Bank of America sells $5 billion following earnings; Citi, JPMorgan, Credit Suisse issues firm

By Aleesia Forni and Cristal Cody

New York, April 14 – Bank of America Corp. entered the primary space on Thursday, pricing $5 billion of bonds on the heels of an earnings announcement that was only slightly better than expectations.

For the first quarter, the bank reported earnings of $0.21 per share, just above predictions of around $0.20 per share.

The Charlotte, N.C.-based bank cited a continued decline in trading revenue for its 18% slide in profits.

Following the announcement, the company issued the three-part deal in five- and 10-year maturities, all at the tightest side of price guidance.

And Micron Technology, Inc. sold an upsized $1.25 billion issue of secured notes at the tight end of talk.

Investment-grade corporate bonds traded mostly stronger over the session.

Bank of America’s existing 4.45% medium-term subordinated notes due 2026 firmed by 3 basis points after the bank reported earnings.

Citigroup Inc.’s 4.6% subordinated notes due 2026 tightened 11 bps on the day ahead of the company’s first-quarter earnings report on Friday.

JPMorgan Chase & Co.’s 3.3% senior notes due 2026 came in 9 bps after the release of the company’s first-quarter earnings results on Wednesday.

Earlier on Thursday, Credit Suisse Group Funding (Guernsey) Ltd.’s new senior notes (Baa3/BBB+/A) traded about 3 bps to 5 bps tighter.

In other secondary trading, AT&T Inc.’s 4.125% notes due 2026 improved 4 bps on the day.

Apple Inc.’s 3.25% notes due 2026 tightened 2 bps by late afternoon secondary trading.

The Markit CDX North American Investment Grade index ended mostly unchanged at a spread of 79 bps.

BofA prices tight

Bank of America priced $5 billion of senior notes (Baa1/BBB+/A) on Thursday in three parts, according to a market source.

The sale included $2 billion of 2.625% five-year notes sold at Treasuries plus 138 bps.

Pricing came at the tightest side of guidance in the 140 bps area.

A $500 million five-year floater sold at Libor plus 142 bps, at the tight end of the Libor plus 144 bps area guidance.

Finally, $2.5 billion of 3.5% 10-year bonds sold with a spread of 173 bps over Treasuries.

Guidance was in the Treasuries plus 175 bps area.

BofA Merrill Lynch was the bookrunner.

The bank will use proceeds for general corporate purposes.

Micron new issue

Micron Technology priced an upsized $1.25 billion issue of senior secured notes due Sept. 15, 2023 (Baa2/BBB-) at par to yield 7½% on Thursday, according to a syndicate source.

The issue size was increased from $1 billion.

The yield printed at the tight end of the 7½% to 7¾% yield talk and well inside initial guidance in the 8% area, sources said.

Although the deal has investment-grade ratings and is coming with a covenant package that is basically investment grade-style, the bonds will be traded off of the high-yield desk, a trader said.

Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., HSBC and J.P. Morgan Securities LLC were the joint bookrunners.

Joint lead managers also included BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, DBS Bank and Wells Fargo Securities LLC.

The Boise, Idaho-based semiconductor manufacturer plans to use the proceeds, as well as proceeds from a $500 million term loan B, for general corporate purposes, including working capital and capital expenditures. The additional proceeds resulting from the $250 million upsizing of the deal will be used for general corporate purposes.

Citigroup rallies

Citigroup's 4.6% subordinated notes due 2026 came in 11 bps on Thursday to 250 bps bid, a market source said.

Citigroup sold $1.5 billion of the notes (Baa3/BBB/A-) on March 1 at a spread of Treasuries plus 280 bps.

The banking and financial services company is based in New York.

Bank of America firms

Bank of America’s 4.45% subordinated notes due 2026 improved 3 bps during the session to 239 bps bid, a source said.

Bank of America sold $2 billion of the notes on Feb. 29 at a spread of 270 bps plus Treasuries.

The financial services company is based in Charlotte, N.C.

JPMorgan tightens

JPMorgan’s 3.3% notes due 2026 tightened 9 bps on Thursday to 141 bps bid, according to a market source.

JPMorgan sold $2.5 billion of the notes (A3/A-) on March 18 at a spread of 145 bps plus Treasuries.

The financial services company is based in New York City.

Credit Suisse improves

Credit Suisse Group Funding’s 3.45% notes due 2021 traded earlier in the day at 220 bps offered, according to a market source.

The notes priced on Wednesday in a $1.5 billion tranche at a spread of Treasuries plus 225 bps.

The company’s 4.55% notes due 2026 were seen at 277 bps offered in the secondary market.

Credit Suisse Group Funding sold $2 billion of the 10-year notes in Wednesday’s offering at Treasuries plus 280 bps.

The financial services company is based in Zurich.

AT&T better

AT&T’s 4.125% notes due 2026 headed out 4 bps tighter on the day at 150 bps bid, a market source said.

The company sold $1.75 billion of the notes (Baa1/BBB+/A-) on Jan. 29 at a spread of 220 bps over Treasuries.

AT&T is a Dallas-based telecommunications company.

Apple stronger

Apple’s 3.25% bonds due 2026 firmed 2 bps on Thursday to 96 bps bid, according to a market source.

The company sold $1.25 billion of the notes in a reopening on March 17 at Treasuries plus 100 bps.

Apple originally sold $2 billion of the notes on Feb. 16 at a spread of 150 bps over Treasuries.

The computer and mobile communications device company is based in Cupertino, Calif.

Paul A. Harris contributed to this review

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