Financials dominate primary market; secondary slows amid primary surge; Credit Suisse firms

By Aleesia Forni and Cristal Cody

Virginia Beach, Sept. 4 – Issuers continued to pile into the high-grade bond market on Thursday, pushing the week’s total to a staggering $54 billion.

Financials again dominated primary activity during the session, with new deals pricing from Credit Suisse AG, Barclays, Bank of New York Mellon, American Honda Finance Corp. and Bank of Nova Scotia.

Credit Suisse, acting through its New York branch, sold a $3 billion 10-year note at the tight end of talk.

Barclays, also pricing at the tight end of talk, came to market with a subordinated note offering due 2024.

American Honda Finance sold a two-part issue of notes in tranches due 2016 and 2019.

Meanwhile, Bank of New York Mellon sold a two-part new issue, while Scotiabank offered a $1.5 billion covered bond.

Details were unavailable at press time.

Also on Thursday, Fannie Mae brought to market a $4.5 billion 10-year offering of Benchmark Notes.

The issue priced in line with talk.

The session also saw Swiss Re Corporate Solutions Ltd. issue a new 30-year offering of subordinated bonds.

There was also a $2 billion offering priced by the Province of Ontario on Thursday.

In other primary happenings, Omega Healthcare Investors, Inc. announced plans to price a new bond offering during the session.

High-grade credit spreads softened slightly on the day but remain mostly unchanged, sources said.

The Markit CDX North American Investment Grade series 22 index headed out less than 1 basis point wider at a spread of 57 bps.

Secondary trading has slowed over the week as primary activity takes a front seat, a trader said.

“Attention [is] focused on new issues,” the trader said.

In aftermarket trading on Thursday, Credit Suisse’s 3.625% notes due 2024 tightened 5 bps, according to a trader.

Bank of Nova Scotia’s new bonds traded at 40 bps bid, 37 bps offered, a trader said.

Barclays’ new paper traded mostly wrapped around issuance, a trader said.

American Honda Finance’s 2.25% notes due 2019 firmed 2 bps in the secondary market, a trader said.

The new paper from Bank of New York Mellon and Omega Healthcare was not seen in late afternoon aftermarket trading.

Fannie Mae brings 10-years

Fannie Mae priced $4.5 billion of 2.625% Benchmark Notes due Sept. 6, 2024 in line with talk at Treasuries plus 32 bps, according to a market source and a company news release.

Pricing was at 99.087 to yield 2.73%.

The issue will settle on Sept. 8.

Deutsche Bank Securities Inc., J.P. Morgan & Co. and Nomura Securities International, Inc. are the joint lead managers.

Investors from the United States grabbed 66.1%, European investors 13.8% and Asian investors 4.1%.

Fund managers picked up 56.4%, commercial banks 20%, central banks 12.9%, corporate and pensions 4.1%, state and local governments 3.5%, insurance companies 3% and retail 0.1%.

The government-backed mortgage lender is based in Washington, D.C.

Credit Suisse sells $3 billion

Credit Suisse AG, New York branch priced $3 billion of 3.625% 10-year notes due 2024 at Treasuries plus 125 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.436.

The notes (A1/A/) sold at the tight end of talk.

Credit Suisse’s 3.625% notes due 2024 traded better at 120 bps bid, 117 bps offered in the secondary market, according to a trader.

Credit Suisse Securities (USA) LLC was the bookrunner.

Proceeds will be used for general corporate purposes.

The financial services company is based in Zurich.

American Honda two-parter

American Honda Finance sold $1.5 billion of medium-term notes, series A, (A1/A+/) on Thursday, according to a market source and two FWP filings with the SEC.

There was $500 million of two-year floaters priced at par yielding Libor plus 12.5 bps.

A $1 billion tranche of 2.25% notes due 2019 sold at 99.815 to yield 2.29%, or Treasuries plus 58 bps.

American Honda Finance’s tranche of floating-rate notes was not active in the secondary market, but the company’s 2.25% notes due 2019 tightened to 56 bps bid, 54 bps offered, a trader said.

Barclays, Deutsche Bank Securities, BofA Merrill Lynch and SG Americas Securities LLC were the bookrunners.

The U.S. arm of Honda Financial Services is based in Torrance, Calif.

Ontario new issue

The Province of Ontario priced $2 billion of 2.5% seven-year bonds (/AA-/) at mid-swaps plus 34 bps, or Treasuries plus 41.3 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 99.675 to yield 2.551%.

BMO Capital Markets Corp., CIBC World Markets Corp., National Bank Financial Inc., RBC Capital Markets LLC, Scotia Capital (USA) Inc., Barclays, BofA Merrill Lynch, Morgan Stanley & Co. LLC and TD Securities (USA) LLC were the underwriters.

Proceeds from the sale will be used for general provincial purposes.

Barclays prices tight

Barclays priced $1.25 billion of 4.375% subordinated notes due 2024 on Thursday at Treasuries plus 195 bps, according to a market source.

Pricing was at the tight end of talk.

Barclays’ notes were quoted flat to slightly softer at 196 bps bid, 195 bps offered in the secondary market, a trader said.

The notes (Baa1/BBB/A-) sold at 99.848 to yield 4.394%.

Barclays was the bookrunner.

Proceeds will be used for general corporate purposes.

The financial services company is based in London.

Swiss Re brings sub bonds

Swiss Re Corporate Solutions priced $500 million of 4.5% subordinated bonds due 2044 at par on Thursday, a market source said.

The bookrunners were BofA Merrill Lynch, BNP Paribas Securities Corp., Citigroup Global Markets Inc. and RBC Capital Markets.

The issuer is a subsidiary of Zurich-based reinsurance company Swiss Reinsurance Co. Ltd.

Omega offering notes

Omega Healthcare Investors plans to price a $250 million split-rated offering of non-callable senior notes due Jan. 15, 2025 (expected ratings Ba1/BBB-/BBB-) on Thursday, according to a market source.

BofA Merrill Lynch, Credit Agricole CIB, JPMorgan and RBS Securities Inc. are the joint bookrunners for the Rule 144A and Regulation S with registration rights offering.

The Huntsville, Md.-based real estate investment trust plans to use the proceeds to pay down its revolving credit facility and for general corporate purposes.

Omega Healthcare invests in long-term care providers.

Bank/brokerage CDS costs mixed

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

Bank of America Corp.’s CDS costs ended 1 bps wider at 64 bps bid, 67 bps offered. Citigroup Inc.’s CDS costs were 1 bp lower at 64 bps bid, 67 bps offered. JPMorgan Chase & Co.’s CDS costs were flat at 52 bps bid, 55 bps offered. Wells Fargo & Co.’s CDS costs were also flat at 40 bps bid, 43 bps offered.

Merrill Lynch’s CDS costs closed 1 bp wider at 66 bps bid, 70 bps offered. Morgan Stanley’s CDS costs ended 1 bp tighter at 73 bps bid, 76 bps offered. Goldman Sachs Group, Inc.’s CDS costs were flat at 75 bps bid, 78 bps offered.

Paul Deckelman and Paul A. Harris contributed to this review.

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