Morning Commentary: Philip Morris prices $1.25 billion; LabCorp, Western Union, Apple eye notes

By Devika Patel

Knoxville, Tenn., Aug. 15 – Primary activity in the investment-grade bond market brought several new deals to market on Tuesday.

Philip Morris International Inc., the New York producer of cigarette and tobacco products, sold a $1.25 billion two-part offering of fixed-rate notes.

Burlington, N.C.-based diagnostic technologies developer Laboratory Corp. of America Holdings is marketing a two-tranche offering of senior notes, including an add-on to its 3.6% senior notes (Baa2/BBB/BBB+) due 2022.

Englewood, Colo.-based money transfer network Western Union Co. announced an offering of fixed-rate senior notes in two parts.

And Cupertino, Calif., computer and mobile communications device company Apple Inc. plans to sell Canadian dollar-denominated notes.

Philip Morris prices

Philip Morris finalized terms for a $1.25 billion two-tranche sale of notes on Monday after the market close.

The company priced $750 million of 2.375% five-year notes at Treasuries plus 70 basis points. The notes priced at 99.537 to yield 2.474%.

Philip Morris sold $500 million of 3.125% 10-year notes at a spread of 95 bps over Treasuries. These notes priced at 99.583 to yield 3.174%.

The notes have make-whole calls at Treasuries plus 12.5 bps until July 17, 2022 for the five-year notes and at Treasuries plus 15 bps until May 17, 2027 for the 10-year notes and then have par calls after those dates.

Goldman Sachs & Co., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, Mizuho Securities USA Inc. and Societe Generale CIB were the bookrunners.

Proceeds will be used for general corporate purposes, to refinance debt, to meet working capital requirements or to repurchase common stock.

LabCorp to offer notes

LabCorp intends to sell fixed-rate senior notes in two tranches, which will feature a make-whole call and then a par call.

BofA Merrill Lynch and Wells Fargo Securities LLC are the bookrunners.

Proceeds will be used for general corporate purposes, including to repay at maturity the company’s 2.2% senior notes due Aug. 23, 2017 and to repay borrowings under its revolving credit facility.

Western Union plans notes

Western Union intends to offer senior notes in two tranches, including an add-on to its 3.6% senior notes due March 15, 2022.

The new notes will be a floating-rate tranche due in 2019.

The new notes are non-callable. The 3.6% notes have a make-whole call at Treasuries plus 25 bps until Feb. 15, 2022, then a par call.

Citigroup Global Markets Inc. and U.S. Bancorp Investments Inc. are the bookrunners.

Proceeds will be used for general corporate purposes.

The company sold $400 million of the 3.6% notes in a sale that priced on March 8 and settled on March 15. The notes were priced at 99.859 to yield 3.631% with a spread of 155 bps over Treasuries.

Apple on tap

Apple will conduct a Canadian dollar-denominated offering of notes, which feature a make-whole call until two months prior to maturity and then a par call.

HSBC Securities, RBC Capital Markets Corp., BMO Capital Markets Corp. and Goldman Sachs are the bookrunners.

Proceeds will be used for general corporate purposes, including common stock repurchases, dividend payments, working capital, capital expenditures, acquisitions and debt repayment.

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