Nationwide Building, WestRock, NWB price notes; CVS, Toyota Industries in deal pipeline

By Cristal Cody

Tupelo, Miss., March 1 – Three issuers tapped the primary market on Thursday after heavy supply in the first half of the week.

Nationwide Building Society priced $1.75 billion of senior non-preferred medium-term fixed-to-floating-rate notes in two tranches.

WestRock Co. sold $1.2 billion of guaranteed senior notes in two parts.

Also, Nederlandse Waterschapsbank NV priced a $250 million tap of its senior floating-rate notes due Aug. 9, 2019.

Deal action is expected to be heavy in March after February closed out with strong supply at the end of the month and with several issuers marketing bonds, sources report.

CVS Health Corp. is expected in the near future with a bond offering as large as $45 billion.

Toyota Industries Corp. intends to hold a roadshow for a benchmark dollar-denominated issue.

“After a subdued start earlier in February, high grade supply volumes are now surprising to the upside,” BofA Merrill Lynch analysts said in a note released on Thursday. “Already $35 [billion] has been priced during the first three days of this week, including $14 [billion on Wednesday], making it the second busiest week this year.”

About $25 billion to $30 billion of total bond issuance was predicted by market sources for the final week of February.

The Markit CDX North American Investment Grade 29 index softened nearly 2 basis points to a spread of 58 bps.

Nationwide sells $1.75 billion

Nationwide Building Society priced $1.75 billion of senior non-preferred medium-term fixed-to-floating-rate notes (Baa1/BBB+/A) in two tranches in a Rule 144A and Regulation S offering on Thursday, according to a market source.

The company sold $1 billion of 3.766% notes due March 8, 2024 at a spread of 120 bps over Treasuries. The notes were initially talked to price with a spread in the Treasuries plus 125 bps to 130 bps area.

The rate will reset to a floating rate plus Libor on the optional redemption date of March 8, 2023.

Nationwide Building Society also sold $750 million of 4.302% notes due March 8, 2029 with a 150 bps over Treasuries spread. Initial spread guidance on the notes was in the Treasuries plus 155 bps to 160 bps area.

The rate on the notes will reset to a floating rate plus Libor at the March 8, 2028 optional redemption date.

The bookrunners for the 2024 notes were BNP Paribas Securities Corp., Citigroup Global Markets Inc., J.P. Morgan Securities LLC, UBS Securities LLC, Barclays and BofA Merrill Lynch.

BNP Paribas Securities Corp., Citigroup Global Markets Inc., J.P. Morgan Securities LLC, UBS Securities LLC, Barclays and Morgan Stanley & Co. LLC were the bookrunners on the 2029 notes.

The mutual financial company and building society is based in Swindon, England.

WestRock on tight side of talk

WestRock priced $1.2 billion of guaranteed senior notes (Baa2/BBB/) in two tranches on Thursday on the tight side of guidance, according to a market source and a news release.

The $600 million tranche of 3.75% notes due March 15, 2025 priced with a spread of 105 bps over Treasuries.

WestRock sold $600 million of 4% notes due March 15, 2028 at a Treasuries plus 120 bps spread.

BofA Merrill Lynch, Mizuho Securities USA Inc., MUFG, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC were the lead managers.

The notes are guaranteed by certain WestRock subsidiaries.

Proceeds will be used to finance a portion of the company’s acquisition of KapStone Paper and Packaging Corp. and for general corporate purposes.

WestRock is an Atlanta-based paper and packaging manufacturer.

NWB reopens floaters

Nederlandse Waterschapsbank (Aaa/AAA/) priced $250 million in a reopening of its senior floating-rate notes due Aug. 9, 2019 on Thursday at Libor plus 2 bps, according to a market source.

The notes were initially talked to price in the Libor plus 1 bp area.

NWB originally sold $1 billion of the notes on Jan. 31 at Libor plus 2 bps. The total amount outstanding now is $1.5 billion.

HSBC Securities (USA) Inc. and Scotia Capital were the lead managers.

The local government funding agency is based in The Hague.

CVS in deal pipeline

CVS Health (Baa1/BBB+/) plans to hold fixed-income investor calls on Friday and Monday ahead of a possible $40 billion to $45 billion bond offering, according to a market source.

BofA Merrill Lynch, Barclays, Goldman Sachs & Co. LLC and J.P. Morgan Securities are the call arrangers.

CVS Health’s $69 billion cash and stock acquisition of Aetna Inc. (Baa2/A/A-) is expected to close in the second half of 2018.

CVS Health and Aetna both have shareholder meetings scheduled on March 13 to approve the merger.

CVS is a retail pharmacy health care company based in Woonsocket, R.I.

Aetna is a managed health care insurance company based in Hartford, Conn.

Toyota plans roadshow

Toyota Industries (A1/AA-/) plans to hold a roadshow in the United States, Europe and Asia for a benchmark dollar-denominated bond offering, according to a market source.

The roadshow will start on Monday.

BofA Merrill Lynch, Citigroup Global Markets, J.P. Morgan Securities, Mizuho, Morgan Stanley, Nomura Securities International, Inc. and SMBC are the arrangers for the Rule 144A and Regulation S transaction.

Toyota Industries is a Japanese machine maker based in Kariya, Aichi Prefecture, Japan.

Funds add $1.37 billion

Investment-grade corporate funds gained $1.372 billion in the week ended Feb. 28, according to sources familiar with the fund-flow statistics generated by AMG Data Services Inc.

That followed a $1.57 billion net inflow the week before which in turn was a rebound from the rare $790 million net outflow the week before, the first downturn after 21 straight weeks of gains dating back to mid-September, according to a Prospect News analysis of the data.

The latest week’s gain raises the year-to-date net inflow figure for the IG corporates to $21.03 billion.

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