LyondellBasell, BMO, Sumitomo Mitsui add to week's haul; MetLife firms; market tone positive

By Aleesia Forni and Andrea Heisinger

New York, July 11 - A number of issuers priced multi-tranche deals in Thursday's high-grade bond market, including LyondellBasell Industries NV, Bank of Montreal and Sumitomo Mitsui Banking Corp.

LynondellBasell unit LYB International Finance BV priced $1.5 billion of senior notes in two tranches. The sale contained maturities of 2023 and 2043.

Japan's Sumitomo Mitsui sold $2 billion of bonds in four tranches. This trade had three-year notes in two tranches as well as a five-year maturity and 10-year bond.

All of the tranches priced between 10 basis points and 15 bps tighter than where they were initially talked.

Bank of Montreal brought a $2 billion sale of three-year senior medium-term notes in two parts: one floating-rate and one fixed. The trade was the same size and structure as a similar one on Wednesday from the Bank of Nova Scotia.

Terms of the BMO sale - split evenly at $1 billion between the two tranches - were not available at press time.

Elsewhere in the market, American Honda Finance Corp. priced $500 million of one-year floating-rate notes under Rule 144A and Regulation S.

MetLife Global Funding I tapped the market for an upsized $300 million of three-year notes. The size was increased from $250 million.

There was also a crossover trade from Best Buy Co. Inc. priced off the high-yield syndicate desk.

An auction of 30-year Treasury bonds also took place Thursday but did not have an immediate effect on the high-grade deals, a source said.

"We were rocking and rolling today," the source said. "Lot of good names out there."

While domestic financials have been shy about issuing dollar bonds, those from other countries have not, although General Electric Capital Corp. priced a $3.5 billion offering in three tranches in Monday's market.

The tone improved slightly on Thursday after Federal Reserve chair Ben Bernanke said Wednesday that key interest rates would remain unchanged in the short term as the economy had not improved enough to shift them from their near-zero levels.

There are no deals on tap for Friday, but a syndicate source said that "I could see someone squeezing one in."

The secondary bond market's tone was positive on Thursday following Bernanke's comments, and spreads were generally trading better near the end of the session.

The Markit CDX North American Investment Grade index closed Thursday's session 5 bps tighter at a spread of 79 bps at mid-morning.

One trader noted that the new deal from MetLife tightened "a few [basis points]" late during the session, though he had not seen any levels on the Sumitomo Mitsui deal.

Sumitomo prices tight

Sumitomo Mitsui Banking sold $2 billion of notes (Aa2/A+/) in four tranches, a source close to the trade said Thursday.

The trade includes $500 million of 1.45% three-year notes sold at a spread of Treasuries plus 85 bps. Initial talk was in the 95 bps area. There's also $300 million of three-year floating-rate notes priced at par to yield Libor plus 67 bps. Initial guidance was at the Libor equivalent of the three-year fixed-rate notes.

A $500 million tranche of 2.5%five-year notes priced at 115 bps over Treasuries. Whispers were in the 130 bps area.

Finally, there was $700 million of 3.95% 10-year notes sold at a spread of Treasuries plus 140 bps. Initial guidance was in the 150 bps area.

Bookrunners were BofA Merrill Lynch, Citigroup Global Markets Inc. and Goldman Sachs & Co.

The Tokyo-based financial services company was last in the U.S. bond market with a $650 million offering of 1.8% five-year notes priced at 105 bps over Treasuries.

Lyondell's two tranches

LyondellBasell Industries was in the market with a $1.5 billion sale of senior notes (Baa2/BBB/) in two tranches, a market source said.

The offering was issued through financing subsidiary LYB International Finance BV and guaranteed by LyondellBasell Industries.

A $750 million tranche of 4% 10-year notes sold at a spread of Treasuries plus 160 bps.

There was also $750 million of 5.25% 30-year bonds priced at 185 bps over Treasuries.

J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were bookrunners.

Proceeds are being used for general corporate purposes, including repurchase of LyondellBasell's ordinary shares.

The Houston-based chemical company has executive offices in London and is incorporated in the Netherlands. It was last in the U.S. bond market when it was junk-rated (Ba2/BB+/). That sale was $3 billion priced in two tranches on March 26, 2012.

Honda sells $500 million

American Honda Finance sold $500 million of one-year floating-rate notes (A1/A+/) at par to yield Libor plus 2 bps, a source close to the trade said.

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

Bookrunners were Barclays, BNP Paribas Securities Corp. and Wells Fargo Securities LLC.

American Honda was last in the U.S. bond market with a $1.25 billion offering of three-year floaters priced on May 22.

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

MetLife's floaters

MetLife Global Funding sold an upsized $300 million of three-year floating-rate notes (Aa3/AA-/AA-) at par to yield Libor plus 53 bps, a source close to the sale said.

The notes were quoted at 50 bps bid late during the session.

The size was increased from $250 million.

Pricing was done under Rule 144A and Regulation S.

Deutsche Bank Securities Inc. and HSBC Securities (USA) Inc. were bookrunners.

The unit of insurance and employee benefits company MetLife, Inc. is based in New York City.

Best Buy's crossover

Best Buy priced an upsized $500 million issue of 5% senior notes due Aug. 1, 2018 (Baa2/BB/BB-) to yield 5% on Thursday, according to a market source.

The deal was upsized from $350 million.

The yield printed at the tight end of talk set in the 5.125% area.

JPMorgan, Barclays and Citigroup Global Markets were the active bookrunners. RBS Securities was the passive bookrunner.

Proceeds will be used for general corporate purposes, including replacing the liquidity provided by the company's $500 million of 6¾% notes due July 15, 2013, as well as for refunding, repurchasing, retiring upon maturity or redeeming other existing debt. Proceeds will also be used to provide working capital, fund capital expenditures, repurchase capital stock and make strategic investments and acquisitions.

The issuer is a Richfield, Minn.-based retailer of consumer electronics, computers and entertainment software.

Paul A. Harris contributed to this review.

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