Microsoft, Xerox, Nordstrom price as positive tone continues; new deals trade better

By Aleesia Forni

Virginia Beach, Dec. 3 - The high-grade primary market showed no signs of slowing down on Tuesday, as new issues continued to meet strong demand.

The day's largest sale came from Microsoft Corp., which priced a $3.25 billion issue of senior notes in three parts.

The company priced $1.25 billion of 1.625% five-year notes at Treasuries plus 35 basis points and $1.5 billion of 3.625% notes due 2023 at Treasuries plus 90 bps.

Microsoft also priced $500 million of 4.875% 30-year bonds at 105 bps over Treasuries.

Meanwhile, Xerox Corp. was in the day's market with an upsized $500 million issue of 2.75% senior notes due 2019 priced at Treasuries plus 137.5 bps.

The sale came on the heels of the company's ratings upgrade by Standard & Poor's to BBB from BBB- on Monday.

In the secondary market, a trader quoted the notes nearly 5 bps tighter.

Nordstrom Inc. sold $400 million of 5% senior notes due 2044 at Treasuries plus 120 bps on Tuesday in a Rule 144A and Regulation S deal.

The notes firmed 1 bp late during the session, according to a trader.

In other news from the high-grade space, Alabama Power Co. sold $300 million of 3.55% 10-year senior notes with a spread of Treasuries plus 82 bps.

The session also saw Paccar Financial Corp. sell a $250 million issue of five-year floating-rate notes at par to yield Libor plus 60 bps.

There was also a $1.25 billion sale of senior notes from France's BPCE SA, though full details were not available at press time.

Roughly $5.9 billion of new paper was priced during the session on Tuesday, bringing the week's total supply to $14 billion.

With a strong market tone so far this week and no hints of a slowing of activity, issuance could surpass earlier expectations of a $20 billion week.

"We could see more than that," a market source noted on Tuesday. "Maybe around $25 [billion]."

Microsoft prices tight

Microsoft sold a $3.25 billion issue of senior notes (Aaa/AAA/AA+) in three tranches on Tuesday, according to a market source.

The deal included $1.25 billion of 1.625% five-year notes sold with a spread of Treasuries plus 35 bps, or 99.423, to yield 1.746%.

There was also $1.5 billion of 3.625% notes due 2023 priced at Treasuries plus 90 bps.

The notes sold at 99.508 to yield 3.684%.

A $500 million tranche of 4.875% 30-year bonds priced with a spread of 105 bps plus Treasuries, or 99.654, to yield 4.897%.

All three tranches sold tight of talk.

Barclays, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the joint bookrunners.

Proceeds from the sale will be used for general corporate purposes, which may include funding for working capital, capital expenditures, repurchases of capital stock, acquisitions and repayment of existing debt.

The software, services and hardware developer and marketer is based in Redmond, Wash.

Xerox sells $500 million

The session also saw Xerox price an upsized $500 million issue of 2.75% senior notes due March 15, 2019 with a spread of Treasuries plus 137.5 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

The notes (Baa2/BBB/BBB) priced at 99.915 to yield 2.768%.

A trader quoted the notes at 133 bps bid late Tuesday.

BofA Merrill Lynch, Goldman Sachs & Co. and JPMorgan were the joint bookrunners.

Proceeds will be used for general corporate purposes.

The maker of office machines is based in Norwalk, Conn.

Nordstrom new issue

Nordstrom priced a $400 million issue of 5% senior notes (Baa1/A-/A-) due Jan. 15, 2044 at Treasuries plus 120 bps on Tuesday, according to a company release and a market source.

Pricing was at 99.331 to yield 5.043%.

The notes priced at the tight end of talk.

In the secondary market, the notes were quoted at 119 bps bid, 117 bps offered.

Bookrunners for the Rule 144A and Regulation S transaction were Morgan Stanley & Co. LLC, Goldman Sachs and RBS Securities Inc.

Proceeds will be used for general corporate purposes, including the repayment or retirement of outstanding debt in 2014, financing of capital expenditures and working capital needs.

Nordstrom is a fashion specialty retailer based in Seattle.

Alabama Power 10-years

Alabama Power came to Tuesday's market to price $300 million of 3.55% senior notes (A2/A/A+) due Dec. 1, 2023, series 2013A, with a spread of Treasuries plus 82 bps, according to a market source and an FWP filing with the SEC.

The notes priced at 99.717 to yield 3.584%.

Morgan Stanley, RBS Securities and Scotia Capital (USA) Inc. were the bookrunners.

Proceeds will be used for general corporate purposes, including the company's continuous construction program.

Alabama Power was last in the high-grade primary market with a $350 million sale of 3.85% 30-year bonds priced at Treasuries plus 107 bps on Nov. 27, 2012.

The electric subsidiary of Southern Co. is based in Birmingham, Ala.

Paccar brings floaters

In other primary action, Paccar Financial priced a $250 million issue of floating-rate notes, series N, due Dec. 6, 2018 at par to yield Libor plus 60 bps, according to an FWP filed with the SEC.

Citigroup Global Markets Inc., Mitsubishi UFJ Securities (USA) Inc., JPMorgan, Goldman Sachs, Lloyds Securities Inc. and PNC Capital Markets LLC were the bookrunners.

The provider of retail and commercial truck financing for Paccar Inc. is based in Bellevue, Wash.

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