JPMorgan, HSBC, Berkshire Hathaway sell in packed primary; Berkshire firms; Oklahoma G&E wider

By Aleesia Forni and Andrea Heisinger

New York, May 8 - The primary side of the high-grade bond market was fully stocked with supply Wednesday including sales from Statoil ASA, JPMorgan Chase & Co., State Street Corp., HSBC Bank plc and Berkshire Hathaway Finance Corp.

Norway's Statoil priced $3 billion of bonds in four tranches.

JPMorgan sold $2 billion of five-year bonds, and HSBC Bank offered $2 billion of five-year notes. The HSBC trade was done under Rule 144A and Regulation S.

Financial holding company State Street priced $1.5 billion of paper in two parts. The sale included $500 million of five-year senior notes and $1 billion of 10-year senior subordinated notes.

Berkshire Hathaway priced $1 billion of bonds split evenly between maturities of 2018 and 2043. There was a do-not-grow provision on the size.

There were also some deals totaling less than $1 billion, including three crossovers from the high-yield market.

Northeast Utilities priced $750 million of bonds in two parts including $300 million of five-year notes and $450 million of a 10-year maturity.

Oklahoma Gas & Electric Co. priced $250 million of 30-year bonds.

Split-rated Toll Brothers Finance Corp. reopened its issue of 4.375% notes due 2023 to add $100 million.

Restaurant franchise owner and operator Brinker International, Inc. priced $550 million of split-rated senior notes in two parts.

Homebuilder MDC Holdings, Inc. reopened its 6% bonds due 2043 to add $100 million in another crossover trade.

A sale that went overnight was priced by Network Rail Infrastructure Finance plc. The London-based issuer sold $1.75 billion of five-year notes under Rule 144A and Regulation S.

European Investment Bank sold $5 billion of 0.5% three-year notes.

In the preferred stock market, Capstead Mortgage Corp. priced $150 million of perpetual $25-par cumulative redeemable preferred stock.

More than $11 billion of corporate bonds were sold in the high-grade market for the day, not including emerging markets sales.

"We were buzzing," a source said of the amount of supply on Wednesday. "I think people wanted financing at the cheap rates."

The source also noted that investors have been clamoring for the high-grade bonds despite the lack of yield, especially "solid names like today's State Street."

The Markit CDX North American Investment Grade index was unchanged on Wednesday at a spread of 69 basis points.

In secondary action, Berkshire Hathaway's notes were 2 bps to 3 bps tighter late during Wednesday's trading, while Oklahoma Gas & Electric's new notes traded 1 bp wider.

The source had seen no market on the $300 million five-year notes from Northeast Utilities.

JPMorgan's existing 6.3% bonds due 2019 traded 7 bps tighter on the day, a market source noted.

Berkshire's $1 billion

Berkshire Hathaway Finance priced $1 billion of senior notes (Aa2/AA+/A+) in two tranches, an informed source said.

A $500 million tranche of 1.3% five-year notes sold at a spread of Treasuries plus 57 bps.

The notes were quoted 2 bps better at 55 bps bid, 45 bps offered.

There was also $500 million of 4.3% 30-year bonds priced at 135 bps over Treasuries.

A trader saw the notes firm 3 bps to 132 bps bid, 131 bps offered.

The bookrunners were BofA Merrill Lynch, Goldman Sachs & Co. and Wells Fargo Securities LLC.

Proceeds are being used to redeem $1 billion of 4.6% senior notes due 2013 at par.

The sale is guaranteed by Berkshire Hathaway Inc.

Berkshire Hathaway was last in the U.S. bond market with a $2.6 billion sale in four tranches on Jan. 29.

The holding company for various subsidiaries is based in Omaha.

Statoil's four tranches

Statoil sold $3 billion of notes (Aa2/AA-/) in four tranches, a market source said.

A $500 million tranche of five-year floating-rate notes priced at par to yield Libor plus 29 bps.

There was also $750 million of 1.15% five-year notes sold at a spread of Treasuries plus 45 bps.

The third part was $900 million of 2.65% notes due 2024 that priced at 90 bps over Treasuries.

Finally, there was $850 million of 3.95% 30-year bonds sold at a spread of Treasuries plus 95 bps.

The bookrunners were Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and RBS Securities Inc.

Proceeds are being used for general corporate purposes.

The sale is guaranteed by Statoil Petroleum AS.

The issuer last tapped the U.S. bond market in a $2 billion sale in three parts on Nov. 14. That offering included a 1.2% five-year note sold at 60 bps over Treasuries, a 2.45% note due 2023 priced at 90 bps over Treasuries and a reopening of 4.25% bonds due 2041 priced to yield 90 bps over Treasuries.

The oil and gas production company is based in Stavanger, Norway.

State Street sells

State Street sold $1.5 billion of notes in two parts during the day's session, a market source said.

The sale included $500 million of 1.35% five-year senior notes (A1/A+/A+) priced at a spread of Treasuries plus 62.5 bps.

There was also $1 billion of 3.1%10-year senior subordinated notes (A2/A/A) sold at a spread of 135 bps over Treasuries.

BofA Merrill Lynch, Goldman Sachs and Morgan Stanley were the bookrunners.

Proceeds are being used for general corporate purposes.

The Boston-based financial holding company last priced bonds in a $2 billion offering of senior notes in three parts on March 2, 2011.

HSBC offers $2 billion

HSBC Bank sold $2 billion of notes with five-year maturities (Aa3/AA-/AA-) in two tranches during the day's session, an informed source said.

A $1.25 billion tranche of 1.5% five-year notes sold at a spread of Treasuries plus 80 bps.

There was also $750 million of five-year floaters priced at par to yield Libor plus 64 bps.

The sale was done under Rule 144A and Regulation S.

HSBC Securities (USA) Inc. was the bookrunner.

The financial services company is based in London.

JPMorgan's five-year notes

JPMorgan Chase was in the market with a $2 billion sale of 1.625% five-year notes (A2/A/A+) priced at a spread of Treasuries plus 92 bps, an informed source said.

The bookrunner was J.P. Morgan Securities.

Proceeds are being used for general corporate purposes.

The financial services company is based in New York.

Oklahoma G&E goes long

Oklahoma Gas & Electric sold $250 million of 3.9% 30-year senior notes (A2/A-/A+) at Treasuries plus 90 bps, according to an FWP filing with the Securities and Exchange Commission.

The notes traded 1 bp wider near the end of the session at 91 bps bid, 85 bps offered.

The bookrunners were Mitsubishi UFJ Securities (USA) Inc., Mizuho Securities USA Inc. and RBS.

Proceeds are being added to the company's general funds and will be used to repay debt, to fund capital expenditures, for working capital and for general corporate purposes.

The electric utility is based in Oklahoma City.

Network Rail's five-year notes

Network Rail Infrastructure Finance sold $1.75 billion of 0.875% five-year notes (Aa1/AAA/AAA) to yield mid-swaps plus 6 bps, an informed source said.

The sale went overnight from Tuesday.

BofA Merrill Lynch, HSBC, Morgan Stanley and RBC Capital Markets LLC were the bookrunners.

Pricing was done under Rule 144A and Regulation S.

The government-operated rail infrastructure company in Great Britain is based in London.

MDC's tap

MDC Holdings reopened its 6% senior notes due 2043 (Baa3/BB+/BBB-) to add $100 million, according to an FWP filing with the SEC.

Pricing was at par plus interest accrued from Jan. 10 to yield 5.999% with a spread of Treasuries plus 300.5 bps.

Total issuance will be $350 million including $250 million sold on Jan. 7 at par.

Citigroup Global Markets Inc. was the bookrunner.

Proceeds are being used for general corporate purposes.

The sale is guaranteed by the company's current and future domestic subsidiaries.

The homebuilding and financial services company is based in Denver.

Toll reopens

Toll Brothers Finance reopened its 4.375% senior notes due April 15, 2023 (Ba1/BB+/BBB-) to add $100 million, according to a market source.

Pricing was at 102.983 to yield 4% with a spread of Treasuries plus 223.4 bps.

Total issuance will be $400 million including $300 million of the notes sold on April 3 at par.

Citigroup, Deutsche Bank, RBS and SunTrust Robinson Humphrey Inc. were the bookrunners.

There is a guarantee from parent company Toll Brothers Inc.

Proceeds are being used for general corporate purposes including to repay or repurchase outstanding debt.

The issuer is a Horsham, Pa.-based homebuilder.

Brinker's crossover

Brinker International priced $550 million in a crossover trade of senior notes (Ba2/BBB-/BBB-) in two tranches, according to a press release.

There was a $250 million tranche of 2.6% five-year notes and $300 million of 3.875% 10-year notes.

The full terms of the sale were not available at press time.

BofA Merrill Lynch and JPMorgan were the bookrunners.

Proceeds are being used to redeem outstanding notes due 2014, to repay a portion of the outstanding balance of a revolving credit facility and for general corporate purposes including the possible purchase of common stock.

The owner and operator of restaurant franchises Chili's Bar & Grill and Maggiano's Little Italy is based in Dallas.

EIB does three-year notes

European Investment Bank priced $5 billion of 0.5% three-year notes (Aaa/AAA/AAA) on Wednesday to yield Treasuries plus 21.35 bps, a market source said.

Pricing was at 99.804.

The bookrunners were Citigroup, Deutsche Bank and Goldman Sachs.

The funding arm of the European Union is based in Kirchberg, Luxembourg.

Capstead's preferreds

Capstead Mortgage priced $150 million of 7.5% series E perpetual cumulative redeemable preferred stock, according to a press release.

The shares priced at par of $25.

A trader said price talk was around 7.5%.

The trader saw the issue trading at $24.90 in the midday gray market.

Morgan Stanley and UBS Securities LLC were the bookrunners.

The Dallas-based real estate investment trust will apply to list the new securities on the New York Stock Exchange under the ticker symbol "CMOPE."

Proceeds from the offering will be used with cash to redeem all or a portion of outstanding series A and B preferred shares. If the company chooses to forgo the redemption, the funds will be used for general corporate purposes.

JPMorgan tighter

The secondary also saw the $3 billion 6.3% issue due 2019 from JPMorgan tighten 13 bps to 145 bps bid on Wednesday.

JPMorgan priced the 10-year bonds on April 16, 2009 at 305 bps over Treasuries.

Stephanie N. Rotondo contributed to this review

© 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.