Primary activity resumes following quiet start to year; Visa, McDonald’s firm; Charter widens

By Aleesia Forni and Cristal Cody

New York, Jan. 5 – The investment-grade primary bond market saw a flurry of new issuance on Tuesday.

Issuers accessed the market following a quiet opening to the new year on Monday that saw no new deals price as weaker economic data out of China spurred fears of a global slowdown, sending stocks sharply lower.

Market sources noted that a number of potential issuers stood down on Monday due to the volatile backdrop.

A more stable tone at Tuesday’s open persuaded corporate names including Ford Motor Credit Co. LLC, Walt Disney Co. and Harley-Davidson Financial Services Inc. to price new offerings.

Entergy Arkansas Inc. attracted more than $2 billion of orders for its $325 million issue of first mortgage bonds.

Yankee and financial names also made a strong showing during the session, with KfW of Germany, Santander UK Group Holdings plc, Barclays plc and Citigroup Inc. pricing bonds.

Primary action in the Canadian bond markets has not kicked the year off yet, except for a new offering of non-viability contingent capital preferred shares on Tuesday.

Toronto-Dominion Bank announced on Tuesday that it priced C$700 million of non-cumulative rate reset preferred shares with a 5.5% annual dividend for the initial period ending April 30, 2021.

“The 5.5% coupon TD came at today was maybe 10, 15 basis points higher than where NVCC preferred share issues have been trading at in the secondary,” a source said.

Investment-grade bonds were mixed in secondary trading on Tuesday.

Visa Inc.’s senior notes (A1/A+) priced in December traded 1 bp to 2 bps tighter after softening at the start of the day.

Charter Communications Inc.’s bonds (Ba1/BBB-) widened 6 bps to 7 bps over the session.

McDonald’s Corp.’s 3.7% senior notes due 2026 firmed 3 bps on Tuesday.

In other secondary trading, Wells Fargo & Co.’s 2.55% senior holding company notes due 2020 were flat.

The Markit CDX North American Investment Grade 25 index closed mostly unchanged at a spread of 90 bps.

KfW global notes

KfW sold the largest new issue of the session, offering $5 billion of 1.5% three-year global notes (Aaa/AAA/AAA) on Tuesday at 99.749, according to an FWP filed with the Securities and Exchange Commission.

Price talk was set in the mid-swaps plus 22 bps area.

Bookrunners are Barclays, Morgan Stanley & Co. LLC and RBC Capital Markets LLC.

The German government-owned development bank is based in Frankfurt.

Barclays sells $4 billion

Barclays plc sold $4 billion of senior notes (Baa3/BBB/A) on Tuesday in five- and 10-year tranches, according to an informed source.

There was $1.5 billion of 3.25% five-year notes priced at 99.945 to yield 3.262%, or Treasuries plus 155 bps.

Price guidance was set in the Treasuries plus 160 bps area, tightened from talk in the Treasuries plus 165 bps area.

A $2.5 billion tranche of 4.375% 10-year notes sold at 99.512 to yield 4.436% with a spread of Treasuries plus 220 bps.

The notes sold at the tight end of guidance set in the Treasuries plus 225 bps area. Initial talk was in the Treasuries plus 230 bps area.

Barclays is the bookrunner.

Proceeds will be used for general corporate purposes.

The financial services company is based in London.

Disney five-parter

Walt Disney attracted an order book that was more than three times oversubscribed for its newly printed $3 billion of senior notes (A2/A/A) that sold in five tranches, a market source said.

Included in the sale was $350 million of 1.65% three-year notes sold at 99.866 to yield 1.696%, or Treasuries plus 40 bps.

The notes were talked in the Treasuries plus 45 bps area, tightened from the Treasuries plus 50 bps area.

A $400 million tranche of three-year floaters sold at par to yield Libor plus 32 bps after being talked at the Libor equivalent to the fixed-rate tranche.

Also, $750 million of 2.3% five-year notes priced at 99.903 to yield 2.32% with a spread of Treasuries plus 60 bps.

Pricing came at the tightest side of the Treasuries plus 65 bps area guidance after having firmed from the Treasuries plus high-60 bps area.

A $1 billion 3% tranche of 10-year notes sold at 99.6 to yield 3.046% with a spread of Treasuries plus 80 bps.

Guidance was in the Treasuries plus 85 bps area, and the notes were initially talked in the Treasuries plus high-90 bps area.

Finally, a $500 million tap of the company’s existing 4.125% notes due June 1, 2044 sold at 100.884 to yield 4.072%, or Treasuries plus 105 bps.

The notes were issued at the tightest side of the Treasuries plus 110 bps area guidance. Initial price thoughts were in the Treasuries plus 120 bps area.

Proceeds will be used for general corporate purposes.

Bookrunners were Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Credit Suisse Securities, Mizuho Securities and RBC.

The entertainment and media company is based in Burbank, Calif.

Ford prices tight

Also on Tuesday, Ford Motor Credit sold $2.75 billion of notes (Baa3/BBB-/BBB-) in three tranches, according to an FWP filing with the SEC.

There was $1.2 billion of 2.943% three-year notes sold at par, or Treasuries plus 165 bps.

A $350 million tranche of three-year floating-rate notes priced at par.

Also, a $1.2 billion 4.389% tranche of 10-year notes priced at par with a spread of 215 bps over Treasuries.

All tranches sold inside initial price thoughts.

The bookrunners are Barclays, Citigroup, Credit Agricole CIB, Goldman Sachs & Co., J.P. Morgan Securities LLC, Lloyds Securities and Morgan Stanley.

Proceeds will be added to the general funds of Ford Motor Credit and will be available for the purchase of receivables, for loans and for use in connection with the retirement of debt.

Ford Motor Credit is the financing arm of Dearborn, Mich.-based automaker Ford Motor Co.

Citigroup senior notes

And Citigroup priced a $2 billion offering of 3.7% 10-year senior notes on Tuesday at Treasuries plus 148 bps, according to a market source.

The notes (Baa1/BBB+/A) sold at 99.867 to yield 3.716%.

Pricing was at the tight end of the Treasuries plus 150 bps area guidance, which had firmed from talk set in the Treasuries plus 165 bps area.

Citigroup Global Markets is the bookrunner.

The financial services company is based in New York.

Santander five-year notes

In another financial new issue, Santander UK priced a $1 billion offering of 3.125% senior notes (Baa1/BBB/A) due Jan. 8, 2021 on Tuesday at Treasuries plus 143 bps, according to a market source.

Pricing was at 99.899 to yield 3.147%.

The notes sold at the tightest side of the Treasuries plus 145 bps area guidance, following talk set in the Treasuries plus 155 bps to 160 bps range.

Bookrunners are Barclays, BofA Merrill Lynch, Credit Suisse, Santander and UBS Securities LLC.

Proceeds will be used for general corporate purposes.

The provider of banking and financial products and services is based in London.

Entergy mortgage bonds

Entergy Arkansas priced a $325 million offering of 3.5% 10-year first mortgage bonds at 130 bps over Treasuries on Tuesday, according to a market source and an FWP filing with the SEC.

The notes (A3/A-) sold at 99.671 to yield 3.539%.

BNY Mellon Capital Markets LLC, Goldman Sachs, Scotia Capital (USA) and Stephens Inc. were the bookrunners.

Proceeds will be used to finance the purchase of a power block at the Union Power Station from Union Power Partners, LP for roughly $237 million, to redeem the company’s $175 million of 5.66% first mortgage bonds due February 2025 and for general corporate purposes.

Entergy Arkansas is a Little Rock, Ark.-based energy provider.

Fannie Mae eyes notes

Fannie Mae plans to price Benchmark Notes due Jan. 28, 2019, according to a company news release.

Barclays, JPMorgan and Nomura Securities International, Inc. are the joint lead managers. The co-managers include CastleOak Securities, Deutsche Bank Securities Inc., Loop Capital Markets, Multi-Bank Securities Inc. and TD Securities USA.

The issue will settle on Friday.

Fannie Mae is a Washington, D.C.-based mortgage credit provider.

Visa tightens

Visa’s 3.15% notes due 2025 firmed 2 bps over the day to 87 bps bid, according to a market source.

The notes were seen over the morning 2 bps wider at 86 bps offered.

The company sold $4 billion of the bonds on Dec. 9 at Treasuries plus 97 bps.

The retail electronic payments network operator is based in San Francisco.

Charter widens

Charter Communications’ 4.908% notes due 2025 headed out weaker at 276 bps bid after opening mostly flat at 270 bps offered, a market source said.

The company sold $4.5 billion of the bonds on July 9 at a spread of Treasuries plus 260 bps.

Charter Communications’ 6.484% bonds due 2045 widened 7 bps to 347 bps bid, the source said.

The company sold $3.5 billion of the bonds in the July 9 offering at Treasuries plus 335 bps.

The provider of cable, internet and phone services is based in Stamford, Conn.

McDonald’s firms

McDonald’s 3.7% notes due 2026 firmed 3 bps to 144 bps bid on Tuesday, according to a market source.

The company sold $1.75 billion of the notes (Baa1/BBB+/BBB+) on Dec. 2 at a spread of Treasuries plus 155 bps.

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

Wells Fargo unchanged

Wells Fargo’s 2.55% notes due 2020 (A2/A+/AA-) were flat at 99 bps bid in the secondary market, a source said.

The company sold $2.1 billion of the notes at a spread of Treasuries plus 93 bps on Nov. 30.

The bank is based in San Francisco.

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