Charter, UBS, Valero, Scotiabank, DXC, Marriott, USAA, KKR price; World Bank plans deal

By Cristal Cody

Tupelo, Miss., April 14 – Investment-grade issuers priced nearly $12 billion of bonds over Tuesday’s session, bringing week to date volume to more than $30 billion.

Charter Communications, Inc. subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. came by the market with $3 billion of senior secured notes in two tranches.

UBS AG, London Branch priced $2.5 billion of two-year senior notes.

Valero Energy Corp. sold $1.5 billion of senior notes in two tranches.

Bank of Nova Scotia brought $1.25 billion of three-year senior bail-inable notes.

DXC Technology Co. sold $1 billion of senior notes in two tranches on Tuesday.

DXC joins a growing list of companies that have drawn down credit lines and issued bonds thereafter, sources note.

DCX announced on April 2 that it would borrow the remaining $2.5 billion under its $4 billion multi-currency revolving credit facility to increase its cash position.

Marriott International, Inc. priced an upsized $1.6 billion of 5.75% five-year senior notes (Baa3/BBB-/) on Tuesday at 99.996 to yield 5.75%, tighter than talk in the 7.25% area. The deal was upsized from $1 billion.

Marriott announced that on Monday it entered into a $1.5 billion 364-day senior revolving credit facility with the principal expected to be reduced by new debt issuances, including senior notes, equity offerings and asset sales. The company announced on April 3 that it has fully drawn down a $4.5 billion credit facility.

Since March, companies including Anheuser-Busch InBev Worldwide Inc., TJX Cos. and Estee Lauder Cos. Inc. have issued bonds after drawing down credit lines.

In other issuance on Tuesday, USAA Capital Corp. priced $800 million of sustainability bonds in two tranches.

Also, KKR & Co. Inc. subsidiary KKR Group Finance Co. VI LLC priced a $250 million reopening of its 3.75% senior notes due July 1, 2029.

In other activity during the session, the International Bank for Reconstruction and Development, or World Bank, held investor calls ahead of a dollar-denominated offering of five-year notes expected in the primary market on Wednesday.

About $25 billion to as much as $50 billion of issuance is expected this week.

Market tone was mixed but improving Tuesday on reports of a possible end to lockdown restrictions as the number of coronavirus infections flattens in some areas across the globe.

The Markit CDX North American Investment Grade 33 index firmed about 3 basis points to a spread of 82.89 bps on Tuesday.

The iShares iBoxx Investment Grade Corporate Bond ETF was down 0.49% on the day at 129.91 after closing Monday 0.97% weaker.

The iShares iBoxx Investment Grade Corporate Bond ETF softened 0.73% to 109.88 after improving 0.68% in the prior session.

Equities were stronger with stock indexes up about 2% to nearly 4%. The Nasdaq rose 3.95%, while the Dow Jones industrial average gained about 559 points, or 2.39%.

In the secondary market, new issues priced Monday mostly tightened, sources said.

Walgreens Boots Alliance, Inc.’s $1.5 billion of senior notes (Baa2/BBB/BBB-) improved 10 bps from issuance across both tranches.

The Deerfield, Ill.-based drugstore chain sold $500 million of 3.2% notes due April 15, 2030 at 99.992 to yield 3.201%, or a spread of Treasuries plus 235 bps. Initial talk was in the 287.5 bps area.

Walgreens’ $1 billion tranche of 4.1% notes due April 15, 2050 were priced at par to yield a Treasuries plus 270 bps spread, versus talk in the 300 bps over Treasuries area.

Charter prices $3 billion

Charter Communications priced $3 billion of senior secured notes (Ba1/BBB-/BBB-) in two tranches on Tuesday, according to a market source.

A $1.6 billion tranche of 2.8% notes due April 1, 2031 priced at a spread of Treasuries plus 210 bps.

The 11-year notes were talked to print in the Treasuries plus 250 bps area.

The company sold $1.4 billion of 3.7% notes due April 1, 2051 at a 235 bps over Treasuries spread.

The 31-year notes were talked at the 275 bps spread area.

BofA Securities, Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the bookrunners.

Charter is a Stamford, Conn.-based broadband communications company.

UBS prices $2.5 billion

UBS, London Branch priced $2.5 billion of 1.75% senior notes due April 21, 2022 (Aa3/A+/AA-) at a spread of Treasuries plus 160 bps on Tuesday, according to a market source.

Initial talk was in the 200 bps over Treasuries area.

UBS Securities LLC was the bookrunner.

UBS, London Branch is a London-based financial services company and subsidiary of UBS AG.

Valero Energy prices $1.5 billion

Valero Energy priced $1.5 billion of senior notes (Baa2/BBB/BBB) in two parts on Tuesday, according to a market source and an FWP filing with the Securities and Exchange Commission.

The company sold $850 million of 2.7% three-year notes at 99.889 to yield 2.739%, or a spread of Treasuries plus 245 bps.

A $650 million tranche of 2.85% five-year notes priced at 99.926 to yield 2.866% and a Treasuries plus 245 bps spread.

The three- and five-year notes were talked to price in the Treasuries plus 300 bps area.

BofA Securities, Citigroup Global Markets Inc., J.P. Morgan, Mizuho Securities USA Inc., MUFG, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc. and U.S. Bancorp Investments, Inc. were the bookrunners.

San Antonio-based Valero is an oil refinery owner and operator.

Bank of Nova Scotia sells $1.25 billion

Bank of Nova Scotia priced $1.25 billion of 1.625% senior bail-inable notes due May 1, 2023 (A2/A-/AA-) on Tuesday at 99.84 to yield 1.679% and a spread of 140 bps over Treasuries, according to a market source and an FWP filing.

Initial price talk was in the Treasuries plus 155 bps area.

Scotia, BNP Paribas Securities Corp., BofA Securities, Morgan Stanley and Wells Fargo Securities LLC were the bookrunners.

The bank is based in Toronto.

DXC prices $1 billion

DXC Technology sold $1 billion of senior notes (Baa2/BBB/BBB+) in two tranches on Tuesday, according to a market source and an FWP filing.

The company priced $500 million of 4% three-year notes at 99.884 to yield 4.042%, or a spread of Treasuries plus 375 bps.

Initial talk was in the Treasuries plus 387.5 bps area.

A $500 million tranche of 4.125% five-year notes priced at 99.791 to yield 4.172%. The notes priced with a Treasuries plus 375 bps spread, versus guidance in the 400 bps spread area.

BofA Securities, Citigroup, MUFG, Lloyds Securities Inc. and Mizuho were the bookrunners.

Based in McLean, Va., DXC provides digital information technology services and solutions.

USAA Capital sells sustainability bonds

USAA Capital priced $800 million of sustainability bonds (Aa1/AA/) in two tranches on Tuesday, according to a market source.

A $400 million tranche of 1.5% three-year senior notes priced at a spread of Treasuries plus 125 bps.

The notes were initially talked to print in the 170 bps spread area.

USAA Capital sold $400 million of 2.125% 10-year senior notes with a Treasuries plus 140 bps spread.

Price guidance was in the Treasuries plus 180 bps area.

BofA Securities, Deutsche Bank Securities Inc. and Wells Fargo were the bookrunners.

USAA Capital is a San Antonio, Texas-based insurance holding company and subsidiary of United Services Automobile Association.

KKR reopens notes

KKR Group Finance priced a $250 million reopening of its 3.75% senior notes due July 1, 2029 (/A/A) on Tuesday at a spread of 306.2 bps over Treasuries, according to a market source and a news release.

Citigroup, Goldman Sachs & Co. LLC, Mizuho and Morgan Stanley were the bookrunners of the Rule 144A and Regulation S offering.

KKR originally sold $500 million of the notes on June 17, 2019 at a spread of 170 bps over Treasuries. The total outstanding is now $750 million.

The notes are guaranteed by KKR & Co. Inc. and subsidiary KKR Group Partnership, LP.

KKR is a New York-based global investment firm.

IBRD in pipeline

World Bank plans to price a dollar-denominated offering of global notes due April 22, 2025 (Aaa/AAA/AAA) on Wednesday, according to a market source.

The notes are initially talked to price at the mid-swaps plus 28 basis points area.

Barclays, BMO Capital Markets Corp., Citigroup and TD Securities (USA) LLC are the bookrunners.

World Bank held global investor calls on Tuesday.

The global development financing cooperative is based in Washington, D.C.

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