FedEx, Constellation sell notes; Mid-American upsizes; Kommunalbanken in deal pipeline

By Cristal Cody

Tupelo, Miss., Jan. 29 – High-grade issuers including Constellation Brands, Inc., FedEx Corp. and MidAmerican Energy Co. stopped by the primary market on Monday.

Constellation Brands priced a three-part offering of notes in a $1.9 billion deal.

FedEx tapped the primary market with $1.5 billion of notes in two tranches.

MidAmerican Energy priced long 30-year green first mortgage bonds in an offering that was upsized to $700 million from $500 million.

Coming up on Tuesday, Kommunalbanken AS is expected to price a Rule 144A and Regulation S offering of three-year notes.

With many companies still in earnings blackout periods, supply is expected to stay light following less than $10 billion of corporate issuance in the previous week, according to market sources.

About $20 billion of supply is forecast by syndicate sources for the week.

This week is the “midpoint of this very busy earnings reporting season, which might imply a small pickup in the supply calendar,” BofA Merrill Lynch analysts said in a note released on Monday. “However, the January FOMC meeting will conclude next Wednesday, which could also slow the pace of new issue supply a bit.”

The Markit CDX North American Investment Grade 29 index softened nearly 1 basis point to close the day at a spread of 46 bps.

Constellation Brands prices

Constellation Brands priced $1.9 billion of fixed-rate senior notes (Baa3/BBB-/) in three tranches on Monday, according to a market source.

The company sold $600 million of 3.2% five-year notes at a spread of Treasuries plus 72 bps.

Constellation Brands priced $700 million of 3.6% 10-year notes with a Treasuries plus 92 bps spread.

In the final $600 million tranche, the company placed the 4.1% 30-year notes at a spread of 117 bps over Treasuries.

The tranches all priced on the tight side of guidance and better than initial talk.

BofA Merrill Lynch and J.P. Morgan Securities LLC were the bookrunners.

Proceeds will be used to redeem the company’s $600 million of 6% senior notes due 2022, with a $74.4 million make-whole premium, and for general corporate purposes.

Constellation Brands is a Victor, N.Y.-based producer, importer and distributor of beer, wine and liquor.

FedEx raises $1.5 billion

FedEx sold $1.5 billion of notes (Baa2/BBB/) in two tranches on Monday, according to a market source and an FWP filing with the Securities and Exchange Commission.

The $500 million tranche of 3.4% 10-year notes priced at 99.805 to yield 3.423%. The notes were placed at a spread of 72 bps over Treasuries, tighter than initial price talk in the 90 bps spread area.

FedEx also sold $1 billion of 4.05% 30-year notes at 99.584 to yield 4.074%, or a Treasuries plus 112 bps spread. The bonds were initially talked to price with a spread in the Treasuries plus 130 bps area.

Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., Goldman Sachs & Co., J.P. Morgan Securities and BofA Merrill Lynch were the bookrunners.

Proceeds will be used for working capital and general corporate purposes.

FedEx is a Memphis, Tenn.-based package and freight transportation company.

MidAmerican sells bonds

MidAmerican Energy sold $700 million of 3.65% long 30-year green first mortgage bonds (Aa2/A+/A+) on Monday at 99.127 to yield 3.698%, according to a market source and an FWP filing with the Securities and Exchange Commission.

The company priced the bonds at a spread of 75 bps over Treasuries, on the tight side of initial talk in the Treasuries plus 92.5 bps area.

Barclays, BNP Paribas Securities Corp., Scotia Capital (USA) Inc., U.S. Bancorp Investments Inc., Wells Fargo Securities LLC, BMO Capital Markets Corp. and SMBC Nikko Securities America, Inc. were the bookrunners.

Proceeds will be used to finance eligible green projects.

MidAmerican Energy is a utility company based in Des Moines.

Kommunalbanken plans deal

Kommunalbanken (Aaa/AAA/) plans to price a Rule 144A and Regulation S offering of senior floating-rate notes on Tuesday, according to a market source.

The notes due March 12, 2021 were initially talked to price in the Libor plus 5 bps area.

Citigroup Global Markets, J.P. Morgan Securities and TD Securities (USA) LLC are the lead managers.

The government-funded lender to municipalities is based in Oslo.

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