Enterprise Products prices new issue, attracts strong investor demand; Bayer bonds firm

By Aleesia Forni

Virginia Beach, Oct. 2 – Enterprise Products Operating LLC came to the primary market with a $2.75 billion offering of notes, while the rest of the high-grade bond market was subdued on Thursday.

Enterprise’s four-part deal was swamped with orders, attracting a book that was nearly four times oversubscribed.

All four tranches of the deal sold on top of talk, which firmed around 10 basis points to 15 bps from initial guidance for the five-, 10- and add-on tranches.

The 40-year tranche was added prior to the deal’s launch.

The new issue comes on the heels of Bayer US Finance LLC’s $7 billion six-part offering of senior notes, which priced on Wednesday.

“Bayer’s deal from yesterday is just doing really well, so that helped [Enterprise],” a market source said.

In the secondary market, the new bonds from Bayer were trading around 6 bps to 10 bps better.

Enterprise’s new bonds were also performing well late Thursday, trading around 2 bps to 3 bps tighter in the aftermarket.

This solid performance comes at the end of what was a volatile week for the high-grade bond market and a weaker tone overall.

Spreads in the secondary market have made up some of their earlier losses, with the Markit CDX North American Investment Grade series 22 index around 3 bps tighter on the week.

The index was unchanged on Thursday at a spread of 64 bps.

In total, this week’s primary saw around $20.5 billion of new issuance, falling in line with what sources had predicted to be a $20 billion to $25 billion week.

Friday’s session is likely to be devoid of any activity in the primary market, with players focused on the release of non-farm payrolls.

Enterprise prices tight

Enterprise Products Operating sold $2.75 billion of senior notes (Baa1/BBB+/) in four parts on Thursday, according to a market source and an FWP filed with the Securities and Exchange Commission.

The company priced $800 million of 2.55% five-year notes at 99.981 to yield 2.554%, or Treasuries plus 85 bps.

The notes traded 2 bps better at 83 bps bid, 81 bps offered, a trader said.

A second tranche was $1.15 billion of 3.75% bonds due 2024 priced at 99.681 to yield 3.788%, or Treasuries plus 135 bps.

The trader quoted the notes at 132 bps bid late Thursday.

The company also sold a $400 million add-on to its existing 4.85% bonds due 2044 at 100.836 to yield 4.796%, or Treasuries plus 190 bps.

The original $1 billion issue sold at Treasuries plus 160 bps on March 11, 2013.

Finally, $400 million of 4.95% bonds due 2054 priced at 98.356 to yield 5.046%, or Treasuries plus 190 bps.

In the secondary market, the notes traded at 198 bps bid, 196 bps offered.

The notes will be guaranteed by Enterprise Products Partners LP.

Citigroup Global Markets Inc., BofA Merrill Lynch, DnB NOR Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBS Securities Inc., Scotia Capital (USA) Inc. and UBS Securities LLC were the bookrunners.

Proceeds will be used to repay debt, including amounts under its 364-day credit agreement or commercial paper program and its $650 million of senior notes due Oct. 15, 2014, and for general company purposes.

The midstream energy services provider is based in Houston.

Bayer trades tighter

Bayer US Finance’s new $7 billion six-part issue of senior notes traded better in the secondary market on Thursday following Wednesday’s pricing.

The company’s $850 million tranche of 1.5% three-year notes, which sold at Treasuries plus 55 bps on Wednesday, was quoted 9 bps better at 46 bps bid, 43 bps offered.

Another trader quoted the issue at 42 bps offered late during the session.

The company’s recently priced $2 billion of 2.375% five-year notes traded 6 bps better at 74 bps bid, a trader said.

The notes sold with a spread of Treasuries plus 80 bps.

Bayer’s $1.5 billion of 3% notes due 2021, which priced at Treasuries plus 90 bps, traded 10 bps better at 80 bps bid, 78 bps offered.

The company’s $1.75 billion of 3.375% 10-year notes was quoted at 100 bps offered following Wednesday’s pricing at Treasuries plus 110 bps.

The German chemical and pharmaceutical company is based in Leverkusen.

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