DirecTV, Hasbro, Ameriprise, Bank of America, CME among high-grade issuers; market tone better

By Andrea Heisinger and Cristal Cody

New York, March 8 - DirecTV Holdings LLC, Hasbro, Inc., Bank of America Corp., BNP Paribas, Ameriprise Financial, Inc., Southern California Edison Co., DCP Midstream LLC, CME Group Index Services LLC and Bank of England each sold bonds on a hectic and reinvigorated Monday in the high-grade bond market.

A market source said he was "really surprised" at the amount and quality of deals that were priced.

"We thought we'd see this more [in 2010]," he added.

The largest and perhaps most watched sale came from DirecTV, with its $3 billion in three tranches. Books were heavily oversubscribed on the $1.2 billion of five-year notes, $1.3 billion of 10-year notes and $500 million in 30-year bonds, a source said. All of the tranches came in tight to talk.

Bank of America also brought one of the day's large sales, a $2.5 billion offering of five-year notes.

Financial planning company Ameriprise sold $750 million of 10-year notes and provided another non-industrial offering.

Southern California Edison continued the utility issuance trend of the previous week with its upsized $500 million sale of 30-year mortgage bonds.

Toy and game maker Hasbro sold an upsized $500 million of 30-year bonds. The sale was increased from $400 million, a source said.

BNP Paribas was another financial in the market with a $750 million sale of five-year notes that priced late in the session.

DCP Midstream priced an upsized $600 million of 10-year notes under Rule 144A, while CME Group Index sold $612.5 million of eight-year notes privately.

Ban k of England priced its $2 billion of three-year global notes early in the session after a delay of several days.

The next couple of days, at least, are expected to be busy, sources said. One said he was sure "it won't be as packed" as Monday, however.

Secondary traders were busy on Monday with new deals, which pumped new life into trading.

The market was "better overall today," one trader said. "It had a better tone."

The secondary was active with new offerings from BNP Paribas; Bank of America; Ameriprise Financial; DirecTV; Hasbro; and Shinhan Bank, according to sources.

Also on Monday, outstanding debt from MetLife, Inc. was not seen moving on the news it would acquire American Life Insurance Co., which is a subsidiary of American International Group, Inc. according to a trader.

Overall the financial sector was stronger on Monday, a source told Prospect News.

"It was probably 5 to 10 bps better depending on what you're looking at," including debt from Goldman Sachs Group Inc., the source said. "Goldman paper was probably 3 to 5 bps tighter. Everything across the board was a little bit tighter, even some of the off-the-run [Treasury] paper."

For example, Goldman's 6.15% notes due 2018 were seen Monday at 158 bps over Treasuries, according to a source.

Also, Treasuries eased again on Monday. The yield on the 10-year Treasury note moved out to 3.72% from 3.68%, while the yield on the 30-year bond eased 5 bps to 4.69%.

Meanwhile, the CDX Series 13 North American high-grade index tightened 2 bps to a mid bid-asked spread level of 83 bps, according to a market source.

Overall Trace volume was up about 10% to $11.5 billion on Monday, a source said.

DirecTV offers $3 billion in three parts

DirecTV Holdings priced $3 billion of senior unsecured notes (Baa3/BBB-) in three tranches late in the day a market source said.

The $1.2 billion of 3.55% five-year notes priced with a spread of 120 bps over Treasuries. This was at the tight end of price guidance in the 125 bps area.

A $1.3 billion tranche of 5.2%10-year notes sold at a Treasuries plus 150 bps spread. The spread was again at the tight end of talk in the 155 bps area.

The third tranche was $500 million of 6.35% 30-year bonds priced to yield Treasuries plus 167 bps. This was tight to talk in the 170 bps area.

They were priced under Rule 144A and Regulation S.

Pricing of at least the 10-year tranche was in line with the issuer's outstanding bonds due 2019 which were seen at 149 bps in the secondary, the source said.

"We basically priced it right on top of the secondary," he said.

The sale had about $13 billion on the books, leaving it more than four times oversubscribed.

Citigroup Global Markets and J.P. Morgan Securities were bookrunners.

Proceeds will be used for general corporate purposes including repayment of a term loan C and to make a distribution to parent company DirecTV for a share repurchase plan.

The deal is guaranteed by the DirecTV subsidiaries.

The broadcast satellite TV service is based in El Segundo, Calif.

Ameriprise prices 10-year

Ameriprise Financial priced $750 million of 5.3% 10-year senior unsecured notes (A3/A/A-) by early afternoon to yield 162.5 bps over Treasuries, a source close to the sale said.

They were priced at the tight end of talk in the range of 162.5 to 175 bps, the source said. Bookrunners pointed to the secondary market for guidance.

The sale was "multiple times oversubscribed," the source said.

Bookrunners were Goldman Sachs & Co., Credit Suisse Securities and Morgan Stanley & Co.

Proceeds will be used for general corporate purposes including repayment of $340 million in 5.35% senior notes due this year.

The financial planning and services company is based in Minneapolis.

Bank of America sells $2.5 billion

Bank of America sold $2.5 billion of 4.5% five-year notes (A2/A/A+) late in the day to yield 215 bps over Treasuries, a market source away from the sale said.

Bank of America Merrill Lynch was the bookrunner.

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

Issuers regain confidence

A window into the high-grade market opened at the top of the week, with new deals flooding a market that was only recently reinvigorated.

"This is awesome," one market source said of the nine or more offerings that were priced. "I think these are a lot that have been waiting," he added.

Several issuers were waiting on the sidelines while the drama with Greece and other European Union countries played out. When those headlines became more positive in the past week, issuers returned with deals in tow.

"The price is right," a source who worked on two of the day's sales said. "They're all oversubscribed - all coming in at talk."

At least three of the day's deals, including all three tranches of the DirecTV sale, came in tight to price guidance.

It's unclear exactly what is in the pipeline for the remainder of the week, or when those issuers will see fit to price their bonds.

One market source said he had deals that will likely come to price in the next couple of days "if conditions hold."

The week is expected to see a diverse mix of industrials and financials, as was the case Monday with a fairly even distribution.

New issue concessions are expected to remain low - for nearly all issuers. Only a handful of issuers in recent weeks have come in at or wider than talk, with the vast majority pricing about 5 basis points tighter, or at the tightest end of guidance.

"That should continue for most names," the market source said.

Hasbro upsizes offering

Hasbro priced an upsized $500 million of 6.35% 30-year senior unsecured bonds (Baa2/BBB/BBB+) early in the day at 170 bps over Treasuries, a source close to the offering said.

The size was initially $400 million, the source said.

Bank of America Merrill Lynch and Citigroup Global Markets ran the books.

Proceeds will be used to effectively replace outstanding 2.75% convertible notes due in 2021 via a share repurchase.

The toy and game company is based in Pawtucket, R.I.

CME unit sells 8-year notes

CME Group Index Services priced $612.5 million of 4.4% eight-year guaranteed senior unsecured notes (Aa3/AA) to yield 130 bps over Treasuries, an informed source said.

The sale came in at the tight end of talk in the 135 bps area, the source said, adding that books were multiple times oversubscribed.

The notes were offered under Rule 144A and are guaranteed by parent company CME Group Inc.

Bank of America Merrill Lynch, Barclays Capital and UBS Investment Bank ran the books.

The futures and options exchange is based in Chicago.

Southern California Edison upsizes

Southern California Edison offered an upsized $500 million of 5.5% 30-year first and refunding mortgage bonds (A1/A/A+) in the afternoon at 90 bps over Treasuries, a source who worked on the sale said.

The size was originally $400 million. The deal priced at the tight end of unofficial guidance in the range of 90 to 95 bps, based on the "entire single-A first mortgage [bond] market" outstandings, he said.

The book was multiple times oversubscribed.

Citigroup Global Markets, Credit Suisse Securities, J.P. Morgan Securities and RBS Securities ran the books.

Proceeds will be used to repay commercial paper and for other general corporate purposes.

The electric utility is based in Rosemead, Calif.

DCP Midstream sells upsized 10-year notes

DCP Midstream sold an upsized $600 million of 5.35% 10-year notes (Baa2/BBB/BBB) at Treasuries plus 165 bps, an informed source said.

The size was increased from $500 million.

J.P. Morgan Securities, RBS Securities and SunTrust Robinson Humphrey ran the books for the Rule 144A offering.

The joint venture between Spectra Energy and ConocoPhillips is based in Denver, Colorado.

BNP sells $750 million

Paris-based banking group BNP Paribas offered $750 million of 3.25% five-year notes (Aa2/AA/AA) late in the afternoon at Treasuries plus 97 bps, a market source away from the deal said.

BNP Paribas Securities ran the books.

Bank of England prices delayed deal

Bank of England offered $2 billion of 1.625% three-year global notes (Aaa/AAA/AAA) early in the day at Treasuries plus 32.4 bps, a source away from the sale said.

They were priced under Rule 144A. The deal was originally announced on March 3, but delayed.

Barclays Capital, BNP Paribas Securities, Goldman Sachs & Co. and J.P. Morgan Securities ran the books.

Proceeds are being used to finance foreign exchange reserves.

The central bank for the United Kingdom is based in London.

Ameriprise Financial firm in secondary

Ameriprise Financial priced $750 million of senior notes due 2020 at Treasuries plus 162.5 bps.

Once the notes hit secondary trading, they quickly moved tighter, according to sources.

The "10-years are trading 150/148 [and] started at 156/152 earlier," a trader said.

Looking at the notes later on Monday, they firmed 12 bps in trading, according to one source.

"They're trading basically wrapped around 150."

BNP Paribas firms

Meanwhile, BNP Paribas sold $750 million of 3.25% notes due 2015 at Treasuries plus 97 bps on Monday.

In trading, the notes were seen tightening 2 bps to 95 bps bid, a source said.

Bank of America tightens

Elsewhere in the secondary, Bank of America's new 4.5% notes due 2015 firmed after pricing at Treasuries plus 215 bps, a source said.

"Seeing 207/203 in the gray market."

Near the market close, the notes "just traded up at 204 bps," one trader said.

DirecTV Holdings firm in secondary

In addition on Monday, DirecTV's new notes were active in secondary trading.

The notes due 2015 were priced at Treasuries plus 120 bps and later firmed in secondary trading to 112 bps, one source said.

In addition, DirecTV's notes due 2020, which priced at Treasuries plus 150 bps, gained to 144 bps.

In the gray market, the bonds due 2040, which priced at Treasuries plus 167 bps, were seen at 160 bps bid, 157 bps offered, a source said.

Also, DirecTV's five-year notes were seen trading in the gray market at 117 bps bid, 114 bps offered, and the 10-year notes were quoted at 147 bps bid, 145 bps offered, the source said.

But later in Monday's session a trader saw some of the debt giving up a part of those gains.

The five-year notes moved out to 118 bps bid, 115 bps offered, while the 30-year bonds were quoted at 163 bps bid, 160 bps offered, but no trades were seen.

The 10-year notes were seen in the gray market at 147 bps bid, 144 bps offered.

Hasbro stronger

In other new offerings, Hasbro priced $400 million of bonds due 2040 at Treasuries plus 170 bps. The offering traded 8 bps stronger in the afternoon at 162 bps, a source said.

Later in the day, the bonds were seen at 163 bps bid, 158 bps offered.

Shinhan firms

In addition on Monday, South Korea's Shinhan Bank sold $700 million of new notes due 2015 at Treasuries plus 205 bps. The notes firmed in secondary trading, according to a source.

The 5.5-year notes due in September 2015 were quoted at 197 bps bid, 192 bps offered.

MetLife unmoved on deal

MetLife's notes, including the 6.75% senior notes due 2016, were not seen moving on the news it would acquire American Life Insurance, according to a trader.

"It didn't really affect anything that I saw," a source said.

The outstanding notes "did not move much."

MetLife said it would pay about $15.5 billion to take over the international life insurance company, which has a large presence in Japan - the world's second-largest life insurance market.

The price includes $6.8 billion in cash and about $8.7 billion in MetLife equity securities. New York-based MetLife said in a statement on Monday that it expects to finance the cash portion through a combination of the issuance of senior debt and MetLife common stock and cash on hand.

The equity includes 78.2 million shares of MetLife common stock valued at $3 billion, 6.9 million shares of contingent convertible preferred stock valued at $2.7 billion and 40 million equity units having an aggregate value of $3 billion.

Moody's Investors Service said Monday that it changed MetLife's outlook to negative from stable and affirmed the company's senior debt at A3, junior subordinated debt at Baa2, provisional senior debt shelf at A3, provisional subordinated debt shelf at Baa1 and provisional preferred shelf at Baa2.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.