US banks give solid start to high-grade week

Mon Apr 21, 2014 6:08pm EDT

With corporates still stuck in earnings blackout, trades from Goldman Sachs, US Bank, US Bancorp, Capital One Financial and Huntington National Bank kept syndicate desks busy.

Goldman Sachs raised USD2bn of Tier 1 capital by issuing USD1000-par fixed-to-floating rate non-cumulative perpetual non-call five-year bonds aimed at the institutional market and USD25 par fixed-to-floating non-cumulative perpetual non-call 10-year preferred stock, which was aimed at both retail and institutional investors.

The USD1.3bn USD1000 par trade ended with order books of USD4.25bn after tightening from whispers of 6% and then revised guidance of 5.75% area to a final level of 5.7%. The bonds, if not called, convert to floaters at three-month Libor plus 388.4bp.

The order books for the USD700m USD25 par trade totalled USD1.25bn. They pay 6.375% (at the bottom end of revised guidance of 6.375%-6.50%). If not called, they float at Libor plus 355bp.

Goldman's decision to issue two deals in both retail and institutional preferred markets is an unusual twist to Tier 1 execution strategy, as is the sight of a US bank offering institutional investors a non-call five-year rather than a non-call 10-year structure.

By doing so, Goldman was able to take advantage of much better pricing in fives than 10s because of the steep yield curve, but in a market which is significantly deeper than the USD25 par market.

US Bank meanwhile raised USD1.25bn by issuing two-year senior bank floaters that tightened 3bp from IPTs of Libor plus 15bp on the back of a USD1.75bn order book. And US Bancorp issued USD1.25bn of five-year fixed and USD250m five-year floaters on the senior holdco level.

Both tranches tightened from IPT levels of mid to high 50s to finally price at plus 50bp on the fixed and Libor plus 40bp on the floater. The fixed got the bulk of orders - USD2bn out of USD2.375bn overall.

The tightening of spread levels was slightly more pronounced in the case of Capital One Financial, which issued USD750m of 2.45% five-year notes at T+75bp and USD750m of 3.75% 10-year notes at 105bp.

Order books were about USD3.4bn for the five-year and USD2bn for the 10-year, enabling COF to pull in the five-year's 75bp pricing from IPTs of 90bp and guidance of 80bp area, and the 10-year's pricing to 105bp from IPTs of 115bp area and guidance of 110bp area.

At those levels it appeared COF offered about a 4bp new issue concession on the five-year versus its outstanding 2.25% February 2019s, issued at the bank level. The 2019s were trading around G+64bp. Add 10bp for the holdco/bank difference suggests fair value of G+74bp.

The 10-year comp is the COF 3.5% June 2023s, at T+92bp or G+99bp, issued at the holding company level. That would suggest a 6bp NIC on the new 10-year.

Ohio-based Huntington National Bank increased an original USD500m offering of three-year fixed and floating rate notes to USD750m after attracting USD1.02bn of orders for the fixed and USD343m for the floater.

The USD500m of 1.375% three-year April 2017s at T+53bp after going out with IPTs in the low 60s and guidance of 55bp area. Huntington also sold US$250m three-year FRNS at 3mL+42.5bp.

At that level Huntington appeared to pay just 3bp of NIC versus its 2.2% April 2019s, trading at G+55bp, and after deducting 5bp for the credit curve difference.

U.S. BANK NA

U.S. Bank NA, Aa3/AA-/AA (s/s/s), announced a USD benchmark 2-year (4/22/2016) senior bank note floater via US Bank, Barclays and Morgan Stanley. Par call 30-day applies. UOP: GCP. Settlement date 4/24/2014.

IPT: 3mL+15bp area

PRICE GUIDANCE: 2yr FRN 3mL+12.5bp area (+/- 2.5bp)

LAUNCHED: USD1.25bn 2yr FRN at 3mL+12bp

PRICED: USD1.25bn 2-year (4/22/2016) FRN. At 100, floats at 3mL+12bp.

BOOKS: USD1.75bn

COMPS:

USB (Aa3/AA-) 1.10% January 30, 2017 at G+26bp (Sr bank)

USB (A1/A) 1.65% May 15, 2017 at G+30bp (Holdco)

USB (A1/A) 1.95% November 15, 2018 at G+43bp (Holdco)

USB (A1/A) 3.70% January 30, 2024 at G +77bp (Holdco)

WFC (A2/A) 2.125% April 22, 2019 at G+53bp (Holdco)

BBT (A1/A) 1.00% April 3, 2017 at G+36bp (Sr bank)

BBT (A1/A) 2.30% October 15, 2018 at G+51bp (Sr bank)

PNC (A2/A) 1.125% January 27, 2017 at G +40bp (Sr bank)

PNC (A2/A) 2.20% January 28, 2019 at G+54bp (Sr bank)

US BANCORP

US Bancorp, A1/A+/AA-/AA (s/s/s/s), announced a USD benchmark SEC registered 5-year (4/25/2019) senior Holdco fixed and/or FRN. The notes contain a 30-day par call prior to maturity. The active bookrunners are US Bank, Barclays and Morgan Stanley. UOP: GCP. Settle: T+3 (4/24/2014).

IPT: Mid-high 50s on 5-year FXD, 3mL+equivalent on 5-year FRN

PRICE GUIDANCE: 5-year FXD T+50-53bp, 5-year FRN Libor equiv

LAUNCHED: USD1.5bn 2-part total. USD1.25bn 5-year FXD at T+50bp, USD250m 5-year FRN at 3mL+40bp.

PRICED: USD1.5bn 2-tranche total.

- USD1.25bn 2.20% 5-year (4/25/2019) fixed. At 99.910, yld 2.219%. T+50bp.

- USD250m 5-year (4/25/2019) FRN. At 100, floats at 3m+40bp

BOOKS: 5-year FRN USD375m, 5-year FXD USD2bn

NIC: 5-year FXD 7bp (versus 1.95% 2018 at G+43bp)

COMPS:

USB (Aa3/AA-) 1.10% January 30, 2017 at G+26bp (Sr bank)

USB (A1/A) 1.65% May 15, 2017 at G+30bp (Holdco)

USB (A1/A) 1.95% November 15, 2018 at G+43bp (Holdco)

USB (A1/A) 3.70% January 30, 2024 at G +77bp (Holdco)

WFC (A2/A) 2.125% April 22, 2019 at G+53bp (Holdco)

BBT (A1/A) 1.00% April 3, 2017 at G+36bp (Sr bank)

BBT (A1/A) 2.30% October 15, 2018 at G+51bp (Sr bank)

PNC (A2/A) 1.125% January 27, 2017 at G +40bp (Sr bank)

PNC (A2/A) 2.20% January 28, 2019 at G+54bp (Sr bank)

CAPITAL ONE FINANCIAL CORP

Capital One Financial Corporation, Baa1/BBB/A-, announced a USD SEC registered senior note two-part offering that consists of a 5-year and 10-year. The notes contain a 1-month par call prior to maturity. The bookrunners are Credit Suisse, Goldman Sachs, JP Morgan and Wells Fargo. UOP: GCP.

IPT: 5-year T+90bp area, 10-year T+115bp area

PRICE GUIDANCE: 5-year T+80bp area, 10-year T+110bp area. Area is +/- 5bp.

LAUNCHED: USD1.5bn 2-tranche deal.USD750m 5-year at T+75bp, USD750m 10-year at T+105bp

PRICED: USD1.5bn 2-tranche total.

- USD750m 2.45% 5-year (4/24/2019). At 99.925, yld 2.466%.

T+75bp.

- USD750m 3.75% 10-year (4/24/2024) . At 99.909, yld 3.761%. T+105bp.

BOOKS: 5-year FXD USD3.4bn, 10-year FXD 2bn

NIC: 5-year 4bp, 10-year 6bp

COMPS:

COF 2.15% November 21, 2018 at G+62bp

COF 2.25% February 13, 2019 at G+61bp (bank level)

COF 3.50% June 15, 2023 at G+99bp

THE HUNTINGTON NATIONAL BANK

The Huntington National Bank (HBAN), A3/BBB+/A-, announced a USD500m 3(a)(2) exempt 3-year fixed and or floating rate senior bank notes. Bank of America and Goldman Sachs are the active bookrunners.

IPT: low 60's

PRICE GUIDANCE: 3-year FXD T+55bp area (+/- 2bp), 3-year FRN Libor equivalent

LAUNCHED: USD750m (upsized from USD500m) 2-part. USD500m 3-year FXD ar T+53bp, USD250m 3-year FRN at 3mL+42.5bp.

PRICED: USD750m 2-tranche total.

- USD500m 1.375% 3-year (4/24/2017) fixed. At 99.842, yld 1.429%. T+53bp.

- USD250m 3-year (4/24/2017). At 100, floats at 3mL+42.5bp.

BOOKS: USD1.022bn on fixed, USD343m on FRN

NIC: 3bp (3/5 curve worth 5bp; fair value G+50bp)

COMPS:

HBAN 2.20% April 1, 2019 at G+55bp

GOLDMAN SACHS

The Goldman Sachs Group Inc (GS), Ba2/BB+/BB+, announced a SEC registered USD1000 par fixed to floating rate non-cumulatived perpetual NC5 preferred stock, Series L.

From the date of original issue, semi-annually in arrears on the 10th day of May and November of each year, commencing on November 10, 2014 to, but excluding, May 10, 2019, at a fixed rate per annum of %, and (ii) from and including May 10, 2019, quarterly in arrears on the 10th day of February, May, August and November of each year, at a floating rate per annum equal to three-month U.S. dollar LIBOR. GS sole bookrunner. UOP: GCP. Settle: T+5 (4/28/2014).

REVISED GUIDANCE: 5.75% area (+/- 5bp)

LAUNCH: USD1.3bn at 5.70%

PRICED: USD1.3bn 5.70% at 100, then floats at 3mL+388.4bp if not called.

BOOKS: USD4.25bn

GOLDMAN SACHS

The Goldman Sachs Group Inc (GS), Ba2/BB+/BB+, announced a SEC registered USD25 par fixed to floating rate non-cumulatived perpetual NC10 preferred stock. The Series K Preferred Stock is perpetual and has no maturity date. The Company may, at its option, redeem the shares of Series K Preferred Stock (i) in whole or in part, from time to time, on or after May 10, 2024 (or, if not a business day, the next succeeding business day), or (ii) in whole but not in part at any time within 90 days following a Regulatory Capital Treatment Event GS sole bookrunner. Bank of America, Citigroup, Morgan Stanley, Royal Bank of Canada, UBS and Wells-Fargo are the joint-lead managers. UOP: GCP. Settle: T+5 (4/28/2014).

REVISED GUIDANCE: 6.375%-6.50%

LAUNCH: USD700m at 6.375%

PRICED: USD700m 6.375% at 100, then floats at 3mL+355bp if not called.

BOOKS: USD1.25bn (Reporting by Shankar Ramakrishnan and Danielle Robinson; Editing by Marc Carnegie)

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