SAIC, IBM, ANZ tap market; Occidental Petroleum notes stronger; Brown-Forman notes flat

By Andrea Heisinger and Cristal Cody

New York, Dec. 13 - Occidental Petroleum Corp., Brown-Forman Corp., SAIC, Inc., Caterpillar Financial Services Corp., International Business Machines Corp. and ANZ National Ltd. tapped the high-grade bond market on a busy Monday.

The largest sale of the day came from Occidental Petroleum. The oil and gas company sold $2.6 billion in three tranches.

There was the most interest in the 10-year tranche of notes, a source said, adding that "they all had a good showing" with investors.

Another trade that saw success was SAIC. The military contractor priced $750 million of senior notes in two tranches that both came in at the tight end of guidance.

"There was really good reception in the market," a source close to the sale said. "We were able to tighten it in pretty good."

IBM sold $1 billion of floating-rate notes due 2012. This was the second time in two weeks that the company has tapped the market for that amount. IBM also sold $1 billion of five-year notes on Dec. 6.

CAT Financial also returned to the market after pricing an initial issue and then an add-on the previous week. The retail financing company for Caterpillar sold an upsized $500 million of three-year notes.

Wine and spirits maker Brown-Forman priced $250 million of five-year notes.

The last sale of the day came from ANZ National International. The financial sold $750 million of three-year bank notes under Rule 144A.

Huntington Bancshares Inc. is planning a sale of notes and common stock to repay the government from the Troubled Asset Relief Program.

Another note sale is planned by First Horizon National Corp. The company is using the proceeds to repurchase notes.

Overall investment-grade Trace volume rose 20% to about $13 billion, a source said.

In secondary trading, Occidental Petroleum's notes were mostly stronger, while Brown-Forman's five-year notes were wrapped around the pricing level, sources said.

The Markit CDX Series 14 North American investment-grade index firmed 1 basis point to a spread of 86 bps, according to Markit Group Ltd.

Treasuries reversed losses on Monday with the short end of the curve performing better after the Federal Reserve purchased $7.79 billion of bonds.

The yield on the 10-year benchmark note fell to 3.28% from 3.32% on Friday. The 30-year bond yield fell 2 bps to 4.41%.

The Federal Reserve purchased Treasuries with maturities from 2016 through 2017 as part of its $600 billion buyback program to boost the economy.

The markets were moving on no economic data on Monday and ahead of the Fed's Federal Open Market Committee meeting on Tuesday.

Oxy Petroleum's $2.6 billion

Occidental Petroleum priced $2.6 billion of notes in three reallocated tranches later in the day, an informed source said.

The deal had been announced in two tranches.

The $600 million of 1.45% three-year notes priced at a spread of Treasuries plus 50 bps. The notes were priced at the tight end of talk in the 50 bps to 55 bps range.

A $700 million tranche of 2.5% five-year notes sold at 60 bps over Treasuries. Price talk was in the 60 bps to 65 bps range and the notes priced at the tight end of that.

The final tranche of notes was $1.3 billion of 4.1% 10-year maturities priced at Treasuries plus 80 bps. These notes sold at the tight end of price guidance in the range of 80 bps to 85 bps.

Barclays Capital Inc., Bank of America Merrill Lynch and J.P. Morgan Securities Inc. were bookrunners.

Proceeds are being used for general corporate purposes, including acquisitions.

In the secondary market, the first tranche of notes due 2013 was wider on the offer side at 49 bps bid, 53 bps offered, a trader said.

The notes due 2016 were seen flat at 60 bps in initial trading and tightening to 57 bps bid, 55 bps offered, according to sources.

The last tranche of notes due 2021 was 2 bps tighter on the bid side at 78 bps Monday afternoon, one trader said. Later, a trader on another desk saw the notes firmer at 75 bps bid, 73 bps offered.

The oil and gas exploration and production company is based in Los Angeles.

Week seen as last chance

It was a packed day in the high-grade market, and Tuesday and Wednesday could see similar issuance.

"Everybody's trying to get in before Thursday and Friday," a syndicate source said. "Next week is going to be deader than dead."

Some vacations are starting at the end of the week, and there is expected to be little in the way of new deals then.

The next couple of days are expected to remain slightly busy, a source said.

"I think it's supposed to be moderate," she said. "I know our guys were on a lot of calls today."

SAIC prices two tranches

SAIC priced $750 million of senior notes (A3/A-) in two tranches, an informed source said.

The first tranche of $450 million of 4.45% 10-year notes priced at a spread of Treasuries plus 120 bps. The notes priced at the tight end of initial talk in the 130 bps area and revised guidance in the 120 to 125 bps range.

A second tranche was $300 million of 5.95% 30-year bonds priced at 155 bps over Treasuries.

The 30-year bonds were initially talked at a curve of 35 bps over the 10-year spread and later revised to 155 to 160 bps. They priced at the tight end of that.

Bank of America Merrill Lynch, Citigroup Global Markets Inc. and Morgan Stanley & Co. Inc. were bookrunners.

The notes were sold under Rule 144A and Reg. S.

SAIC plans to use $300 million of the proceeds to repurchase additional shares of common stock to offset the impact of earnings per share for fiscal year 2012.

The deal is guaranteed by Science Applications International Corp.

The military contractor is based in McLean, Va.

Brown-Forman sells five-years

Brown-Forman priced $250 million of 2.5% five-year notes (A2/A) to yield 75 bps over Treasuries, said a source close to the trade.

The notes priced at the tight end of revised talk in the 75 bps to 80 bps range. Initial guidance was in the low 70 bps area.

Bookrunners are Bank of America Merrill Lynch and Citigroup Global Markets Inc.

Proceeds are being used for general corporate purposes.

The notes traded in the secondary market at 76 bps bid, 75 bps offered, a source said.

Later Monday afternoon, another source saw the five-year notes at 76 bps bid, 72 bps offered.

The wine and spirits company is based in Louisville, Ky.

CAT upsizes deal

Caterpillar Financial Services sold an upsized $500 million of 1.55% three-year notes (A2/A/A) to yield 60 bps over Treasuries, according to a market source and FWP filing with the Securities and Exchange Commission.

The deal size was increased from $350 million.

Bank of America Merrill Lynch and Barclays Capital Inc. ran the books.

The retail financing arm of heavy equipment maker Caterpillar is based in Nashville.

IBM's floaters

IBM sold $1 billion of floating-rate notes due 2012 at par to yield Libor plus 3 bps, a source close to the deal said.

The notes (Aa3/A+/A+) are non-callable and have interest paid quarterly.

Bookrunners were Barclays Capital Inc. and UBS Securities LLC.

Proceeds are being used for general corporate purposes.

The computer and IT company is based in Armonk, N.Y.

ANZ prices under 144A

ANZ National International sold $750 million of three-year senior bank notes (Aa2/AA/AA-) late in the day at par to yield Libor plus 100 bps, a market source away from the deal said.

Bookrunners were Barclays Capital Inc. and Goldman Sachs & Co. Passive bookrunner was ANZ Banking.

The deal was done under Rule 144A.

The branch of financial services company ANZ is based in Wellington, New Zealand.

First Horizon plans deal

First Horizon National is planning a minimum $400 million sale of senior notes, according to a 424B3 filing with the SEC.

The notes will be used to repurchase outstanding cumulative preferred stock, series CPP and to redeem $103 million principal amount of 8.07% junior subordinated deferrable interest debentures.

If the note sale is not completed, the company will not be allowed to redeem the junior subordinated notes.

Goldman Sachs & Co., J.P. Morgan Securities Inc. and Morgan Stanley & Co. Inc. may be the bookrunners for the note sale.

The financial holding company is based in Memphis.

Huntington selling sub notes

Huntington Bancshares announced a $300 million sale of subordinated notes, according to a press release on Monday.

The company is also selling $920 million of common stock with Goldman Sachs & Co. on the books.

The bank holding company plans to use proceeds from both the stock and note sales to repurchase $1.4 billion of series B fixed-rate cumulative perpetual preferred stock issued to the U.S. Department of the Treasury under the TARP Capital Purchase Program.

The issuer is based in Columbus, Ohio.

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