American Tower, Westpac, Cooper, Bank of NY among new trades; long-dated bond demand grows

By Andrea Heisinger and Cristal Cody

New York, Dec. 2 - American Tower Corp., New York Life Global Funding, Westpac Banking Corp., Cooper US, Inc. and Bank of New York Mellon Corp. were the issuers in the high-grade bond market on Thursday, sources said.

The largest sale of the day, and also the last to price, came from Australia's Westpac Banking. The financial sold $2.5 billion in three tranches. A floating-rate tranche of three-year notes was added to the two fixed-rate tranches that were originally planned, a source said.

Split-rated American Tower priced an upsized $1 billion of seven-year notes by mid-afternoon.

That deal priced about the same time as the $500 million sale in two parts from Cooper US. The offering was split evenly between maturities of 2016 and 2020.

Triple-A rated NY Life Global Funding priced $500 million of one-year floating-rate notes.

Another financial name in the primary was Bank of NY Mellon. The company priced $600 million of five-year notes at the tight end of guidance.

Sentiment in the primary was good for the day, a syndicate source said.

Secondary market tone was strong on Thursday, according to sources.

The Markit CDX Series 14 North American investment-grade index firmed a second day on Thursday by 4 bps to 92 bps, according to Markit Group Ltd.

"There's a lot of demand for longer duration paper," a trader said. "The index is tighter. The spread rally that happened yesterday carried through today."

Eastman Chemical Co.'s new debt was tighter on the offer side on Thursday, while bank and financial paper narrowed, sources said.

The new debt from America Tower and Bank of New York was stronger in the secondary market, sources said.

Overall investment-grade Trace volume was flat on Thursday at about $13.5 billion, according to a market source.

U.S. government debt fell sending the 10-year Treasury benchmark note yield up 4 basis points to 3.00% as traders squared positions ahead of Friday's job report.

The 30-year bond yield rose 2 bps to 4.26%.

"It's been a very choppy day," said Mary Ann Hurley, a fixed-income trader for D.A. Davidson & Co. "We started out lower, moved higher and went back lower again."

Cooper's $500 million deal

Cooper US priced $500 million of senior notes (A3/A) in two tranches, a source who worked on the sale said.

The $250 million of 2.375% five-year notes sold at a spread of Treasuries plus 75 bps. The notes were initially talked in the 100 bps area, then revised to the 90 bps area. They priced at the tight end.

A second $250 million tranche of 3.875% 10-year notes priced at a spread of 95 bps over Treasuries. The tranche was priced at the tight end of guidance in the 100 bps area.

There was plenty of demand for the deal and more interest from investors in the 10-year notes.

Active bookrunners were Citigroup Global Markets Inc. and Goldman Sachs & Co.

The notes are guaranteed by Cooper Industries plc, Cooper Industries, Ltd., Cooper B-Line, Inc., Cooper Bussmann, LLC, Cooper Crouse-Hinds, LLC, Cooper Lighting, LLC, Cooper Power Systems, LLC, and Cooper Wiring Devices, Inc.

Proceeds are being used for general corporate purposes.

Cooper's new debt was not seen trading in the markets Thursday afternoon, a source said.

The maker of electric products is based in Houston.

American Tower upsizes

American Tower sold an upsized $1 billion of split-rated 4.5% seven-year senior notes (Baa3/BB+/BBB-) at a spread of Treasuries plus 215 bps, said a source who worked on the trade.

The size was increased from $500 million at the launch. The notes were whispered in the 230 bps area and then talk was revised to the 225 bps area. The deal priced tighter than that.

There was "very strong demand" on the books, the source said. The notes had not been freed for trading by late in the day.

Citigroup Global Markets Inc., Credit Suisse Securities LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and RBS Securities Inc. were bookrunners.

Proceeds will be used to finance acquisitions. This includes up to $200 million for the acquisition of towers from Cell C Pty Ltd. and up to $500 million for proposed acquisitions in Latin America, including additional tranches of tower purchases in Colombia, Peru and Chile. Proceeds may also be used to repay a revolving credit facility if one is required.

In the secondary market, a trader saw the notes tightening to 215 bps bid, 208 bps offered.

Another trader heard the new notes were trading at 211 bps bid, 207 bps offered.

The owner and manager for leasing communication and broadcast tower sites is based in Boston.

Momentum propels issuance

It was the third day in a row with plenty of new issues in the market and the second day with a solid tone, a syndicate source said.

"We're sustaining a lot of momentum," he said. "It looks great."

Nearly all of the deals that went out with price guidance ratcheted in from where they were whispered. Some, like the Westpac and American Tower sales, saw their sizes increase on demand. The American Tower deal in particular doubled in size from a planned $500 million.

"I think people are seeing these names and grabbing for them," the source said.

Westpac offers $2.5 billion

Australia-based Westpac Banking sold $2.5 billion of senior notes late in the day in three short-dated tranches, a source away from the sale said.

Three-year floating-rate notes were added before the launch, on demand.

That $400 million tranche of three-year floaters priced at par to yield Libor plus 73 bps.

There was also $1.1 billion of 1.85% three-year notes that priced to yield Treasuries plus 103 bps.

The second tranche was $1 billion of 3% five-year notes sold at 135 bps over Treasuries.

Goldman Sachs & Co. and J.P. Morgan Securities LLC ran the books.

Proceeds are being used for general corporate purposes.

The bank and financial services company is based in Sydney.

Bank of NY prices five-years

Bank of New York Mellon priced $600 million of 2.5% five-year notes on Thursday at a spread of Treasuries plus 83 basis points, a market source said.

The issue sold at the tight end of guidance in the 85 bps area.

The notes (Aa2/AA-) were priced at 99.97 to yield 2.506%.

Deutsche Bank Securities Inc. and Morgan Stanley & Co. Inc. were bookrunners.

The notes were stronger in the secondary market, a trader said. "It's trading inside 80 now."

The financial services company is based in New York City.

NY Life's floaters

New York Life Global Funding priced $500 million of one-year floating-rate notes (Aaa/AAA/AAA) early in the afternoon at par to yield Libor flat, a market source away from the sale said.

Credit Suisse Securities USA LLC and Goldman Sachs & Co. were bookrunners.

The funding arm of the insurance company is based in New York City.

Eastman tightens on bid side

Eastman Chemical's new debt was tighter on the offer side but sticking to pricing on the bid side, a trader said.

The company sold $500 million of senior notes (Baa2/BBB) in two tranches on Wednesday.

The $250 million of 3% notes due 2015 priced at a spread of 140 bps over Treasuries. The notes were quoted Thursday afternoon at 140 bps bid, 137 bps offered.

The company sold $250 million in the second tranche of 4.5% notes due 2021 at Treasuries plus 155 bps. On Thursday, the notes were quoted at 155 bps bid, 154 bps offered.

The global chemical company is based in Kingsport, Tenn.

Citi, Bank of America firm

The financial sector improved on Thursday, according to sources.

"Bank paper's doing better today," a trader said.

Financial and bank paper was seen trading slightly better to flat on Thursday.

Bank of America Corp.'s 7.375% notes due 2014 firmed 4 bps to 315 bps.

Elsewhere in the sector, Citigroup Inc.'s 8.5% notes due 2019 (A3/A/) firmed 5 bps to 230 bps over Treasuries.

Paul Deckelman contributed to this review.

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