Public Storage prices $500 million; Fannie Mae on tap; U.S., Canada bank supply eyed

By Cristal Cody

Tupelo, Miss., April 10 – Public Storage priced $500 million of 10-year senior notes following fixed income investor calls on Tuesday as the sole issuer in the high-grade primary market on Wednesday.

The deal was upsized from $400 million and attracted $2.6 billion of orders, a source said.

Otherwise, market activity was light over the session with focus on the afternoon release of the minutes from the Federal Reserve’s March monetary policy meeting.

Fannie Mae announced plans to price three-year Benchmark Notes on Thursday.

Dublin aircraft leasing company Avolon Holdings Ltd. continued a second day of fixed income investor calls on Wednesday for a possible Rule 144A and Regulation S bond offering that may receive investment-grade ratings, according to market sources and news releases from the company and Moody’s Investors Service.

About $6 billion of high-grade bonds have priced week to date, not including a $12 billion five-part deal on Tuesday from Saudi Arabian Oil Co. and other emerging markets issuers this week.

Syndicate sources forecasted about $15 billion to $20 billion of investment-grade deal volume this week.

Looking ahead, bank and financial issuance in the U.S. and Canadian markets is being eyed after companies exit earnings blackout reporting periods in April and May, according to market sources.

In the U.S. market, JPMorgan Chase & Co. and Wells Fargo & Co. report first-quarter earnings on Friday, followed by Citigroup Inc. and Goldman Sachs Group, Inc. on Monday and Bank of America Corp. on Tuesday. Morgan Stanley releases its first-quarter earnings results on April 17.

Canadian bank and financial companies start to exit blackout earnings reporting periods in late April and in May with Canadian Imperial Bank of Commerce reporting its second-quarter revenue on May 22, Royal Bank of Canada and Toronto-Dominion Bank reporting on May 23, followed by Bank of Montreal on May 29.

The first quarter was “not a busy quarter for financials,” one syndicate source said of supply. “The market’s in great shape. Canadian banks spent the first part of the year on secured funding and got that in Europe. When they switch back to unsecured funding, we’ll see a pickup.”

The Markit CDX North American Investment Grade 32 index firmed about 1 basis point to close the day at a spread of 59 bps.

New issues priced this week have traded mostly tighter in the secondary market, a source said.

Waste Connections, Inc.’s $500 million of 3.5% senior notes due May 1, 2029 (Baa2/BBB+/BBB+) that priced on Tuesday firmed about 4 bps following issuance, according to a market source.

The company sold the notes at a spread of Treasuries plus 103 bps, compared to guidance in the Treasuries plus 105 bps area and initial talk in the 125 bps spread area.

Public Storage prints

Public Storage priced $500 million of 3.385% 10-year senior notes (A2/A) on Wednesday at 99.998 to yield 3.385% and a spread of 92 bps over Treasuries, according to an FWP filing with the Securities and Exchange Commission.

Citigroup Global Markets Inc., BofA Merrill Lynch and Wells Fargo Securities LLC were the bookrunners.

Public Storage is a Glendale, Calif., real estate investment trust that acquires, develops, owns and operates self-storage facilities.

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