John Deere, Cullen/Frost price; Southern Gas firms; Burlington Northern, McDonald’s soften

By Cristal Cody

Tupelo, Miss., March 10 – Two high-grade companies tapped the primary market on Friday, capping off a week of more than $45 billion of corporate supply.

John Deere Capital Corp. brought $1 billion of senior medium-term notes in three tranches to the market on Friday.

Cullen/Frost Bankers Inc. placed $100 million of 10-year subordinated notes.

Looking ahead, about $25 billion to $30 billion of deal volume is forecast with issuance expected to be front-loaded in the upcoming week, according to market sources.

The Markit CDX North American Investment Grade index closed the day slightly wider at a spread of 64 basis points.

New bonds priced over the week were mixed as market tone shifted with energy names trading mostly tighter in the secondary market, sources said.

Southern Natural Gas’ 4.8% senior notes due March 15, 2047 tightened about 4 bps.

Burlington Northern Santa Fe, LLC’s $1.25 billion two-tranche offering of senior debentures (A3/A/) priced on Monday traded about 1 bp to 5 bps wider than issuance.

UnitedHealth Group Inc.’s $1.35 billion of senior notes (A3/A+/A) sold in two parts traded flat to about 2 ˝ bps wider than where the notes priced on Wednesday.

McDonald’s Corp.’s $2 billion of senior notes (Baa1/BBB+/BBB) priced in three parts on Monday softened about 4 bps to 7 bps in the secondary market.

John Deere sells $1 billion

John Deere Capital priced $1 billion of series F senior medium-term notes (A2/A/A) in three parts on Friday, according to FWP filings with the Securities and Exchange Commission.

The company sold $450 million of three-year floating-rate notes at par to yield Libor plus 30 bps.

John Deere Capital priced $300 million of 2.2% three-year fixed-rate notes at 99.922 to yield 2.227% and a spread of 58 bps over Treasuries.

The company priced a $250 million add-on to its 2.65% notes due Jan. 6, 2022 at 99.559 with a 2.748% yield, or Treasuries plus 65 bps.

John Deere first priced the issue on Jan. 3 in a $400 million tranche at 99.972 to yield 2.656% and a Treasuries plus 72 bps spread. The total outstanding now is $650 million.

Barclays, MUFG and RBC Capital Markets LLC were the bookrunners.

John Deere Capital is a financing arm of Moline, Ill.-based farm equipment supplier Deere & Co.

Cullen/Frost prices notes

Cullen/Frost Bankers sold $100 million of 4.5% 10-year subordinated notes (A3/BBB+/) on Friday at 99.777 to yield 4.528%, according to an FWP filing with the SEC.

The notes due March 17, 2027 priced at a spread of 195 bps over Treasuries.

Goldman Sachs & Co. and J.P. Morgan Securities LLC were the bookrunners.

Proceeds will be used for general corporate purposes.

Cullen/Frost is the San Antonio-based holding company for Frost Bank.

Southern Natural Gas firms

Southern Natural Gas’ 4.8% notes due March 15, 2047 traded on Friday at 166 bps bid, 162 bps offered, according to a market source.

The company priced $400 million of the notes (Baa2/BBB+/BBB+) at a spread of Treasuries plus 170 bps on Tuesday.

Southern Natural Gas is a Birmingham, Ala.-based natural gas pipeline company and division of Kinder Morgan, Inc.

Burlington Northern eases

Burlington Northern Santa Fe’s 3.25% debentures due June 15, 2027 traded on Friday at 79 bps bid, 75 bps offered, a market source said.

The company priced $500 million of the debentures on Monday at a spread of Treasuries plus 78 bps.

Burlington Northern Santa Fe’s 4.125% debentures due June 15, 2047 widened to 113 bps bid, 110 bps offered in secondary trading.

The company sold $750 million of the debentures on Monday at a Treasuries plus 108 bps spread.

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

UnitedHealth mixed

UnitedHealth Group’s 3.375% notes due April 15, 2027 traded weaker than issuance on Friday at 90 bps bid, 88 bps offered, according to a market source.

The company sold $625 million of the 10-year notes on Wednesday at a spread of 87.5 bps over Treasuries.

UnitedHealth Group’s 4.25% notes due April 15, 2047 were flat on Friday at 110 bps bid, 107 bps offered.

UnitedHealth Group priced $725 million of the 30-year notes at a Treasuries plus 110 bps spread in Wednesday’s offering.

The diversified health company is based in Minnetonka, Minn.

McDonald’s softens

McDonald’s 2.625% notes due Jan. 15, 2022 were seen on Friday at 69 bps bid, 65 bps offered in the secondary market, a source said.

McDonald’s priced a $600 million add-on on Monday to the notes first issued in 2011 at a spread of Treasuries plus 62 bps.

Its 3.5% notes due March 1, 2027 eased to 111 bps bid, 107 bps offered in secondary trading.

McDonald’s sold $850 million of the notes in Monday’s offering at a Treasuries plus 107 bps spread.

The tranche of 4.45% notes due March 1, 2047 softened to 142 bps bid, 139 bps offered.

The company sold $550 millions of the bonds on Monday at a spread of 137 bps over Treasuries.

The fast food chain is based in Oak Brook, Ill.

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