World Bank, S.C. Johnson, BAE Systems price as market tone improves; Abbey National firms

By Aleesia Forni

Virginia Beach, Sept. 30 – The tone of the high-grade bond market was stronger on Tuesday following a weak Monday session that saw no new deals price.

Tuesday’s primary saw new deals price from International Bank for Reconstruction and Development (World Bank), S.C. Johnson & Son Inc. and BAE Systems Holdings Inc.

World Bank came to market with a $4 billion offering of five-year notes, while both BAE Systems and S.C. Johnson were in the market with two-part offerings.

BAE sold its $1.1 billion of 10- and 30-year bonds at the tight end of price talk and attracted an order book that was nearly four times oversubscribed.

Both tranches of S.C. Johnson’s new issue also priced at the tight end of talk.

The session also saw Dexia Credit Local bring a new bond offering to market, though details of the sale were unavailable at press time.

In other market action on Tuesday, MetLife, Inc. sold $1 billion of senior component debentures in two tranches in a remarketing.

In the secondary, spreads rebounded from losses seen during Monday’s session.

The Markit CDX North American Investment Grade series 22 index was 3 basis points tighter at a spread of 64 bps.

Meanwhile, bank and financial paper was around 2 bps to 3 bps better on the day, a trader said.

Abbey National Treasury Services plc’s $500 million of 1.65% three-year notes, which sold at Treasuries plus 62.5 bps on Wednesday, were quoted 2 bps tighter during the session.

World Bank new issue

International Bank for Reconstruction and Development (World Bank) priced $4 billion of 1.875% five-year notes at 99.853 to yield mid-swaps minus 3 bps, according to a market source.

The notes were talked in the mid-swaps minus 2 bps area.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. and TD Securities were the bookrunners.

The issuer is based in Washington, D.C.

BAE two-parter

BAE Systems Holdings sold $1.1 billion of senior notes (Baa3/BBB+/BBB+) in 10- and 30-year tranches, a market source said.

There was $800 million of 10-year notes sold at 99.703 to yield 3.836%, or Treasuries plus 135 bps.

A second tranche was $300 million of 4.75% 30-year bonds priced at 99.477 to yield 4.783%, or Treasuries plus 160 bps.

Both tranches sold at the tight end of talk.

Proceeds will be used for general corporate purposes.

The bookrunners are Citigroup, Deutsche Bank Securities and Goldman Sachs.

The multinational aerospace and defense company is based in London.

S.C. Johnson prices tight

S.C. Johnson & Son priced $500 million of senior notes (/A-/A-) in tranches due 2024 and 2044, an informed source said.

The sale included $250 million of 3.35% 10-year notes priced at 99.908 to yield 3.361%, or Treasuries plus 87.5 bps.

Pricing was at the tight end of the Treasuries plus 90 bps area talk.

There was also $250 million of 4.35% 30-year bonds sold with a spread of Treasuries plus 120 bps, at the tight end of the Treasuries plus 125 bps area talk. Pricing was at 99.552 to yield 4.377%.

The bookrunners were BofA Merrill Lynch, Barclays, Citigroup and Morgan Stanley & Co. LLC.

The consumer products company is based in Racine, Wis.

MetLife remarketing

MetLife priced $1 billion of series E senior component debentures in two tranches in a remarketing, according to a company news release.

There was $499,924,000 of 1.903% debentures with an initial maturity of June 15, 2018 and $499,924,000 of 4.721% debentures with an initial maturity of June 15, 2045.

The maturities will adjust to Dec. 15, 2017 and Dec. 15, 2044 following the settlement of the remarketing on Oct. 8.

The series E debentures were originally issued in November 2010 as $1 billion of series E senior debentures due 2045, which formed part of MetLife’s 40 million common equity units, with an aggregate stated amount at issuance of $3 billion.

Effective Sept. 15, 2014, each original series E debenture converted into a unit consisting of two tranches, with each $2,000 principal amount of original series E debentures consisting of $1,000 principal amount of series E senior component debentures due 2018 and $1,000 of series C senior component debentures due 2045, according to a filing with the Securities and Exchange Commission.

Remarketing agents are Deutsche Bank Securities, Citigroup, Credit Suisse Securities (USA) LLC, Goldman Sachs, HSBC Securities (USA) Inc., UBS Securities LLC and Wells Fargo Securities LLC.

The insurance, annuities and employee benefits provider is based in New York City.

Abbey National firms

Abbey National Treasury Services’ $500 million of 1.65% three-year notes, which sold at Treasuries plus 62.5 bps on Wednesday, were quoted 2 bps tighter at 61 bps bid, 59 bps offered, a trader said.

The sale also included $250 million of floating-rate notes due 2017 sold at par to yield Libor plus 41 bps.

BofA Merrill Lynch, Deutsche Bank Securities and Santander were the bookrunners.

The financial services company is based in London.

Bank/brokerage CDS costs

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

Bank of America Corp.’s CDS costs fell 1 bp to 78 bps bid, 81 bps offered. Citigroup Inc.’s CDS costs were also 1 bp lower at 78 bps bid, 81 bps offered. JPMorgan Chase & Co.’s CDS costs were 3 bps lower at 64 bps bid, 67 bps offered. Wells Fargo & Co.’s CDS costs ended 1 bp lower at 48 bps bid, 51 bps offered.

Merrill Lynch’s CDS costs were 1 bp lower at 80 bps bid, 84 bps offered. Morgan Stanley’s CDS costs ended 2 bp lower at 88 bps bid, 91 bps offered. Goldman Sachs Group, Inc.’s CDS costs were 2 bps lower at 91 bps bid, 94 bps offered.

Paul Deckelman contributed to this review

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