Burlington, Lincoln, CA price as primary remains busy; Burlington flat, Paccar firmer

By Aleesia Forni and Cristal Cody

Virginia Beach, Va., Aug. 13 - Burlington Northern Santa Fe LLC, CA Inc. and Lincoln National Corp. were among the issuers bringing new deals to the primary on Tuesday despite a session that saw a jump in Treasury yields, sources said.

One market source commented early during the session that it seems players have become somewhat used to the volatility in Treasuries, as reaction to the moves are not as severe as the market saw in May.

Leading off the day's new trades, Burlington Northern sold a two-tranche $1.5 billion offering of debentures, according to a market source.

The deal included $800 million of 3.85% debentures due 2023 sold with a spread of Treasuries plus 117 basis points.

The deal also included $700 million of 5.15% debentures due 2043 priced at Treasuries plus 140 bps.

Meanwhile, CA priced a $500 million offering of senior notes in two tranches, according to a syndicate source.

Both tranches priced at the tight end of talk.

There was a $250 million issue of 2.875% five-year notes sold at Treasuries plus 143 bps and a $250 million issue of 4.5% 10-year notes that priced at Treasuries plus 183 bps.

Paccar Financial Corp. was also in Tuesday's primary market selling $500 million of 1.15% series N three-year notes with a spread of Treasuries plus 50 bps, according to syndicate sources.

The notes priced at the tight end of the Treasuries plus 55 bps area talk.

In other primary action, Lincoln National brought a $350 million issue of 4% 10-year senior notes at a spread of Treasuries plus 138 bps during the session.

Southwestern Public Service Co. brought a second tap of its 4.5% first mortgage bonds due 2041 on Tuesday.

The $100 million add-on sold with a spread of 98 bps over Treasuries, according to an informed source.

Sources saw Burlington's and Paccar's new issues come in roughly twice oversubscribed.

"Today's deals seemed to do okay," one market source said after the close. "Not great, but pretty good."

He added that this could persuade issuers to bring new deals to the primary during the rest of the week despite the end of August and the late-summer slowdown.

The primary also saw Freddie Mac join the forward calendar, as the lender is expected to price a new benchmark three-year Reference Note due 2016 on Wednesday, according to an informed source.

Price talk was widened on Tuesday to the Treasuries plus 19.5 bps area from earlier talk in the area of Treasuries plus 18.5 bps.

A source noted that talk was revised due to several factors, including sector widening and a steeper yield curve.

The order book reached $2.5 billion by mid-afternoon.

Investment-grade bonds firmed in trading early Tuesday and continued to stay mostly better over the day, market sources said.

"Generally tighter," one source said.

The Markit CDX Series 20 North American Investment Grade index tightened 0.17 bps on the day to a spread of 75.4 bps.

In the secondary market, both Burlington Northern's 3.85% debentures due 2023 and 5.15% debentures due 2043 went out unchanged.

In other trading, Paccar's 1.15% notes due 2016 sold over the session firmed 1 bp.

Burlington sells $1.5 billion

Burlington Northern sold a two-tranche $1.5 billion offering of debentures on Tuesday, according to a market source and a filing with the Securities and Exchange Commission.

The deal included $800 million of 3.85% debentures due 2023 sold with a spread of Treasuries plus 117 bps.

Burlington Northern sold the notes at 99.661 to yield 3.891%.

The deal also included $700 million of 5.15% debentures due 2043 priced at Treasuries plus 140 bps.

The securities priced at 99.408 to yield 5.189%.

In the secondary market, Burlington Northern's 3.85% debentures traded flat at 117 bps bid, 115 bps offered, according to a source.

Burlington Northern's long tranche of 5.15% debentures went out unchanged at 140 bps bid, 138 bps offered, the source said.

BofA Merrill Lynch, Citigroup Global Markets Inc. and Goldman Sachs & Co. are the joint bookrunners.

Proceeds will be used for general corporate purposes.

The holding company for railroad transportation subsidiaries is based in Fort Worth.

CA Inc. prices tight

The session also saw CA price a $500 million offering of senior notes in two tranches, according to a syndicate source and a filing with the SEC.

Both tranches priced at the tight end of talk.

There was a $250 million issue of 2.875% five-year notes sold at Treasuries plus 143 bps, or 99.811, to yield 2.916%.

Price talk was set in the 150 bps over Treasuries area.

There was also $250 million of 4.5% 10-year notes priced with a spread of Treasuries plus 183 bps.

The notes sold at 99.539 to yield 4.558%.

CA had talked the notes in the area of 190 bps over Treasuries.

BofA Merrill Lynch, Morgan Stanley & Co. LLC, Citigroup Global Markets and J.P. Morgan Securities LLC were the joint bookrunners.

The company plans to use the proceeds for general corporate purposes, which may include the repayment of its 6.125% senior notes due 2014.

CA is an Islandia, N.Y.-based information technology company.

Paccar sells three-year notes

Paccar Financial was in Tuesday's primary market selling $500 million of 1.15% series N three-year notes with a spread of Treasuries plus 50 bps, according to syndicate sources and a filing with the SEC.

In other trading, Paccar's 1.15% notes due 2016 sold over the session firmed 1 bp to 49 bps bid, 46 bps offered, a source said.

The notes priced at the tight end of the Treasuries plus 55 bps area talk.

Paccar sold the notes at 99.903 to yield 1.183%.

Barclays, RBS Securities Inc., UBS Securities LLC and Wells Fargo Securities LLC were the joint bookrunners.

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

Lincoln sells $350 million

Meanwhile, Lincoln National came to Tuesday's primary market with a $350 million issue of 4% 10-year senior notes at a spread of Treasuries plus 138 bps, according to an FWP filing with the SEC.

The notes were sold at 99.19 to yield 4.099%.

BofA Merrill Lynch and Credit Suisse Securities (USA) LLC are the joint bookrunners.

Proceeds will be used to repay the company's 4.75% senior notes maturing on Jan. 30, 2014 and 4.75% senior notes maturing on Feb. 15, 2014.

Prior to repayment, the company will invest the proceeds of the offering in highly rated securities.

The holding company for insurance and retirement subsidiaries is based in Radnor, Pa.

Southwestern's add-on

Southwestern Public Service priced a $100 million tap of its 4.5% first mortgage bonds series No. 1 due 2041 on Tuesday with a spread of 98 bps over Treasuries, according to an informed source and a filing with the SEC.

The notes sold at the tight end of talk, which was set at Treasuries plus 100 bps, the source added.

Southwestern priced the notes at 95.912 to yield 4.766%.

Deutsche Bank Securities Inc. and Mitsubishi UFJ Securities (USA) Inc. are the joint bookrunners.

Proceeds will be added to the company's general corporate fund and used for the repayment of short-term debt, including the company's commercial paper and utility money pool borrowings. Proceeds will also be used for general corporate purposes.

The total issue size is now $400 million, including $200 million priced on Aug. 3, 2011 at 78 bps over Treasuries and $100 million priced on June 5, 2012 at Treasuries plus 130 bps.

The electric utility is based in Amarillo, Texas.

Freddie Mac eyes Reference Notes

In forward calendar news, Freddie Mac is expected to price a new benchmark three-year Reference Note on Wednesday, according to an informed source.

Price talk was widened on Tuesday to the Treasuries plus 19.5 bps area from earlier talk in the area of Treasuries plus 18.5 bps.

The notes will be due on Oct. 14, 2016, and settlement will be Aug. 16.

Bookrunners are Barclays, JPMorgan and Nomura Securities Co. Ltd.

The government-backed mortgage lender is based in McLean, Va.

Bank/brokerage CDS costs down

Investment-grade bank and brokerage CDS costs declined, a market source said.

Bank of America Corp.'s CDS costs fell 3 bps to 105 bps bid, 108 bps offered. Citigroup Inc.'s CDS costs firmed 1 bp to 97 bps bid, 100 bps offered. JPMorgan Chase & Co.'s CDS costs tightened 2 bps to 80 bps bid, 83 bps offered. Wells Fargo & Co.'s CDS costs declined 2 bps to 62 bps bid, 65 bps offered.

Merrill Lynch's CDS costs were flat at 103 bps bid, 108 bps offered. Morgan Stanley's CDS costs dropped 3 bps to 134 bps bid, 139 bps offered. Goldman Sachs Group, Inc.'s CDS costs fell 2 bps to 126 bps bid, 131 bps offered.

Paul Deckelman contributed to this review.

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