UPS, Coke Enterprises, Ventas, AutoZone among flood of new paper; PPG long-dated debt firms

By Andrea Heisinger and Cristal Cody

New York, Nov. 8 - PPG Industries, Inc., United Parcel Service, Inc., Kentucky Utilities Co., Coca-Cola Enterprises Inc., Hubbell, Inc., Talisman Energy, Inc., AutoZone, Inc., Plum Creek Timberlands, LP, Ventas Realty LP and Ventas Capital Corp., Boston Properties, LP, Public Service Co. of Colorado, American Honda Finance Corp. and Becton, Dickinson & Co. each tapped the market on a hectic Monday in high-grade bonds.

A market source called the number of names in the market "insane," but added it was a welcome change from a previous week that was mostly slow. There was about $9.875 billion of straight investment-grade corporate bonds priced among 13 deals.

One of Monday's larger sales came from Boston Properties. The arm of the real estate investment trust sold $850 million of long 10-year notes after the size was increased from $500 million.

UPS tapped the market for $2 billion in two tranches, making it the largest investment-grade deal of the day.

Diversified manufacturing company PPG Industries sold $1 billion of notes in three tranches later in the day.

Nearly all of the day's high-grade bond deals were upsized - by as little as $75 million or as much as $350 million.

Coca-Cola Enterprises tapped the market for $400 million of three-year notes a week after Coca-Cola Co. sold a massive deal of bonds at rates tied with record lows. The Coke Enterprises sale was increased from $300 million.

Kentucky Utilities priced $1.5 billion in three tranches under Rule 144A.

Hubbell also increased the size of its offering to $300 million from $250 million of 12-year senior notes. It priced at the tight end of guidance.

Medical technology and supply company Becton, Dickinson priced $1 billion in two tranches later in the day.

AutoZone priced a $500 million upsized deal of 10-year notes. The size was increased by $100 million.

Two units of senior and health care real estate investment trust Ventas sold $400 million of five-year debt. This was one of the only sales that was not upsized, a source said.

Utility Public Service Co. of Colorado sold $400 million of 10-year senior secured first mortgage bonds.

One of the smaller upsizings of the day came from Plum Creek Timberlands. The company sold $575 million of guaranteed notes due 2021, and the deal size had been increased by $75 million.

Calgary-based Talisman Energy sold an upsized $600 million of notes due 2021, sources said late in the day. The size was increased by $100 million from $500 million.

A $350 million deal of two-year floating-rate notes was priced late in the day by American Honda Finance.

There was one deal in the split-rated market from Icahn Enterprises LP and Icahn Enterprises Finance Corp. The issuers added a total of $517 million to two existing notes.

In the secondary market, traders scrambled to keep up, staying busy well after the markets closed. Overall investment-grade Trace volume slipped about 20% to $10 billion on Monday, according to a source.

UPS' new debt was mixed in secondary trading, while the deals from Boston Properties and AutoZone firmed. More market activity was seen in the longer end of the three-tranche deal that PPG Industries sold, a trader said.

The Markit CDX Series 14 North American investment-grade index continued to narrow on Monday. The index ended the day at a spread of 88 bps, according to Markit Group Ltd.

In government bonds, Treasuries slipped, sending short-dated yields up slightly on less economic data and an auction of $32 billion of three-year government debt.

The yield on the benchmark 10-year note rose 2 bps to 2.55%. The 30-year bond yield ended the day unchanged at 4.12%.

The government auctioned three-year notes on Monday and plans to sell 10-year notes and 30-year bonds on Tuesday and Wednesday.

"The 10-year probably has better prospects than the 30-year," said Nick Kalivas, a market strategist at MF Global Holdings Ltd. "There's a little bit of jitteriness here. A lot of corporate issuance seems to be on the map today. These low Treasury yields are going to make people look at the corporate market a little bit more."

UPS sells $2 billion

United Parcel Service priced a benchmark $2 billion of senior notes (Aa3/AA-) in two tranches late in the day, a source associated with the sale said.

The $1.5 billion of 3.125% notes due 2021 priced at a spread of Treasuries plus 65 bps. The notes were talked in the 65 bps to 70 bps range and priced at the tight end of that.

A $500 million tranche of 4.875% 30-year bonds sold at an 85 bps over Treasuries spread. The notes had guidance in the range of 85 to 90 bps and sold at the tight end of that.

Bookrunners for the notes due 2021 were J.P. Morgan Securities LLC, Morgan Stanley & Co. Inc., Barclays Capital Inc., BNP Paribas Securities Corp., Bank of America Merrill Lynch, Citigroup Global Markets Inc. and UBS Securities LLC.

J.P. Morgan Securities, Morgan Stanley and Goldman Sachs & Co. were bookrunners for the 30-year tranche.

Proceeds are being used for early contributions to primary domestic pension plans otherwise payable over five years.

The debt was mixed in initial secondary trading, a source said. The notes due 2021 priced at 65 bps and widened to 70 bps bid, 65 bps offered, the trader said.

The bonds due 2040 tightened 3 bps from pricing to 82 bps on the offer side.

The package delivery company is based in Atlanta.

Boston Properties ups deal

Boston Properties tapped the bond market for an upsized $850 million of 4.125% senior notes due 2021 (Baa2/A-/BBB) at a spread of Treasuries plus 165 bps, a market source away from the deal said.

Another source said the size of the deal was increased from $500 million. The notes were whispered in the range of 175 to 180 bps area and then talk was revised downward to the 170 bps area, a source said. The notes priced at the tight end of that guidance.

Books totaled about $3.7 billion, the source said.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. Inc. were active bookrunners.

Proceeds are being used to repay, redeem or repurchase 6.25% notes due 2013 or other debt with near-term maturities. The remainder will be used for general corporate purposes, including investment opportunities.

One source heard the new notes trading stronger in the secondary at 158 bps bid, 155 bps offered.

The business arm of real estate investment trust Boston Properties, Inc. is based in Boston.

Moderate issuance ahead

No coming day this week is likely to match Monday in terms of the sheer number of deals, market sources said at the end of the day, but that doesn't mean there won't be more bonds pricing.

"I think tomorrow should be moderate - not quite as busy," a source said.

A syndicate source agreed that Tuesday would be "fairly active," but would not say how busy any days past that would be.

The Veteran's Day market close on Thursday will likely mean a top heavy week and also that some issuers will just wait until the week of Nov. 15 to sell.

Still, low rates continue to entice companies to sell bonds.

"That's exactly it," the syndicate source said. "We're going to see more attracted by rates. I can't say how much we have coming up."

Hubbell offers $300 million

Hubbell priced an upsized $300 million of 3.625% 12-year senior notes (A3/A/A) at a spread of Treasuries plus 115 bps, a source who worked on the deal said.

The size had been announced at $250 million early in the day, a source said. The notes priced at the tight end of guidance in the 120 bps area.

Total books for the deal were "upwards of $750 million," a source said.

J.P. Morgan Securities LLC and Wells Fargo Securities LLC were bookrunners.

Proceeds are going to purchase 2012 notes in a tender offer and pay for the costs of the note offering and tender offer. If any 2012 notes remain, they will be redeemed in accordance with terms. The remainder will be used for general corporate purposes, including acquisitions, distributions to shareholders and repurchase of securities.

The maker of electrical and electronic products is based in Shelton, Conn.

PPG sells three tranches

PPG Industries sold $1 billion of senior notes (Baa1/BBB+/A-) in three parts, according to an FWP filing with the Securities and Exchange Commission.

The $250 million tranche of 1.9% notes due 2016 priced at a spread of Treasuries plus 95 bps.

A $500 million tranche of 3.6% 10-year notes sold at 120 bps over Treasuries.

The third tranche was $250 million of 5.5% 30-year bonds that sold at Treasuries plus 145 bps.

Goldman Sachs & Co., J.P. Morgan Securities LLC and Morgan Stanley & Co. Inc. ran the books.

Proceeds are being used to repay a $400 million term loan, contribute to pension plans, fund asbestos claims and for general corporate purposes.

In the secondary market, more activity was seen late afternoon in the longer end of the tranches, a trader said.

The notes due 2020, which priced at 120 bps over Treasuries, firmed to 115 bps on the offer side.

The bonds due 2040 priced at 145 bps over Treasuries and tightened 10 bps on the offer side to 135 bps, the trader said.

No secondary activity was immediately seen in the shorter-dated notes due 2016, the trader said.

The diversified coatings and chemical manufacturing company is based in Pittsburgh.

Becton's late sale

Becton, Dickinson offered $1 billion of senior notes (A2/AA-) in two parts late in the day, an informed source said.

The $700 million of 3.25% 10-year notes sold at a spread of 70 bps over Treasuries.

A $300 million tranche of 5% 30-year bonds priced at Treasuries plus 90 bps.

Goldman Sachs & Co. and Morgan Stanley & Co. Inc. were bookrunners for the sale.

The proceeds are going toward general corporate purposes, including working capital, capital expenditures, repurchase of stock and acquisitions.

The company's tranche of notes due 2020 was seen trading 2 bps tighter on the bid side at 73 bps in the secondary market, a source said.

No secondary trading levels were seen on the tranche of bonds due 2040.

The medical technology and supply company is based in Franklin Lakes, N.J.

KY Utilities $1.5 billion

Kentucky Utilities priced its $1.5 billion of notes (A2/A/A+) in three tranches later in the day under Rule 144A, a source who worked on the deal said late in the afternoon.

The $250 million of 1.625% five-year notes priced at a spread of Treasuries plus 58 bps.

A second tranche of $500 million in 3.25% 10-year notes priced a spread of Treasuries plus 75 bps.

The final tranche was $750 million of 5.125% 30-year bond that sold at Treasuries plus 108 bps.

Bank of America Merrill Lynch and Credit Suisse Securities USA LLC were bookrunners.

The electric utility is based in Lexington, Kentucky.

Coke Enterprises' short bond

Coca-Cola Enterprises priced an upsized $400 million of 1.125% three-year notes (A3/BBB/BBB+) by early afternoon at a spread of 62 bps over Treasuries, a market source said.

The size was increased from $300 million, a syndicate source said.

Bookrunners were Citigroup Global Markets Inc., HSBC Securities USA Inc. and RBS Securities Inc.

Proceeds are being used for general corporate purposes, including share repurchases and commercial paper financing.

Secondary activity was not immediately seen by traders on the new notes.

The marketer, producer and distributor of Coca-Cola soft drinks, is based in Atlanta.

AutoZone offers 10-year

AutoZone priced an increased $500 million of 4% 10-year senior notes (Baa2/BBB/BBB) in front of the market close at a spread of Treasuries plus 150 bps, a source away from the sale said.

The size had been announced at $400 million earlier in the day, a source said.

Bank of America Merrill Lynch and SunTrust Robinson Humphrey were on the books.

Proceeds are being used to repay amounts due on $200 million principal amount of 4.75% notes due Nov. 15 and for general corporate purposes.

AutoZone's new debt tightened in the secondary, a trader said.

The notes priced at 150 bps over Treasuries. In secondary trading, the debt firmed to 144 bps bid, 141 bps offered.

The auto parts and accessories retailer is based in Memphis.

Ventas units bring five-year

Ventas Realty and Ventas Capital priced $400 million of 3.125% five-year senior notes (Baa3/BBB-/BBB) by late afternoon to yield Treasuries plus 210 bps, an informed source said.

The deal was originally talked at $300 million, a source said. Guidance was whispered in the mid 200 bps and then revised to the 215 bps area, plus or minus 5 bps. The notes priced at the tight end of talk.

Total book size was around $2.2 billion, a source said.

Bookrunners were Bank of America Merrill Lynch, Barclays Capital Inc. and Citigroup Global Markets Inc.

Proceeds are going to repay debt under unsecured revolving credit facilities, for working capital and other general corporate purposes, including funding other future acquisitions and investments.

The deal is guaranteed by parent company Ventas, Inc.

The real estate investment trust of senior housing and health care properties is based in Chicago.

Public Service $400 million

Public Service Co. of Colorado priced $400 million of 3.2% 10-year senior secured first mortgage bonds, series No. 21, (A2/A/A) by late afternoon at a spread of Treasuries plus 70 bps, a source close to the sale said.

BMO Capital Markets Corp., Goldman Sachs & Co. and KeyBanc Capital Markets Inc. were bookrunners.

Proceeds are being used to fund a portion of the $739 million purchase price of Rocky Mountain Energy Center and Blue Spruce Energy Center natural gas generation assets.

The electric and natural gas utility is based in Denver.

Plum Creek offers long 10-year

Plum Creek Timberlands offered a slightly upsized $575 million of 4.7% notes due 2021(Baa3/BBB-) to yield Treasuries plus 215 bps a source close to the sale said.

The deal size was increased from $500 million, a second source said.

Goldman Sachs & Co., Bank of America Merrill Lynch and RBS Securities Inc. were on the books.

The company is using the proceeds to repay a portion of outstanding debt, including notes maturing in 2011, a term loan maturing in 2012 and revolver borrowings.

Parent company Plum Creek Timber Co., Inc. guaranteed the sale.

The timberland owner and manager is based in Seattle.

Talisman Energy $600 million

Talisman Energy priced an upsized $600 million of 3.75% senior notes due 2021 (Baa2/BBB) at a spread of Treasuries plus 128 bps, an informed source said late in the day.

The size had initially been $500 million.

Active bookrunners were Citigroup Global Markets Inc. and J.P. Morgan Securities LLC.

Proceeds are going toward general corporate purposes including capital expenditures and repayment of debt.

The upstream oil and gas company is based in Calgary, Canada.

Honda Finance arm's floaters

American Honda Finance priced $350 million of two-year floating-rate notes (A1/A+) at par to yield three-month Libor plus 37 bps, a market source said late in the day.

Barclays Capital Inc. and HSBC Securities (USA) Inc. were bookrunners.

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

Icahn's split-rated bonds

Icahn Enterprises and Icahn Enterprises Finance tapped two existing issues of split-rated senior notes (Ba3/BBB-), raising $517 million proceeds, according to an informed source.

The $500 million face amount deal included a $200 million add-on to the 7.75% notes due 2016, which priced at 103.25 to yield 6.987%. The reoffer price came at the cheap end of the 103.25 to 103.5 price talk.

In addition Icahn priced a $300 million add-on to the 8% notes due 2018 at 103.5 to yield 7.36%. The 8% notes add-on also priced at the cheap end of the 103.5 to 103.75 price talk.

Jefferies & Co. ran the books for the quick-to-market deal.

Proceeds will be used for general corporate purposes.

The New York City-based holding company is primarily engaged in the investment management, automotive, metals, real estate and home fashion businesses.

Paul A. Harris contributed to this report.

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