By Shankar Ramakrishnan
NEW YORK, May 1 (IFR) – Compared to the hectic issuance days
early in the week, Wednesday was relatively quiet, although
there was a steady flow of deals with three issuers raising a
total USD1.85bn.
There was no clear reason why the market did not see the
expected avalanche of deals because even with a flow of weak
economic data, the backdrop remains solid for a hyperactive
primary high-grade market.
Some said it was probably because the market was taking time
to digest the mammoth USD17bn Apple trade done on
Wednesday, while others said the pipeline was strong but
companies were still getting through the final stages of
paperwork before announcing their transactions.
There was indeed evidence of investor focus on the Apple
trade. Apple bonds made up nearly a quarter of all corporate
debt traded early in the session, according to Jody Lurie, a
corporate credit analyst at Janney Montgomery Scott LLC.
This continued activity in one of the significant deals done
this year, and the fact that most of the quality deals that have
come to the market this week have performed well in secondary
trade should keep encouraging issuers to hit the high-grade
market this week and next.
The deals done today also boasted big order books and a few
deals even made it to the record low coupon tables underlining
the strength of the high-grade market.
So while it seems the market is a bit off the estimated
USD35bn-$40bn volume this week, Thursday is expected to yield at
least another USD6bn-$7bn which would take the weekly total from
USD28.025bn up to today to a healthy USD35bn.
Some bankers are still predicting up to USD140bn in issuance
volumes in May.
PEARSON
Pearson Funding Five (Baa1/BBB+) raised USD500m from a
144A/Reg S 10-year senior note offering that attracted a peak
order book of up to USD2.8bn. The deal that came via Barclays,
Deutsche Bank and HSBC, priced with a flat new issue concession.
The notes contain a guarantee by Pearson PLC, and a
101 put upon a change of control and ratings downgrade below IG.
The use of proceeds include general corporate purposes,
which may include repayment of the 5.5% 5/6/13 bonds, the
provision of seasonal working capital to subs in the US and
investment in short-term money market investments.
The 10-year (05/08/2023) trade was announced with a price
talk of T+170bp area (+/- 5bp) and then launched 5bp tighter
which is where it priced (3.25% coupon, 99.873 price and yield
of 3.265%).
Compared with the company’s outstanding 3.75% 2022s were at
plus 150bp or G+165bp which made concession flat. The final
order book was about USD2.5bn.
CORPORATE OFFICE PROPERTIES
Corporate Office Properties, Baa3/BBB-/BBB-, also
raised USD350m from an upsized 10-year 144a/Reg S w/Reg Rights
senior unsecured note that attracted a peak book of about
USD1.5bn. It was the company’s debt IPO.
The notes contain a guarantee from Corporate Office
Properties Trust. Active bookrunners were Wells Fargo and JP
Morgan. The attraction for investors was the 2 basis point
handle on the spread level. Corporate Office announced a USD250m
10-year trade with a price talk of T+212.5bp area (+/- 12.5bp)
which at launch became a USD350m 10-year issue at a spread of
T+200bp. It finally priced at that level (3.6% at 99.816, yield
3.622%).
The use of proceeds is to repay borrowings under an
unsecured revolving credit facility and for general corporate
purposes.
TEXAS INSTRUMENTS
Texas Instruments Inc, A1,A+/A+, raised USD1bn (no
grow) from a SEC registered two-part offering that comprised of
five-year and 10-year senior unsecured notes. At final pricing
both tranches found a place in the Thomson Reuters/IFR record
low coupon table.
The company announced the five-year with a price talk of
T+55bp-60bp and the 10-year at T+85bp-90bp. At launch, the
USD500m five-year (5/01/2018) came at plus 55bp and USD500m
10-year (5/01/2023) at plus 85bp. The five-year paid a coupon of
1% (99.070, yield of 1.193%) and the 10-year 2.25% coupon
(98.073, yield 2.469%).
Both the bookrunners Morgan Stanley and JP Morgan on the
deal would not indicate order book sizes amid market talk that
the deal found some resistance from price sensitive investors.
Some market players said the deal could have faced some
challenges because investors were distracted by the other two
deals in the market today which were from Triple B rated
companies and offered better spread.
In the end, however, the company did raise the intended
USD1bn at a competitive cost.
As for comps, outstanding Texas 1.65% 2019s were about
T+48bp which after adjusting for the maturity difference made
the concession on the five-year look about flat or a few basis
points.
IN THE PIPELINE
CNOOC Finance 2013 expected Aa3/AA-, announced a USD
benchmark SEC registered four-part notes offering due 2016,
2018, 2023, and 2043.
The notes contain a guarantor by CNOOC Limited. BOC, BofAML,
CICC, Citi, CS, GS JPM, UBS are the joint bookrunners, CCB,
ICBC, Scotia, SG as co managers. The use of proceeds is to repay
outstanding debt. The total offering size is expected to be no
more than USD4bn.
U.S. Treasuries……….
U.S. Treasury outlook…
U.S. corporate bonds….
U.S. agencies………..
U.S. mortgage-backeds…
U.S. asset-backeds……
U.S. municipal bonds…
(Reporting By Shankar Ramakrishnan; Editing by Ciara Linnane)
