Walgreens brings megadeal; week’s supply tops $43 billion; EnLink, Thermo Fisher tighten

By Aleesia Forni and Cristal Cody

Virginia Beach, Nov. 6 – Walgreens Co. came to Thursday’s market with a jumbo M&A transaction, continuing what has been a frenzied week for an investment-grade primary that has seen roughly $43 billion of supply.

The $8 billion offering from Walgreens was the highlight of another active primary session, with around $12.5 billion of new issuance.

The drugstore chain will use proceeds from the deal to help fund its acquisition of Alliance Boots GmbH.

The seven tranches of the new deal sold around 15 basis points to 25 bps tight of initial guidance, attracting a massive orderbook that was more than four times oversubscribed.

ConocoPhillips Co. was also in Thursday’s primary market, pricing $3 billion of senior notes in four parts.

All four tranches of the issue sold at the tight end of price talk, which had firmed around 5 bps to 15 bps compared to initial guidance.

The primary market also saw Thermo Fisher Scientific Inc., EnLink Midstream Partners LP and PPG Industries Inc. issue bonds ahead of Friday’s payrolls data.

Investment-grade credit spreads were mostly unchanged on the day, sources said.

The Markit CDX North American Investment Grade series 23 index closed unchanged on Wednesday at a spread of 65 bps.

In aftermarket trading, Thermo Fisher’s 3.3% notes due 2022 firmed 2 bps, a trader said.

EnLink’s add-on to the 4.4% notes due 2024 tightened 7 bps in the secondary market, while the company's tranche of new 5.05% notes due 2045 firmed 3 bps, a trader said.

PPG’s 2.3% notes due 2019 traded about 4 bps tighter, according to a trader.

Walgreens’ tranches of notes were not immediately seen in aftermarket trading.

ConocoPhillips’ notes traded about 1 bp better in the secondary market as the session closed, a trader said.

Walgreens megadeal

Walgreens Boots Alliance Inc., a wholly owned subsidiary of Walgreens Co., priced $8 billion of senior notes (Baa2/BBB/) on Thursday in seven tranches, an informed source said.

Walgreens came to market with $750 million of three-year floaters priced with a spread of 45 bps over Libor.

A $750 million tranche of 1.75% notes due 2017 priced at Treasuries plus 80 bps.

There was also a $1.25 billion tranche of 2.7% five-year notes sold with a spread of Treasuries plus 105 bps.

Walgreens also sold $1.25 billion of 3.3% notes due 2021 priced at 125 bps over Treasuries.

A $2 billion tranche of 3.8% 10-year notes sold at Treasuries plus 145 bps.

The company also priced $500 million of 4.5% notes due 2034 at Treasuries plus 145 bps.

Finally, $1.5 billion of 4.8% notes due 2044 sold with a spread of 170 bps over Treasuries.

Plans for a three-year floating-rate tranche were dropped prior to the deal’s launch.

The seven tranches of notes sold at the tight end of price talk.

Proceeds will be used to acquire the remaining 55% of the issued and outstanding share capital of Alliance Boots GmbH, refinance Alliance Boots’ existing borrowings and pay related fees and expenses. Proceeds may also be used for general corporate purposes, including the repayment of the company’s 1% notes due 2015.

The bookrunner were Goldman Sachs & Co., BofA Merrill Lynch, Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

Walgreens is a Deerfield, Ill.-based drugstore chain.

ConocoPhillips sells $3 billion

In other primary happenings, ConocoPhillips sold $3 billion of senior notes (A1/A/) in four tranches during the session on Thursday, an informed source said.

A $750 million tranche of 2.875% seven-year notes priced at Treasuries plus 78 bps.

There was also $1 billion of 3.35% 10-year notes priced with a spread of 98 bps over Treasuries.

A third tranche was $500 million of 4.15% 20-year bonds priced at 105 bps over Treasuries.

Finally, the company sold $750 million of 4.3% notes due 2044 sold at 123 bps over Treasuries.

The securities are guaranteed by ConocoPhillips.

RBS Securities Inc., BofA Merrill Lynch, Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC were the bookrunners.

Proceeds will be used to redeem $1.5 billion of ConocoPhillips’ outstanding 4.6% notes due 2015 and for general corporate purposes.

ConocoPhillips’ tranches of seven-year and 20-year notes were not seen in secondary trading, a trader said.

The company’s notes due 2024 headed out slightly better at 97 bps bid, 94 bps offered, according to the trader.

The tranche of bonds due 2044 firmed to 122 bps bid, 118 bps offered.

ConocoPhillips is a Houston-based energy company.

Thermo Fisher prices tight

Thermo Fisher Scientific priced $800 million of 3.3% senior notes (Baa3/BBB/BBB) due 2022 on Thursday at Treasuries plus 122 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes sold at the tight end of price talk.

Pricing was at 99.991 to yield 3.302%.

BofA Merrill Lynch, MUFG, Citigroup Global Markets and Credit Suisse Securities are the bookrunners.

Proceeds will be used to repay outstanding debt, including $400 million of the company’s 3.25% notes due Nov. 20, 2014.

Thermo Fisher’s 3.3% notes due 2022 tightened to 120 bps bid, 116 bps offered in the secondary market, a trader said.

Thermo Fisher is a Waltham, Mass.-based science technology company.

EnLink two-parter

EnLink Midstream Partners priced $400 million of senior notes (Baa3/BBB/) in two tranches on Thursday, according to a market source and an FWP filed with the SEC.

The sale included a $100 million tap of the company’s 4.4% notes due April 1, 2024 at 104.007 to yield 3.875%, or Treasuries plus 150 bps.

The original $450 million tranche of 4.4% notes sold with a spread of Treasuries plus 170 bps on March 12, 2014.

A $300 million tranche of 5.05% notes due 2045 priced Thursday at 99.452 to yield 5.086%, or Treasuries plus 200 bps.

Proceeds will be used for capital expenditures and general corporate purposes.

The bookrunners were MUFG, Morgan Stanley and RBS Securities.

In the secondary market, EnLink’s add-on to the 4.4% notes due 2024 tightened to 143 bps offered, a trader said.

The company’s tranche of 5.05% notes due 2045 traded at 197 bps offered.

EnLink Midstream Partners, formerly known as Crosstex Energy, LP, is a midstream natural gas company based in Dallas.

PPG five-years

PPG Industries priced $300 million of 2.3% five-year senior notes (/A-/) on Thursday at Treasuries plus 73 bps, according to a market source and an FWP filed with the SEC.

The notes sold at the tight end of price talk, which tightened 12.5 bps from initial guidance.

Pricing was at 99.591 to yield 2.387%.

JPMorgan and Morgan Stanley are the bookrunners.

Proceeds will be used to fund a tender offer and for general corporate purposes.

PPG’s 2.3% notes due 2019 headed out at 69 bps offered in aftermarket trading, a trader said.

PPG is a diversified coatings and chemical manufacturing company based in Pittsburgh.

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