Investment-grade primary led by financial names; TD Ameritrade, CDP Financial, RBS price

By Andrea Heisinger

New York, Nov. 20 - TD Ameritrade Holding Corp., CDP Financial Inc. and the Royal Bank of Scotland plc all sold large issues of bonds on a Friday in a market dominated by financial names.

The TD Ameritrade sale was completed by early afternoon, after it went overnight from Thursday. The deal totaled $1.25 billion in three tranches.

CDP Financial also did its offering early. The Canadian issuer priced $5 billion of notes in three tranches, two days after the sale was announced.

The largest sale of the day came from RBS late in the afternoon. The Scottish bank priced $7 billion of notes in two tranches of fixed- and floating-rate notes that are guaranteed by the government of the United Kingdom.

Both the CDP Financial bonds and two tranches of the TD Ameritrade sale were seen tighter in the secondary market, a trader said.

The previous day's sale from Harley-Davidson Funding Corp. improved by 15 bps or more, a trader in the non-financial sector said.

Spreads moved tighter as Treasury yields widened slightly by late afternoon. The five-year note was out by 2 basis points to yield 2.17%, while the 30-year bond widened by 1 basis point to yield 4.29%.

TD Ameritrade sells two-day deal

TD Ameritrade Holding priced $1.25 billion of senior unsecured notes in three tranches by early afternoon.

The structure was increased from two tranches that were announced in a 424B5 filing with the Securities and Exchange Commission on Thursday, with the deal going overnight.

The sale is guaranteed by the company's subsidiaries.

The securities brokerage, based in Omaha, Neb., had previously filed a shelf registration, which fueled rumors that it is planning a buyout of internet trader E*Trade Financial Corp.

A $250 million tranche of 2.95% three-year notes priced at a spread of 175 bps over Treasuries.

The $500 million of 4.15% five-year notes priced at Treasuries plus 200 bps.

A $500 million tranche of 5.6% 10-year notes priced at a spread of Treasuries plus 225 bps.

"As a result of our credit rating upgrades to investment grade, and the current market environment, we are pleased to be able to issue these senior unsecured notes," Fred Tomczyk, president and chief executive officer, said in a press release.

"We believe that the offering of the senior notes and the application of the proceeds to retire debt under our existing senior secured term loan facilities will enable us to both stagger the maturity dates of our long-term indebtedness and convert to an investment-grade covenant package, which in turn will provide us with a more flexible capital structure."

Bookrunners for the sale were Bank of America Merrill Lynch and Citigroup Global Markets Inc.

CDP sells $5 billion

Quebec-based CDP Financial priced $5 billion of notes in three tranches in the afternoon, two days after the deal was announced.

The $2 billion of 3% five-year notes priced at a spread of Treasuries plus 83 bps.

A $1.75 billion tranche of 4.4% 10-year notes priced at Treasuries plus 105 bps.

The $1.25 billion tranche of 5.6% 30-year notes priced at 130 bps over Treasuries.

Bank of America Merrill Lynch, Goldman Sachs & Co., Morgan Stanley and RBC Capital Markets ran the books.

The subsidiary of public pension plan provider Caisse de depot et placement du Quebec develops public financing programs and is based in Quebec.

RBS prices $7 billion late

The Royal Bank of Scotland priced $7 billion of notes in three-year fixed- and floating-rate tranches late in the day, a market source said.

The sale is guaranteed by the U.K. government.

A $5 billion tranche of three-year floaters priced at par to yield three-month Libor plus 26 bps.

The $2 billion tranche of three-year fixed-rate notes priced at a spread of 80.5 bps over Treasuries.

RBS Securities ran the books for the retail bank, which is based in Edinburgh, Scotland.

Primary set to quiet

New deals will likely be light in the coming holiday week, syndicate sources said late in the day.

"We have a few things lined up, but nothing big," one source said. "I think we'll mostly see stuff on Monday and Tuesday."

Another source said that "anyone who wanted in before [Thanksgiving] probably already came."

There are no sales that have been announced and have yet to price.

The second syndicate source said that there could be some foreign names taking advantage of the market as domestic companies take the Thanksgiving holiday off from issuing.

"It's kind of like when [domestic issuers] were in blackout," he said. "I still don't think we'll see a lot."

CDP bonds tighten

The three tranches of bonds priced by CDP Financial were slightly tighter across the board by late afternoon, a trader in the financial sector said.

The 5.6% bond due 2039 was the best performing. The bond tightened 5 bps to 125 bps bid, with no offer, after pricing at 130 bps over Treasuries. They were quoted even tighter later at 121 bps bid.

The 3% bond due in 2014 also did well. It priced at 83 bps over Treasuries and was quoted at 80 bps bid, 75 bps offered.

The 4.4% bond due in 2019 also tightened a little from its Treasuries plus 105 bps price. The trader quoted it at 102 bps bid, with an offer of 97 bps. They were later quoted as having given back some gains at 204 bps bid, 199 bps offered.

TD Ameritrade tranches improve

Two of the three tranches priced from TD Ameritrade were quoted as improved by late afternoon by a trader.

The 4.15% notes due 2014 came in nearly 10 bps to 192 bps bid, with no offer. They were priced at 200 bps over Treasuries.

The longest bond - a 5.6% tranche due 2019 - also did well. It priced at 225 bps over Treasuries and was quoted at 218 bps bid, 211 bps offered. They were later quoted with an offer of 215 bps.

There were no trading levels available for the third tranche of 2.95% notes due 2012.

Non-financial bonds tighten

A trader in the non-financial sector of the secondary market said that his part of the market "keeps grinding tighter, and just when you think it won't go any tighter, it does.

"Utilities were the last sector to tighten," he said.

Friday was a quiet day, he said, with light volume.

Another trader quoted investment-grade trading volume at $7.3 billion for the day, compared to the $8.5 billion traded on Thursday.

"Today's volume was the lightest this week," she said.

Despite that, a lot of people are looking for bonds, she said. "There are a lot of offers out there, but not a lot of bids," she said. "Fridays are just dead. No one's really doing anything."

Harley-Davidson bonds move in

An issue of bonds priced late the previous day by the financing arm of the motorcycle maker, Harley-Davidson Funding, was quoted as better in the secondary by a trader.

The 5.75% issue due 2014 was sold at 362.5 bps over Treasuries and was quoted at 346 bps bid, with no offer.

They were later quoted at a 350 bps bid by another trader.

"There's a lot of overseas interest in those bonds," she said.

Cisco bonds active

Two bonds from a recent, large sale from Cisco Systems Inc. were actively trading by early afternoon, a trader said. The bonds have been popular with investors since the company's $5 billion sale priced in the previous week.

The 4.45% note due 2020 led trading volume, quoted at 98 bps. A 5.5% note due 2040 from the same issue was next on the volume list. It was at a spread of 139 bps.

A 4.2% bond due 2014 from Morgan Stanley was farther down on the trading volume list but still attracting attention. It priced on Tuesday at 205 bps over Treasuries and was quoted slightly better at 199 bps.

Boeing bond among day's movers

An outstanding bond from Boeing Co. was among the day's biggest movers after the aerospace company successfully sold $1.2 billion of senior unsecured notes in two tranches on Tuesday.

The company's 6% bond due 2019 was a little more than 20 bps tighter than a week ago. It was quoted at 96 bps.

© 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.