HSBC, Health Care, Scotia, Marriott, Yara, Ferguson, Element, Brighthouse price; inflows rise

By Cristal Cody

Tupelo, Miss., May 28 – Investment-grade companies priced nearly $9 billion of bonds over Thursday’s session, bringing week to date deal volume to about $33 billion.

Supply came in higher than the $25 billion to $30 billion of issuance anticipated by market participants for the holiday-shortened week.

Heading up Thursday’s primary activity, HSBC Holdings plc priced $3.5 billion of fixed-to-floating-rate senior notes in two tranches.

Health Care Service Corp. sold $1.3 billion of senior notes in three tranches.

Bank of Nova Scotia priced $1.25 billion of fixed rate resetting perpetual subordinated additional tier 1 capital notes.

Marriott International Inc. brought $1 billion of 10-year senior notes to the primary market.

Yara International ASA came by with $750 million of 10-year senior notes.

Ferguson Finance plc sold $600 million of 10-year senior notes.

Element Fleet Management Corp. priced $400 million of five-year senior notes.

Also, Brighthouse Financial Inc. priced a $115 million reopening of its 5.625% senior notes due May 15, 2030.

Several high-grade companies also are holding fixed income investor calls this week for potential issuance.

Ralph Lauren Corp., which last tapped the high-grade bond market with an offering of senior notes (A2/A-/) in 2018, is holding investor calls on Thursday and Friday, a source said.

Meanwhile, investment-grade corporate fund inflows totaled $7.5 billion for the past week ended Wednesday, up from inflows of $5.33 million in the previous week and $5.25 billion in the prior week, according to Refinitive Lipper US Fund Flows.

The Markit CDX North American Investment Grade 33 index improved 1.5 basis points on the day to close at a spread of 77.71 bps.

Volume this week has been led by Wells Fargo & Co.’s $6 billion two-part offering of fixed-to-floating-rate notes (A2/A-/A+) that priced Tuesday.

In the secondary market, Wells Fargo’s notes traded about 2 bps to 4 bps tighter than issuance, a source said.

The company’s $3.25 billion tranche of 2.393% notes due June 2, 2028 were last seen 2 bps better at 186 bps bid area.

The eight-year notes priced at par to yield a spread of Treasuries plus 187.5 bps, tighter than talk in the 215 bps over Treasuries area.

New financial paper brought to the primary market this week has mostly tightened in secondary trading, a source said.

Santander Holdings USA, Inc.’s $1 billion of 3.45% senior notes due June 2, 2025 (Baa3/BBB+/BBB+) that priced on Wednesday firmed more than 10 bps to 304 bps bid.

The notes priced at 99.804 to yield 3.493% and a spread of 315 bps over Treasuries versus initial talk in the Treasuries plus 350 bps area.

HSBC brings $3.5 billion

HSBC Holdings priced $3.5 billion of fixed-to-floating-rate senior notes (A2/A-/A+) in two tranches on Thursday, according to a market source.

A $2 billion tranche of 2.099% six-year notes priced at a spread of Treasuries plus 175 bps.

Initial price talk was in the 200 bps over Treasuries area with guidance firmed to the 180 bps area, plus or minus 5 bps.

The coupon will reset to a floating rate of SOFR plus 192.9 bps after the initial fixed-rate period.

HSBC sold $1.5 billion of 2.848% notes due June 4, 2031 at a Treasuries plus 215 bps spread.

The notes were initially talked to price in the Treasuries plus 235 bps area and later guided to print at a 215 bps spread.

The rate will convert to SOFR plus 238.7 bps after the initial fixed-rate period.

HSBC Securities (USA) Inc. was the bookrunner.

The banking and financial services group is based in London.

Health Care Service prices

Health Care Service sold $1.3 billion of senior notes (A3/A+/) in three tranches on Thursday, according to a market source.

Health Care Service sold $500 million of 1.5% five-year notes at a spread of 120 bps over Treasuries, tighter than talk in the 145 bps spread area.

A $50 million tranche of 2.2% 10-year notes priced with a Treasuries plus 155 bps spread.

Initial price talk was in the 180 bps over Treasuries area.

The company sold $750 million of 3.2% 30-year notes at a 180 bps over Treasuries spread versus initial talk in the 205 bps spread area.

Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the bookrunners.

Health Care Service, a Mutual Legal Reserve company and independent licensee of the Blue Cross and Blue Shield Association, is a Chicago-based health and life insurance provider.

Scotiabank sells $1.25 billion

Bank of Nova Scotia sold $1.25 billion of fixed rate resetting perpetual subordinated additional tier 1 capital notes (Baa1/BBB+/) on Thursday at par to yield 4.9%, according to a market source.

Initial price talk on the non-viability contingent capital notes was in the 5.25% area.

The interest rate will reset in 2025 on the first reset date and every following five years at a rate equal to Treasuries plus 455.1 bps.

Scotia Capital (USA) Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan and UBS Securities LLC were the bookrunners.

The bank is based in Toronto.

Marriott raises $1 billion

Marriott International priced $1 billion of 4.625% 10-year senior notes (Baa3/BBB-/) on Thursday at a spread of 400 bps over Treasuries, according to a market source and an FWP filing with the Securities and Exchange Commission.

Initial price talk was in the Treasuries plus 462.5 bps area.

The notes priced at 99.379 to yield 4.703%.

Goldman Sachs, Deutsche Bank Securities Inc., BofA Securities, Inc., Citigroup Global Markets Inc., Fifth Third Securities, Inc., HSBC, ICBC Standard Bank Plc, J.P. Morgan, Scotia Capital, SunTrust Robinson Humphrey, Inc., U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC were the bookrunners.

The lodging company is based in Bethesda, Md.

Yara sells $750 million notes

Yara International (Baa2/BBB/) priced $750 million of 3.148% 10-year senior notes at a spread of 245 bps over Treasuries on Thursday, according to a market source and a news release.

The notes priced tighter than initial talk in the Treasuries plus 300 bps area and guidance in the Treasuries plus 255 bps area, plus or minus 5 bps.

Barclays, BNP Paribas Securities Corp., J.P. Morgan and SMBC Nikko Securities America, Inc. were the lead managers of the Rule 144A and Regulation S deal.

The Norwegian chemical company is based in Oslo.

Ferguson Finance prices

Ferguson Finance (Baa2/BBB/) priced $600 million of 3.25% 10-year senior notes on Thursday at a spread of Treasuries plus 260 bps, according to a market source.

The notes were initially talked to price in the Treasuries plus 300 bps to 312.5 bps area.

BofA Securities, Barclays, J.P. Morgan and SMBC Nikko were the lead managers.

The company is a subsidiary of Zug, Switzerland-based Ferguson plc, which distributes plumbing and heating products in the United Kingdom, United States and the Netherlands.

Element Fleet prints

Element Fleet Management priced $400 million of 3.85% five-year senior notes (/BBB/BBB+) on Thursday at a Treasuries plus 350 bps spread, according to a market source.

The notes were initially talked to print in the 375 bps spread area.

J.P. Morgan and RBC Capital Markets, LLC were the bookrunners of the Rule 144A and Regulation S offering.

Element Fleet Management is a Toronto-based fleet management and equipment finance company.

Brighthouse brings add-on

Brighthouse Financial priced a $115 million reopening of its 5.625% senior notes due May 15, 2030 (Baa3/BBB+/BBB) on Thursday at 103.186 to yield 5.203%, or a spread of Treasuries plus 450 bps, according to a market source and an FWP filing.

Initial price talk was in the 475 bps over Treasuries area.

The company first sold $500 million of the notes on May 13 at 99.871 to yield 5.642%, or a spread of 500 bps over Treasuries. The total outstanding is now $615 million.

BofA Securities, Goldman Sachs, Wells Fargo, Barclays, J.P. Morgan, BNP Paribas, HSBC, Morgan Stanley, PNC Capital Markets LLC and U.S. Bancorp were the bookrunners.

Brighthouse is a Charlotte, N.C.-based insurance provider.

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