Alabama Power notes price; Fannie Mae on deck; Family Dollar notes ‘not very reactive’

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 20 – The slower pace of the high-grade primary market continued on Wednesday as the market focused on the release of the minutes from the Federal Reserve’s July policy meeting.

Alabama Power Co. sold the day’s lone new issue, coming to market with a $400 million offering of 30-year senior bonds.

The notes sold tighter than talk, which was set at Treasuries plus 100 bps to 115 bps.

Despite the slowdown, sources noted that demand for new issues in the investment-grade market remains solid.

The orderbook for Alabama Power’s new deal was more than three times oversubscribed.

Alabama Power’s offering brings this week’s total supply to $1.6 billion, falling short of what sources had expected would be a $5 billion week.

In other market action on Wednesday, Fannie Mae announced plans to price a three-year offering of Benchmark Notes this week.

Investment-grade credit spreads ended mostly unchanged to modestly softer with traders focused on the Federal Reserve July policy meeting minutes and others out for summer vacations, sources said.

“It’s been so quiet this week,” a trader said. “Summer quiet.”

The Markit CDX North American Investment Grade series 22 index was less than 1 basis point wider at a spread of 57 bps.

Alabama Power’s new 4.15% bonds due 2044 tightened 3 bps in aftermarket trading, a trader said.

Dollar General Corp.’s bonds continue to remain active in the secondary market following Monday’s $9.7 billion cash bid to acquire Family Dollar Stores, Inc.

Dollar Tree Inc. announced weeks earlier that it would acquire Family Dollar for $8.5 billion in cash and stock.

Family Dollar’s 5% senior notes due 2021 are “not very reactive,” a trader said. “It’s the only issue they have outstanding, and it doesn’t trade very often at all.”

Alabama Power prices tight

In the day’s sole new issue, Alabama Power priced $400 million of 4.15% senior notes due 2044, series 2014A, with a spread of Treasuries plus 98 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

Pricing came tighter than talk, which was set at Treasuries plus 100 bps to 115 bps.

The notes (A1/A/A+) sold at 99.204 to yield 4.197%.

Alabama Power’s 4.15% bonds due 2044 tightened to 95 bps bid, 92 bps offered in the secondary market, according to a trader.

BofA Merrill Lynch, Morgan Stanley & Co. LLC, SunTrust Robinson Humphrey Inc. and Wells Fargo Securities LLC were the bookrunners.

Proceeds will be used for general corporate purposes, including the company’s continuous construction program.

The electric subsidiary of Southern Co. is based in Birmingham, Ala.

Fannie Mae eyes offering

In forward calendar news, Fannie Mae said it plans to price an offering of Benchmark Notes due Sept. 27, 2017 on Thursday, according to a company news release and a market source.

The issue will settle on Aug. 25.

Barclays, Deutsche Bank Securities Inc. and Morgan Stanley are the joint lead managers.

The co-managers include CastleOak Securities LP, FTN Financial Capital Markets, J.P. Morgan & Co., Loop Capital Markets and MFR Securities, Inc.

The government-backed mortgage lender is based in Washington, D.C.

Dollar General active

Dollar General’s 4.125% senior notes due 2017 traded earlier in the day at 104 bid, 104.5 offered, a trader said.

The issue priced on June 27, 2012 in a $500 million offering at par.

Dollar General’s 1.875% senior notes due 2018 were quoted during the afternoon at 96.25 bid, 96.75 offered. Dollar General sold $400 million of the notes on April 8, 2013 at 99.886 to yield 1.899%.

The company’s 3.25% senior notes due 2023 traded going out at 89.652 bid, 90.50 offered, the trader said.

Dollar General sold $900 million of the 3.25% notes due 2023 on April 8, 2013 at 99.737 to yield 3.281%.

The discount retailer is based in Goodlettsville, Tenn.

Family Dollar trading light

Family Dollar Stores’ 5% notes due 2021 saw little to no trading on Wednesday, according to a trader.

“No trades today to speak of,” the trader said. “Yesterday, there were tons of little pieces and one big trade at 168 bps.”

Family Dollar sold $300 million of the notes on Jan. 25, 2011 at Treasuries plus 175 bps.

The discount retail company is based in Matthews, N.C.

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