Scotiabank, Southern, Mitsubishi price ahead of Fed minutes; new issues firm amidst market rally

By Aleesia Forni and Andrea Heisinger

New York, July 10 - The Bank of Nova Scotia, Southern Power Co. and Mitsubishi Corp. accessed the high-grade bond market on Wednesday as issuance turned more measured ahead of the release of Federal Reserve meeting minutes.

Scotiabank tapped the market for $2 billion of three-year senior notes in two tranches.

Southern Power brought $300 million of 30-year bonds in its first sale since November of 2011. The trade was upsized from $250 million.

Japan's Mitsubishi sold $500 million of five-year medium-term notes by late morning.

There was also a $600 million sale of three-year floating-rate notes from Bank Nederlandse Gemeenten NV.

The Federal Open Market Committee of the Fed released minutes from its last meeting in June. All of the day's sales were "basically done" ahead of the announcement, a source close to the Mitsubishi sale said.

Corporate issuance for the week sits at about $12.4 billion. There's still the possibility of "a couple of small, non-major" sales for Thursday, the source added.

"People were trying to get in ahead of any tone shift," a market source said late Wednesday.

The Markit CDX North American Investment Grade index was 1 basis point wider at a spread of 82 bps on Wednesday.

"All eyes on the Fed today," one secondary market source said late during the session, "and now [we are] waiting to hear Bernanke speak."

The source added that trading early during the session was muted, though the secondary market did see a rally Wednesday afternoon.

Meanwhile, the new issue from Southern Power was quoted 8 bps better, while both the fixed- and floating-rate tranches of notes from Bank of Nova Scotia also tightened on the day.

Scotiabank's $2 billion

The Bank of Nova Scotia was in the day's session with a $2 billion sale of three-year senior notes (Aa2/A+/AA-) in two parts, a market source said.

A $1 billion tranche of three-year floating-rate notes sold at par to yield Libor plus 52 bps.

A trader quoted the notes at 49 bps bid, 44 bps offered.

The second part was $1 billion of 1.375% three-year bonds priced at a spread of Treasuries plus 72 bps. Guidance was in the 75 bps area.

The notes were quoted at 69 bps bid, 66 bps offered late during the session.

Active bookrunners were BofA Merrill Lynch and Scotia Capital (USA) Inc. Passives were Barclays, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC.

Proceeds are being added to the company's general funds and used for general purposes.

Scotiabank, a financial services company based in Halifax, Nova Scotia, was last in the U.S. bond market with a $1.25 billion offering of 1.45% five-year notes priced at 80 bps over Treasuries on April 18.

Southern sells bonds

Southern Power sold an upsized $300 million of 5.25% 30-year senior notes (Baa1/BBB+/BBB+) Wednesday at a spread of Treasuries plus 160 bps, according to an FWP with the Securities and Exchange Commission.

A source saw the notes at 152 bps bid, 149 bps offered near the end of the session.

The size was increased from $250 million.

Bookrunners were Goldman Sachs & Co., Mizuho Securities USA Inc. and RBS Securities Inc.

Proceeds are being used to repay a portion of outstanding short-term debt and for general corporate purposes including a continuous construction program.

The Atlanta-based holding company for utility subsidiaries in the South last tapped the U.S. bond market in a $275 million reopening of 5.15% bonds due 2041 on Nov. 10, 2011.

Mitsubishi's five-years

Mitsubishi priced $500 million of 2.875% five-year medium-term notes (A1/A+/) to yield Treasuries plus 150 basis points, an informed source said.

Bookrunners were Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC.

The Tokyo-based trading company was last in the U.S. bond market with a $750 million offering of 1.875% five-year notes priced at 135 bps over Treasuries on July 9, 2012.

BNG sells floaters

Bank Nederlandse Gemeenten priced $600 million of three-year floating-rate notes (Aaa/AAA/AAA) at par to yield Libor plus 17 bps, a market source said.

The notes were sold under Rule 144A and Regulation S.

Bookrunners were Citigroup Global Markets Inc. and TD Securities (USA) LLC.

The local government funding agency is based in The Hague, The Netherlands.

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