Financials BBVA, Societe Generale, Bank of America dominate; secondary sees positive tone

By Aleesia Forni and Andrea Heisinger

New York, Oct. 4 - Foreign issuers had a near monopoly on the high-grade bond market Thursday.

BBVA U.S. Senior, SA Unipersonal sold $2 billion of three-year notes guaranteed by Banco Bilbao Vizcaya Argentaria, SA. The Spanish bank was joined by France's Societe Generale SA, which sold $1.25 billion of five-year notes at the tight end of guidance.

There was a $1.75 billion sale of three-year bonds from Bank of America Corp., which last did a deal in March.

London-based Smiths Group plc sold $400 million of 10-year notes tight to talk.

Kommunalbanken AS reopened its issue of floating-rate notes due March 2017 to add $250 million.

A $125 million sale of cumulative redeemable preferred stock was priced by Entertainment Properties Trust.

The market tone was slightly improved from Wednesday when there was some unease ahead of the presidential debate. Issuers will likely be scarce Friday ahead of a long weekend for the Columbus Day holiday and because a September jobs report will be released.

"Some companies are in blackout, and everyone else is waiting," a market source said.

Another source added that Friday is looking "very quiet."

The risk on bank bonds fell Thursday, which may have been why some of the day's financial names decided to tap the market, the market source said.

"Sentiment was better this morning," the source said.

A syndicate source who worked on the Societe Generale deal said that the Yankee issuers were "seizing the moment," as many companies have been doing since interest rates have been at record lows.

The Markit CDX Series 18 North American Investment Grade index tightened 1 basis point to a spread of 95 bps on Wednesday.

The secondary market saw "light flows overall" on Thursday, though one trader noted a "positive tone" to the day's activity.

Realty Income Corp.'s five-year notes firmed 5 bps from Wednesday's trading levels, while Montpelier Re Holdings Ltd.'s notes were 2 bps tighter.

BBVA prices short bond

BBVA U.S. Senior sold $2 billion of 4.664% three-year senior notes (Baa3/BBB+/BBB+) at a spread of Treasuries plus 435 bps, a market source said.

The bookrunners were Bank of America Merrill Lynch and Morgan Stanley & Co. LLC.

Proceeds will be invested at BBVA SA and used for general corporate purposes.

BBVA U.S. was last in the market with a $1.6 billion offering in two tranches on May 13, 2011. A 3.25% three-year note from that sale priced at 237.5 bps over Treasuries.

BBVA SA is a bank and finance company based in Bilbao, Spain.

BofA sells $1.75 billon

Bank of America sold $1.75 billion of 1.5% three-year notes (Baa2/A-/A) at a spread of 120 bps over Treasuries, a source away from the trade said.

The bookrunner was Bank of America Merrill Lynch.

The Charlotte, N.C.-based financial services company was last in the bond market with a $1.25 billion sale of five-year notes on March 19.

Societe Generale prices

Societe Generale was in the market with a $1.25 billion sale of 2.75% five-year senior notes (A2/A/A+) priced at 215 bps over Treasuries, an informed source said.

Pricing was at the tight end of talk in the 215 bps to 225 bps range. There was about $4.3 billion of investor interest in the bonds, the informed source said.

Citigroup, Credit Suisse Securities (USA) LLC and SG Americas Securities LLC were the bookrunners.

The offering is guaranteed by Societe Generale's New York branch.

The Paris-based financial services company was last in the market with a $130 million reopening of 2.5% notes due 2014 on March 24, 2011.

Smiths Group sells 10-year

Smiths Group priced a $400 million deal of 10-year notes (Baa2/BBB+/) to yield Treasuries plus 200 bps, a market source said.

The bonds sold at the tight end of guidance in the range of 200 bps to 210 bps over Treasuries.

The full terms were not available at press time.

The offering was done under Rule 144A and Regulation S.

Barclays, J.P. Morgan Securities LLC and Morgan Stanley were the active bookrunners.

Smiths Group was last in the U.S. bond market with a $500 million, two-tranche sale on May 7, 2009. That offering included a 7.2% 10-year note priced at 395 bps over Treasuries.

The diversified engineering company is based in London.

Kommunalbanken reopens

Norway's Kommunalbanken has reopened its issue of floating-rate notes due March 27, 2017 to add $250 million, an informed source said.

The notes (Aaa/AAA/) were priced at 100.947 with a coupon of Libor plus 38 bps to yield Libor plus 17 bps.

Total issuance will be $1.45 billion.

The bookrunners were Credit Suisse, Goldman Sachs International and HSBC Securities (USA) Inc.

The bank provides low-cost funding to municipalities and is based in Oslo.

Nippon Life preps hybrids

Nippon Life Insurance is looking to sell an offering of 30-year fixed-to-floating-rate callable subordinated notes (A2/A-/), a market source said. Pricing is expected in the coming week, the source added.

There will be a fixed interest rate until October 2022 and a floating rate thereafter. There is also an interest deferral option.

The bonds will be sold under Rule 144A and Regulation S and be noncallable for 10 years.

Citigroup and JPMorgan have been tapped as bookrunners.

The life insurance company is based in Osaka, Japan.

Entertainment Properties prices

Entertainment Properties Trust sold $125 million of 6.625% series F cumulative redeemable perpetual preferred stock, according to a filing with the Securities and Exchange Commission.

The preferreds are expected to be listed on the New York Stock Exchange under the symbol "EPRPF."

Bank of America Merrill Lynch, Citigroup, JPMorgan and RBC Capital Markets LLC were the bookrunners.

The Kansas City, Mo.-based real estate investment trust will use proceeds to redeem series D preferreds and for general corporate purposes, including the acquisition, development or financing of properties.

Realty Income firms

Realty Income's $350 million 2% notes due 2018 traded 5 bps tighter from Wednesday's levels at 130 bps bid, 125 bps offered.

The notes sold at a spread of Treasuries plus 140 bps on Tuesday.

The REIT for retail and commercial properties is based in Escondido, Calif.

Montpelier Re notes firm

Montpelier Re Holdings' notes due 2022 were quoted at 288 bps bid, 283 bps offered at midday.

The company priced the upsized $300 million of 4.7% 10-year senior notes on Tuesday at 312.5 bps over Treasuries.

Montpelier Re is an insurance and reinsurance company based in Bermuda.

Stephanie N. Rotondo contributed to this review

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