Comcast, Enterprise Products, Canadian Railway, ERP, Crane price; credit spreads ease

By Cristal Cody

Tupelo, Miss., Feb. 1 – Investment-grade issuers tapped the primary market on Thursday in one of the busiest sessions seen since mid-January.

Comcast Corp. sold $3.2 billion of fixed-rate notes (A3/A-/A-) in three parts, along with an $800 million offering of Taipei Exchange-listed notes.

Enterprise Products Operating LLC brought a $2.7 billion three-tranche offering of notes to the primary market on Thursday.

Canadian National Railway Co. came with a $900 million two-part sale of fixed-rate notes.

ERP Operating LP sold $500 million of 10-year notes.

Deal action in the high-grade bond market has picked up over the last few sessions with market sources expecting about $20 billion of total supply for the week.

Issuance had waned following strong bank and financial supply in mid-January and with many companies still in earnings reporting blackout periods.

Nearly half of U.S. high-grade issuers have now released their fourth quarter earnings results, according to a BofA Merrill Lynch analyst note released on Thursday.

Deal volume in February is pegged at $80 billion to $90 billion, according to the note.

“February supply volumes are seasonally slower compared to January due to issuance blackouts related to the earning reporting season and financials from the latest 10Q going stale in the middle of the month,” the note said. “Moreover, share of non-financial supply is higher in February, and we expect the decline in supply this year to be led by non-financial issuers.”

The Markit CDX North American Investment Grade 29 index softened nearly 1 basis point to a spread of of 48 bps.

Comcast prices $3.2 billion

Comcast sold $3.2 billion of fixed-rate notes (A3/A-/A-) in three parts on Thursday, according to an FWP filed with the Securities and Exchange Commission.

Comcast priced $1 billion of 3.55% long 10-year notes at 99.647 to yield 3.592% and a spread of Treasuries plus 80 bps.

The company sold $1.2 billion of 3.9% 20-year notes at 99.515 to yield 3.935% and a Treasuries plus 90 bps spread.

The final $1 billion tranche of 4% 30-year notes priced at 98.193 to yield 4.105%. The bonds priced with a spread of 107 bps over Treasuries.

Barclays, TD Securities (USA) LLC, Wells Fargo Securities LLC, BofA Merrill Lynch, RBC Capital Markets, LLC and SMBC Nikko Securities America, Inc. were the bookrunners.

The notes are guaranteed by Comcast Cable Communications, LLC and NBCUniversal Media, LLC.

Proceeds will be used for working capital and general corporate purposes, which may include the repayment of portions of its upcoming debt maturities, which include $900 million outstanding of 5.875% notes due Feb. 15, 2018, $1 billion of outstanding 5.7% notes due May 15, 2018 and outstanding commercial paper, which currently has a weighted average annual interest rate of 1.726%.

Comcast is a media and technology company based in Philadelphia.

Enterprise Products prices $2.7 billion

Enterprise Products sold $2.7 billion of notes in three tranches, including two tranches of fixed-rate senior notes (Baa1/BBB+/BBB+) and one tranche of junior subordinated fixed-to-floating notes on Thursday, according to FWP filings with the Securities and Exchange Commission.

The company priced $750 million of 2.8% three-year notes at 99.946 to yield 2.819%, or a spread of Treasuries plus 50 bps.

Enterprise Products sold $1.25 billion of 4.25% 30-year notes at 99.865 to yield 4.258%. The bonds priced with a spread of Treasuries plus 125 bps.

In a separate offering, the company sold $700 million of 5.375% 60-year junior subordinated notes F (Baa2/BBB-/BBB-) at par. The notes will convert to a floating rate of Libor plus 257 bps, reset quarterly, from Feb. 15, 2028.

J.P. Morgan Securities LLC, BofA Merrill Lynch, Deutsche Bank Securities Inc., Scotia Capital (USA) Inc., DNB Markets Inc., Morgan Stanley & Co. LLC, SG Americas Securities, LLC and TD Securities (USA) LLC were the bookrunners.

The notes are unconditionally guaranteed by Enterprise Products Partners LP.

Proceeds will be used to repay debt, including repaying borrowings outstanding under the company’s commercial paper program and repurchasing or redeeming all or a portion of its junior subordinated notes B, and for general company purposes.

Canadian Railway prices

Canadian National Railway sold $900 million of fixed-rate notes (A2/A/) in two parts on Thursday, according to an FWP filing with the SEC.

The company sold $300 million of 2.4% notes due Feb. 3, 2020 at 99.963 to yield 2.419%, or a spread of Treasuries plus 25 bps.

The $600 million tranche of 3.65% 30-year notes priced at 98.974 to yield 3.707%. The bonds priced at a Treasuries plus 70 bps spread.

BofA Merrill Lynch, Citigroup Global Markets Inc. and RBC Capital Markets were the bookrunners.

Proceeds will be used for general corporate purposes, including debt redemption and refinancing and share repurchases.

The railroad is based in Montreal.

ERP Operating sells notes

ERP Operating sold $500 million of 3.5% 10-year notes (A3/A-/A) on Thursday at a spread of 80 bps over Treasuries, according to an FWP filing with the SEC.

The notes priced at 99.402 to yield 3.571%.

Deutsche Bank Securities, J.P. Morgan Securities, UBS Securities LLC and Barclays were the bookrunners.

Proceeds will be used for working capital and general company purposes, including to repay a portion of borrowings under the company’s unsecured revolving credit facility and notes issued under its commercial paper program.

The unit of apartment property builder and manager Equity Residential is based in Chicago.

Crane sells 30-year bonds

Crane priced $350 million of 4.2% 30-year senior notes (Baa2/BBB/) on Thursday at 99.994 to yield a spread of 120 bps over Treasuries, according to a market source and an FWP filing with the SEC.

The notes priced on the tight side of guidance in the Treasuries plus 125 bps area.

Wells Fargo Securities and J.P. Morgan Securities were the bookrunners.

Proceeds will be used with cash on hand to repay all of the $100 million outstanding borrowings under the company’s 364-day credit agreement and to redeem all $250 million of its 2.75% notes due 2018.

Crane is a Stamford, Conn.-based diversified manufacturer of highly engineered industrial products.

Funds add $2.2 billion

Investment-grade corporate funds posted their fifth straight gain for this year so far this week, and their 20th consecutive weekly gain following a rare two straight weekly losses back in September, according to a Prospect News analysis of fund-flow statistics generated by AMG Data Services Inc.

The Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division reported that the funds saw a net inflow of $2.2 billion during the reporting week ended Wednesday, versus last week’s $3.48 billion cash gain.

Those gains had followed a $3.92 billion cash infusion during the Jan. 17 week – which was not too far down from the Jan. 10 week’s reported upturn of almost $4.19 billion – the biggest of the year so far and one of the largest weekly inflows ever recorded for the IG funds.

The year had started off with a $965 million advance.

This week’s inflow establishes an estimated year-to-date net inflow figure of $14.75 billion, a fifth consecutive new peak for the year so far, up from last week’s $12.55 billion.

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