $2 billion of 3.96% eight-year fixed-to-floating rate notes and Munich-based German state-owned wind-down agency FMS Wertmanagement sold $2 billion of 2.75% five-year senior notes. Also, Fifth Third Bancorp priced $1.5 billion of 3.65% five-year senior notes.

Thursday was the busiest day of the week, as Vienna, Austria-based Oesterreichische Kontrollbank AG (Aa1/AA+) priced $1.5 billion of 2.625% three-year global notes; Montreal-based Bank of Montreal brought $360 million of two-year floating-rate notes to market; and Wayne, Pa.’s CubeSmart, LP, a real estate investment trust of self-storage facilities, sold $350 million of 4.375% 10-year guaranteed notes.

Toronto-based alternative asset manager Brookfield Asset Management Inc. reported that a subsidiary priced $1 billion of 4.85% notes (Baa2/A-/A) due 2029; and Regions Financial Corp., a financial services company based in Birmingham, Ala., sold a $500 million add-on to its 3.8% notes due 2025, bringing the total outstanding to $1 billion.

Thursday also saw McLean, Va.-based Capital One Financial Corp. sell $1.25 billion of 3.9% five-year senior notes (Baa1/BBB/A-) and Toronto-based Bank of Nova Scotia sell $415 million of two-year floating-rate senior notes (A2//AA-).

RBC prices $600 million

RBC said it sold $600 million of senior floating-rate notes on Tuesday.

The two-year floating-rate notes priced at par with a coupon of Libor plus 40 basis points.

RBC Capital Markets Corp. was the bookrunner.

Liberty Property taps market

Liberty Property sold $350 million of 4.375% 10-year senior notes on Tuesday.

The notes were sold with a spread of Treasuries plus 168 bps. The notes priced at 99.742 to yield 4.407%.

Citigroup Global Markets Inc., Goldman Sachs & Co. LLC and Wells Fargo Securities LLC are the bookrunners.

Proceeds will be used for working capital and general corporate purposes, including repaying debt under the company’s $900 million credit facility.

JPMorgan prices $2 billion

JPMorgan priced $2 billion of 3.96% eight-year fixed-to-floating rate notes at par with a spread of Treasuries plus 132 bps.

The notes bear interest at a fixed rate up to Jan. 29, 2026 and then carry a coupon equal to Libor rate plus 124.5 bps.

J.P. Morgan Securities LLC is the bookrunner.

Proceeds will be used for general corporate purposes.

FMS brings $2 billion

FMS sold $2 billion of 2.75% five-year senior notes (Aaa/AAA) at a spread of mid-swaps plus 9 bps.

The notes were sold at 99.963 to yield 2.758%.

BofA Merrill Lynch, Citigroup, Commerzbank Capital Markets Corp., Credit Agricole CIB and TD Securities (USA) LLC were the joint bookrunners.

Proceeds will be used to refinance liabilities in order to replace maturing, short-term money market instruments with long-term funding, as well as for general corporate purposes.

Fifth Third prices

Fifth Third, a Cincinnati-based financial services company, sold $1.5 billion of 3.65% five-year senior notes (Baa1/BBB+/A-).

The notes priced at 99.814 to yield 3.691%, or 110 bps over Treasuries.

Morgan Stanley & Co. LLC, Fifth Third Securities Inc., Goldman Sachs and RBC Capital Markets LLC were the bookrunners.

Proceeds will be used for general corporate purposes.

OeKB prices $1.5 billion

OeKB, which provides financial and information services to Austria’s export industry and the capital market, sold $1.5 billion of 2.625% three-year global notes on Thursday at 99.771.

The notes priced at a spread of Treasuries plus 16.65 bps.

Barclays, Deutsche Bank Securities Inc., JPMorgan and RBC Capital Markets were the underwriters.

The notes are guaranteed by the Republic of Austria.

BMO sells floaters

Bank of Montreal priced $360 million of two-year floating-rate notes at par.

Interest is payable quarterly, accruing at the rate equal to Libor plus 40 bps.

BMO Capital Markets Corp. and Wells Fargo are the bookrunners.

Proceeds will be contributed to the general funds of the bank and used for general corporate purposes.

CubeSmart prices notes

CubeSmart sold $350 million of 4.375% 10-year senior notes (Baa2/BBB).

The notes priced at 99.356 to yield 4.455%, or Treasuries plus 175 bps.

The bookrunners are Wells Fargo, Barclays and Jefferies & Co.

The notes will be guaranteed by CubeSmart.

Proceeds will be used to repay $200 million of debt under the unsecured term loan portion of CubeSmart’s credit facility due January 2019 and for working capital and other general corporate purposes, which may include debt repayment or repurchases.

Brookfield sells $1 billion

Brookfield priced $1 billion of 4.85% guaranteed notes (Baa2/A-/A) due March 29, 2029.

The notes priced with a spread of Treasuries plus 215 bps. The notes priced at 99.821 to yield 4.871%.

Citigroup, HSBC Securities (USA) Inc. and SMBC Nikko Securities America Inc. are the joint bookrunners.

The notes will be sold via subsidiary Brookfield Finance Inc. and will be guaranteed by parent company Brookfield Asset Management.

Proceeds will be used for general corporate purposes.

Regions sells $500 million

Regions sold a $500 million add-on to its 3.8% senior notes (Baa2/BBB+/BBB+) due Aug. 14, 2023.

The add-on priced at 99.953 to yield 3.811%, or 123 bps over Treasuries.

Goldman Sachs, Barclays, Credit Suisse Securities (USA) LLC, Regions Securities LLC and UBS Securities LLC were the bookrunners.

The company previously sold $500 million of the notes at 99.941 to yield 3.813% with a spread of 98 bps over Treasuries on Aug. 8, 2018, with the sale settling on Aug. 13, 2018.

Proceeds will be used for general corporate purposes.

Capital One active

Financial services company Capital One sold $1.25 billion of 3.9% five-year senior notes.

The notes were sold with a spread of Treasuries plus 140 bps. The notes priced at 99.784 to yield 3.948%.

Citigroup, Credit Suisse, Morgan Stanley, Wells Fargo and Capital One Securities Inc. are the bookrunners.

Proceeds will be used for general corporate purposes, which may include debt repayment, common stock or other securities redemptions and repurchases, acquisitions, working capital, capital expenditures and investments.

Bank of Nova Scotia prices

Bank of Nova Scotia priced $415 million of two-year floating-rate senior notes at par on Thursday.

The floaters will have a coupon equal to Libor plus 42 bps.

Scotia Capital (USA) Inc. and UBS Securities are the bookrunners.

Proceeds will be used for general business purposes.

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