NEW YORK, April 1 - Financials and utilities dominated a
busy day in the US high-grade market on Tuesday, with nearly
USD9bn raised in what continue to be virtually perfect
conditions for borrowers.
With earnings blackout periods looming for corporates, eight
issuers seized the moment to price USD8.8bn in new issuance,
pushing the week's two-day total to a hefty USD13.425bn.
Highlights included a 100-year bond by Massachusetts
Institute of Technology and a USD2.5bn offering of 10 and
30-year securities by Saudi Electricity that saw almost USD13bn
Strong demand also followed Union Electric d/b/a Ameren
Missouri, which saw some USD2bn of orders at the peak for just
USD350m of 10-year notes.
The securities priced tighter than the T+83bp level at
launch on higher-rated (Aa2/A/A+) MidAmerican Energy Co's
10.5-year transaction the day before.
On the FIG side, Deutsche Bank, Citigroup and NY Life Global
Funding pounced on a surge of demand for investment-grade bonds
to price senior unsecured transactions at aggressive levels.
Dovish comments from new Federal Reserve chairwoman Janet
Yellen on Monday combined with a booming equity market, end of
quarter buying, low dealer inventories and diminished supply
heading into earnings blackout periods to create ideal issuance
"Things are just flying off the shelf again," one head of
debt syndicate told IFR. "The strength of deals today is just
reflective of the markets over the past few days."
Deutsche Bank (A2/A) was able to price a US$1.25bn tap of
its outstanding 2.5% February 2019s, considerably larger than
what was first expected.
The bank was first thought to be coming with a deal of
around US$500m-US$1bn maximum, with initial price thoughts in
the mid 80bp area over Treasuries versus a T+73bp level on the
But about US$2bn of demand poured in, including a number of
sizeable anchor orders, which prompted DB to bump up the size
and squeeze in pricing to T+78bp, or a new issue concession of
Investors in the original US$1bn issue in February have had
a great run in the deal, which has traded in from a new issue
spread of T+100bp.
Citigroup also pounced on the strong market conditions
Tuesday, issuing US$2bn of 2.55% five-year notes maturing April
2019 and US$250m of five-year floaters.
Citi started out with talk in the mid 90s, which offered a
nice pick-up to its closest comps, the 2.5% September 2018s at
T+63bp or G+84bp.
More than US$4bn of orders poured into the deal, enabling
Citi to pull in guidance by around 5bp to 90bp area on the
Some accounts dropped out when the deal was launched at
T+85bp, leaving a final order book of US$3.4bn on the fixed and
US$360m on the FRN.
At T+85bp, the deal priced flat, or slightly through its
2018s if adjusted to account for the different maturities.
Citigroup Inc (C), Baa2/A-/A, announced a USD benchmark
5-year offering of FXD and/or FRN due 4/08/2019. Citigroup is
sole lead manager. Settle: T+5.
IPT: mid T+90s.
PRICE GUIDANCE: 5yr FXD T+90bp area (+/- 5bp), 5yr FRN Libor
LAUNCH: USD2.25bn 2-part. USD2bn 5yr fixed at T+85bp,
USD250m 5yr FRN at 3mL+77bp.
PRICED: $2.25bn 2-tranche total.
-$2bn 2.55% 5-year (4/08/19) fixed. At 99.846, yld 2.583%.
T+85bp. 1st pay: 10/08/14.
-$250m 5-year (4/08/19) FRN. At 100, floats at 3mL+77bp. 1st
BOOK: USD3.4bn fixed; USD360m FRN
NIC: flat (neg3bp if 0-3bp added for mat extension)
2.50% September 26, 2018 at T+63bp, G+84bp
DEUTSCHE BANK AG (LONDON BRANCH)
Deutsche Bank AG (London Branch), A2/A/A+, announced a SEC
registered tap of 2.50% 2/13/2019 senior notes. DB sole books.
IPTs: low 80s
PRICE GUIDANCE: T+78bp (the number)
LAUNCH: USD1.25bn tap of 2.5% 2019s at T+78bp
PRICED: USD1.25bn tap of 2.5% 2/13/2019. 9.962. T+78bp
2.5% 2019s at T+72bp
UNION ELECTRIC DBA AMEREN MISSOURI
Union Electric dba Ameren Missouri (AEE), A2/A/A (s/s/s)
announced a USD350m (no grow) SEC registered 10-year (4/15/2024)
10-year senior secured notes. The notes contain a 3mo par call
prior to maturity. Bank of America, Morgan Stanley, Mitsubishi
and Stifel are the active bookrunners. Co-managers: Blaylock,
BNP Paribas, CL King, FITB, Keybanc and Royal Bank of Scotland.
UOP: To repay at maturity USD104m aggregate principal amount of
our 5.50% senior secured notes due May 15, 2014 and repay a
portion of our short-term debt. Settle: T+3
IPTs: T+90bp area
PRICE GUIDANCE: T+80bp area (+/- 5bp)
LAUNCH: USD350m 10yr at T+75bp
PRICED: USD350m 3.50% 10-year (4/15/2024).99.982, yld
3.502%. T+75bp. MWC+15bp. 1st pay: 10/15/2014.
BOOK: USD1.4 final (peak USD2bn)
NIC: Negative 3bp to flat (+5bp for low dollar price = 83bp,
-5bp 10/30 curve = FV of 78bp)
Union Electric 3.9% 2042 at T+78bp, $92.00
AEE 2.70% September 1, 2022 at T+43, G+64bp
MIDAM (A1/A) 3.60% April 1, 2024 at T+73, G+75bp
CMS (A1/A-) 3.375% August 15, 2023 T+67, at G+74bp
POM (A2/A) 3.60% March 15, 2024 at T+77bp, G+80bp
ETR (A3/A-) 3.70% June 1, 2024 at T+81bp, G+81bp
Duke Energy Corp (DUK), A3/BBB/BBB+, announced a USD750m SEC
registered 2-part offering that consists of a 3-year (4/03/2017)
FRN and a 10-year (4/15/24) senior unsecured fixed notes. The
notes contain a MWC and a 3mo par call on the 10yr tranche. The
active bookrunners are Barclays, Royal Bank of Canada, Scotia
and UBS. UOP: To repurchase tax exempt bonds at Duke Energy
Ohio, Inc. and for GCP, including repayment of CP. Pricing
expected today. Settle: T+3 (4/04/2014).
IPTs: 3yr 3mL+mid/hi 40s, 10yr T+115bp area
PRICE GUIDANCE: 3yr FRN 3mL+40bp area (+/- 2bp), 10yr
LAUNCH: USD1bn (upsized from USD750m) 2-part. USD400m 3yr
FRN at 3mL+38bp, USD600m, 10yr at T+100bp
PRICED: $1bn 2 tranche total
-$400m 3-year (4/03/17) FRN. At 100, floats at 3mL+38bp.
-$600m 3.75% 10-year (4/15/24) fixed. At 99.941, yld 3.757%.
BOOK: USD4bn total
NIC: neg 2bp on FXD
DUKE 3.95% 10/23s T+90 G+102
Sempra En. 4.05% 12/23 T+104 G+106
SCANA Corp 4.125% 2/ 22s G+158
NEW YORK LIFE GLOBAL FUNDING
New York Life Global Funding (NYLIFE), Aaa/AA+/AAA,
announced a USD350m 144a/Reg S (no reg rights) FA-backed
18-month (10/05/2015) floating rate notes. The active
bookrunners are Bank of America, Deutsche Bank andHSBC. UOP: to
purchase the relevant funding agreements. Settle: T+3
IPTs: 3mL+5bp area
PRICE GUIDANCE: 3mL+3-5bp
LAUNCH: USD425m (upsized from USD350m) 18mo FRN 3mL+3bp
PRICED: USD425m 18mo (10/05/2015) FRN. At 100, 3mL+3bp
KO 9/01/15 priced at L+1bp
CSCO 9/03/15 priced at L+5bp
MASSUCHESSETS INSTITUTE OF TECHNOLOGY (MIT)
Massachusetts Institute of Technology (MIT), Aaa/AAA,
announced a USD550m 100-year (7/01/2114) taxable fixed rate
3(a)4 series C bond via Barclays, JP Morgan and Morgan Stanley.
The deal is exempt from SEC-registration. The notes contain a
MWC. Settle: T+5.
PRICE GUIDANCE: T+115bp area vs. 3.75% 11/2043
REVISED GUIDANCE: T+110bp area(+/-5bp) vs. 3.75% 11/2043
LAUNCH: USD550m 100yr at T+108bp
PRICED: $550m 4.678% 100-year (7/01/2114) at 100. T+108bp vs
3.75% 11/2043. MWC+20bp.
MIT 5.6% 7/2111 $122.5 T+100
Tufts 5.017% 2112s T+173bp
Shinhan Bank (A1/A/A) has launched a USD500m 3-year (April
8, 2017) FRN at 3-month dollar Libor+65bp, the tight end of
final guidance and 15bp inside initial price thoughts. The
144a/Reg S senior unsecured floating rate note will price later
today. Settlement is April 8. Joint books: Bank of America, BNP
Paribas, Credit Agricole, Citigroup, JP Morgan, Standard
Chartered. Joint-lead managers: Mizuho, Shinhan Asia, Shinhan
PRICE GUIDANCE: 3mL+70bp area (+/- 5bp)
LAUNCH: USD500m at 3mL+65bp
PRICED: USD500m 3-year (4/08/2017) FRN. At 100, 3mL+65bp
Saudi Electricity Company (SEC), A1/AA-/AA-, is readying a
USD benchmark 2-tranche deal via Deutsche Bank, HSBC and JP
IPTs: 4.25 - 4.375%, 5.625 - 5.75%
PRICE GUIDANCE: 4.125%, plus or minus 12.5bp, on the 10-year
and 5.5%-5.625% on the 30yr
LAUNCH: USD2.5bn 2-tranche total. USD1.5bn 10yr at 4%,
USD1bn 30yr at 5.5
PRICED: $2.5bn 2-tranche total.
-$1.5bn 4.00% 10-year (4/08/14) at 100. T+124.3bp
-$1bn 5.5% 30-year (4/08/44) at 100.T+190.1bp. MS+191bp
BOOKS: USD13bn total
NIC: Flat on 10yr, neg 1bp on 30yr (neg 6bp on 30yr if
adjusted for low $ price of comp)
3.47% 2023 G+125
5.06% 2043 T+192 at USD93.00
(Reporting by Danielle Robinson; Editing by Marc Carnegie)