Primary packed with Societe Generale, Kellogg, Hershey, Ontario deals; new deals firm

By Andrea Heisinger and Cristal Cody

New York, Dec. 8 - Societe Generale, Kellogg Co., Hershey Co., Church & Dwight Co., Inc., Province of Ontario, Cardinal Health, Inc., Healthcare Realty Trust Inc., Caterpillar Financial Services Corp. and Stone St. Trust were among the names crowding the high-grade market on Wednesday.

The largest sale was from France's Societe Generale. The financial priced $2 billion in three parts after a tranche of floating-rate notes was added.

Cereal and snack maker Kellogg sold $1 billion of 10-year notes at the tight end of guidance.

An upsized deal came from Cardinal Health with its $500 million of 10-year notes. The size was increased from $350 million.

Also upsizing was Healthcare Realty Trust. The real estate investment trust priced $400 million of 10-year notes after the size was increased from $300 million.

Chocolate and candy maker Hershey priced $350 million of 10-year notes.

Church & Dwight - a consumer products maker - priced $250 million of five-year notes.

A Rule 144A sale came from Stone St. Trust with its $500 million of five-year notes.

Caterpillar Financial Services priced $250 million of short-dated floating-rate notes.

On the sovereign side was a deal from the Province of Ontario with its $1.25 billion seven-year global bonds that priced in line with talk.

Secondary market spreads were a half point weaker on the plunge in Treasuries, though high-grade bonds were trading tighter, a source said.

The Markit CDX Series 14 North American investment-grade index was 1 basis point tighter on Wednesday at a spread of 89 bps, according to Markit Group Ltd.

"Investment-grade land is probably 2 to 4 basis points better," a source said.

Hershey and Kellogg's offerings firmed in secondary trading, while the Kraft Foods Inc.'s paper and the food sector overall was stronger, sources said.

"It's positive. Kraft paper is 1 basis point better and food is probably 2 basis points better," a trader said.

Northfield, Ill.-based Kraft's 6.125% notes due 2018 firmed 3 bps to 48 bps over Treasuries on Wednesday, a source said.

Overall investment-grade Trace volume fell 5% to less than $14 billion, a market source said.

Treasuries continued losses a second day on Wednesday, sending the 10-year benchmark note yield to 3.27% from 3.14%. The 30-year bond yield jumped to 4.45% from 4.37%.

Treasury yields began rising on Tuesday on potential tax extensions and continued bond purchases by the Federal Reserve.

Tone takes dive

The tone of the day was down despite the successful pricing of so many deals, a syndicate source said.

"Rates were off today," the source said. "The belly was hit hardest with the poor 10-year [Treasury note] auction."

That left a damper on the market that otherwise saw good volume and most of the deals price in line or at the tight end of guidance.

The momentum changed over the past few days for the worse, the source said.

Because of that there could be little to no issuance for the rest of the week.

"There are a few on deck, but it's just not a good tone," the source said. "It's not a good time to issue."

Societe Generale prices

Societe Generale priced $2 billion of notes in three parts late in the day, a source who worked on the trade said.

There was about $3.6 billion in total demand on the books, he said. About $1.9 billion of that was in the fixed three-year tranche and $1.7 billion in the five-year notes.

"It was a strong book," he said.

The $250 million tranche of three-year floating-rate notes was priced at par to yield three-month Libor plus 132 bps. They priced in line with guidance in the Libor plus 130 bps to 135 bps range.

The floating-rate notes were added on reverse inquiry, the informed source said.

The $1 billion tranche of 2.5% three-year notes sold at a spread of Treasuries plus 158 bps. They sold at the tight end of guidance in the 160 bps area.

A final tranche was $750 million of 3.5% five-year notes priced at Treasuries plus 175 bps. This was in line with talk in the 175 bps area.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Morgan Stanley & Co. Inc. and Societe Generale were the bookrunners.

The deal was done under Rule 144A.

The financial services company is based in Paris.

Kellogg's $1 billion deal

Kellogg sold $1 billion of 4% 10-year notes (A3/BBB+) at a spread of Treasuries plus 88 bps, according to a source away from the sale.

This was at the tight end of guidance in the 90 bps area, the source said.

Barclays Capital Inc., Deutsche Bank and J.P. Morgan Securities LLC were the bookrunners.

Proceeds will be used for general corporate purposes, including voluntary pension contributions and repayment of commercial paper issued to fund share repurchases.

Kellogg firmed in secondary trading to 86 bps bid, 84 bps offered, a trader said. The notes were seen on another desk at 86 bps bid.

"Those just came at 4 o'clock," one trader said.

The breakfast cereal and snack company is based in Battle Creek, Mich.

Cardinal upsizes

Cardinal Health sold an upsized $500 million of 4.625% 10-year senior notes (Baa3/BBB+/BBB+) at a spread of 145 bps over Treasuries, an informed source said.

The deal size had increased from $350 million. Pricing was at the tight end of talk in the 150 bps area, a source said.

Bookrunners were Barclays Capital, Deutsche Bank and UBS Securities LLC.

Proceeds will be used for general corporate purposes, including debt repayment.

Cardinal Health's notes were stronger in the secondary market and first firmed to 142 bps bid, 140 bps offered, one source said.

"They're trading at 141, 139," another source said.

The global health care solutions company is based in Dublin, Ohio.

Hershey sells 10-year

Hershey priced $350 million of 4.125% 10-year notes (A2/A) to yield Treasuries plus 88 bps, said a source away from the sale.

Bookrunners were Bank of America Merrill Lynch, UBS Securities and JPMorgan.

Proceeds are going to purchase $150 million of 6.95% notes due 2012, to pay related fees and expenses and to fund general corporate purposes.

Hershey was quoted trading tighter early Wednesday afternoon at 85 bps bid and later at 84 bps bid, 83 bps offered in the secondary market.

Late afternoon, the notes were slightly stronger in the secondary.

"They're now trading at 83, 81," a trader said.

The chocolate and candy company is based in Hershey, Pa.

Healthcare Realty taps market

Healthcare Realty Trust priced an upsized $400 million of 5.75% 10-year notes (Baa3/BBB-/BBB-) at a spread of Treasuries plus 262.5 bps, an informed source said late in the day.

The notes were sold in line with guidance in the 262.5 bps area, the source said. The deal size was increased from $300 million.

Barclays Capital and UBS Securities were the active bookrunners.

Proceeds will be used to repay borrowings under an unsecured credit facility, to repay notes due 2011 at maturity and for general corporate purposes.

The real estate investment trust for outpatient health care services is based in Nashville, Tenn.

Church & Dwight prices

Household, personal care and specialty products maker Church & Dwight priced $250 million of 3.35% five-year senior notes (Baa3/BBB-) at a spread of Treasuries plus 150 bps, a syndicate source said.

Bookrunners were Bank of America Merrill Lynch and Deutsche Bank.

Proceeds will be used to redeem $250 million of 6% senior subordinated notes due 2012, with any remainder for general corporate purposes.

A small portion of the notes was seen trading in the Street at 150 bps bid, 140 bps offered, a source said.

The issuer is based in Princeton, N.J.

Ontario offers $1.25 billion

The Province of Ontario sold $1.25 billion of 3.15% seven-year global bonds (Aa1/AA-) to yield Treasuries plus 57.5 bps, according to a filing with the Securities and Exchange Commission.

The bonds were talked at mid-swaps plus 41 bps.

Bank of America Merrill Lynch, CIBC, TD Securities and UBS Securities were the bookrunners.

Stone St. issues $500 million

Stone St. Trust priced $500 million of five-year notes later in the day at par to yield 5.902%, a market source said.

The notes (A3/A-) have a spread at Treasuries plus 405 bps. The deal was done under Rule 144A.

Bank of America Merrill Lynch and Citigroup were the bookrunners.

The arm of financial services company Stone Street is based in Bethesda, Md.

Caterpillar sells MTNs

Caterpillar Financial Services sold $250 million of floating-rate medium-term notes due 2012 (A2/A/A) at par to yield three-month Libor plus 18 bps, according to an FWP filing with the SEC.

Citigroup was the agent.

The retail financing arm of heavy equipment maker Caterpillar is based in Nashville, Tenn.

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