NEW YORK, Jan 16 (IFR) - This week's deluge of new US
high-grade issuance slowed to a manageable trickle on Thursday,
with just four deals coming to market to raise USD3bn.
Borrowers from the FIG sector dominated again, with Legg
Mason issuing USD400m of 5.625% 30-year bonds; Wells Fargo
following up its earnings release earlier in the week with a
USD1.5bn 3.0% issue of seven-year notes; and New York Life
coming with a USD600m FA-backed three-year.
The fourth deal came from Brazilian chemical company
Braskem, which priced a USD500m 10-year.
Demand was strong, despite USD36.8bn having priced in the
previous three days, with all four receiving good
oversubscription and pricing at the tight end of guidance.
"It's been very constructive today, with no sign of
indigestion," said one syndicate manager. "And pretty much all
deals are trading pretty well."
Brokerage firm Legg Mason (Baa1/BBB) was able to price a
USD400m 30-year 42.5bp tighter than its 237.5bp initial price
thoughts, at 195bp over Treasuries, after lead managers Citi and
JPM built a book of USD2.3bn.
At that pricing the deal came 5-10bp tighter than fair value
of 200-205bp, based on Invesco (A3/A-) 5.375% 2043s at T+135bp
and adding 65-70bp for the ratings difference.
The deal is its first in the senior unsecured since Legg
Mason issued 5.5% 2019s two years ago.
Wells Fargo meanwhile priced USD1.5bn of 3% seven-year
notes, maturing in January 2021, at T+75bp from initial thoughts
of 80bp area, with USD2.8bn of orders for the self-led trade.
At that level it offered investors a 5bp new-issue
concession versus its outstanding 4.6% April 2021s trading at
T+15bp bid or G+68-70bp.
New York Life was able to double its FA-backed three-year
deal to USD600m, after bookrunners Credit Suisse, Goldman Sachs
and JPM built a USD1.25bn book.
The deal was priced at 40bp, from guidance of 40-42bp and
initial price thoughts in the high 40s.
Braskem priced a USS500m 10-year, coming flat to its curve
after generating some USD5.5bn in demand.
The new 2024 priced at par to yield 6.45% or 360.7bp over
Treasuries, the tight end of 6.50% area (+/-5bp) guidance.
With the underlying 2022s trading at a G-spread of around
360bp or a yield of 6.43%, investors garnered a negligible new
The deal is being done in conjunction with a tender for more
expensive shorter-dated debt, namely its 8% 2017s, 7.25% 2018s
and 7% 2020s.
The SEC-registered trade was led by Bradesco, Citi, CA-CIB,
Deutsche Bank and HSBC. Standard Chartered Bank was the
co-manager. Expected ratings are Baa3/BBB-/BBB-.
The market should be quiet on Friday, as syndicate bankers
leave early for a well-earned three-day weekend after the second
consecutive week of more than USD30bn in new issuance.
More FIG issuers will surely be coming to market next week.
Legg Mason Inc, Baa1/BBB, announced a USD300m SEC registered
30-year senior notes. The notes contain a CoC put at 101. The
active bookrunners are Citigroup and JP Morgan. UOP: to repay
outstanding borrowings under a five-year term loan facility
maturing in 2017.
IPT: T+237.5bp area
PRICE GUIDANCE: T+200bp area (+/- 5bp)
LAUNCH: USD400m (upsized USD300m) at T+195bp
PRICED: USD400m 5.625% 30-year (1/15/2044). At 98.435, yld
5.735%. T+195bp. MWC+30bp. 1st pay: 7/15/2014.
NIC: negative 5-10bp. Ratings difference versus Invesco: +65-70.
= FV of 200-205bp
Invesco (A3/A-) 5.375% 11/2043 T+135bp. + 65-70bp ratings diff =
FV of 205bp
Wells Fargo & Co, A2/A+/AA-, announced a USD benchmark SEC
registered 7-year senior notes self-led offering. UOP: general
IPT: T+80bp area
PRICE GUIDANCE: T+75-80bp
LAUNCH: USD1.5bn at T+75bp
PRICED: USD1.5bn 3.0% 7-year (1/22/2021). At 99.831, yld 3.027%.
T+75bp. 1st pay: 7/22/2014.
NIC: 5bp vs 4.6% April 2021s
2.15% January 15, 2019 at G+51bp
4.60% April 1, 2021 at G+68-70bp
3.50% March 8, 2022 at G+85bp
NEW YORK LIFE GLOBAL FUNDING
New York Life Global Funding (NYL), Aa1/AA+/AAA, announced a
USD300m 144A/RegS 3-year (3/01/2017) FA-backed notes. The active
bookrunners are Credit Suisse, Goldman Sachs and JP Morgan.
Settle: T+5 (1/24/2014).
IPT: high 40s
PRICE GUIDANCE: T+40-42bp
LAUNCH: USD600m (upsized from USD300m) at T+40bp
PRICED: USD600m. Cpn 1.125%. Due 3/1/2017. Ip USD99.787. Yld
1.30% October 30, 2017 at G+40bp
Braskem Finance Ltd announced a SEC-registered senior
unsecured USD benchmark 10-year via bookrunners Bradesco,
Citigroup, Credit Agricole, Deutsche Bank and HSBC. Standard
Chartered Bank is the co-manager. UOP: fund tender offer.
Settlement date is February 3 2014. Expected ratings are
IPT: high 6%
PRICE GUIDANCE: 6.50% area (+/-5bp).
BOOK: North of USD2bn
5.750% April 15, 2021 at G+360bp
5.375% May 2, 2022 at G+360bp