UnitedHealth prices for acquisition, joins PNC, CSX, Goldman Sachs; financial paper firms

By Aleesia Forni and Andrea Heisinger

New York, Oct. 17 - The high-grade primary market jumped back to life on Wednesday with sizeable deals from UnitedHealth Group Inc. and PNC Bank NA, among others.

UnitedHealth sold $2.5 billion in four maturities to help pay for its acquisition of a Brazilian health care company. All of the tranches were priced tight to talk.

"They all came in about 20 bps from whispers," a syndicate source said, referring to the initial guidance. The revised talk was about 15 bps tighter than what was whispered.

PNC Bank priced $1 billion of 10-year subordinated notes, also tight to guidance.

There was an $800 million sale of notes due 2044 by CSX Corp.

Owens Corning was in the market with a $600 million crossover trade of 10-year senior notes. The sale was a "total blowout" and was upsized from $500 million, according to a trader.

Goldman Sachs Group Inc. returned to the preferred stock market after an absence of several years with a $750 million sale of noncumulative perpetual shares.

A day after the Province of British Columbia priced $1.25 billion of 10-year global notes, the Province of Ontario announced a sale of five-year notes. The benchmark sized offering is expected to price on Thursday.

Sweden's Kommuninvest i Sverige priced $1.75 billion of five-year notes privately.

Banking names are continuing to tap the bond market on the improved investor sentiment following mostly positive third-quarter earnings announcements from Citigroup Inc. and Goldman Sachs. Bank of America Corp. also gave Q3 numbers, which were better than expected.

There was also good news out of the euro zone as Spain retained its investment-grade ratings ahead of a two-day summit of European Union countries that begins on Thursday.

"I'm thinking we'll see a couple [of deals], but nothing like today," a market source said. "[There was a] ton of investor demand today."

The Markit CDX Series 18 North American Investment Grade index tightened 2 bps to a spread of 90 bps on Thursday.

A trader quoted the PNC 10-year notes at 86 bps bid near the end of the session, while the notes from Owens Corning firmed 13 bps in the secondary.

In other trading, bank and financial names were generally better on the day by 5 bps to 10 bps, another trader commented.

Monday's issuance from JPMorgan Chase & Co. was seen trading at 75 bps bid, 77 bps offered, 3 bps wider compared to Tuesday's levels.

The notes priced at a spread of Treasuries plus 77 bps.

JPMorgan's existing bonds due 2019 were 19 bps tighter from Monday's levels, while bonds from Bank of Nova Scotia and Merrill Lynch also firmed in trading.

Investment-grade bank and brokerage credit default swaps costs declined on Wednesday.

Bank of America's CDS costs tightened 11 bps to 132 bps bid, 137 bps offered. Citi's CDS costs were 12 bps tighter at 132 bps bid, 137 bps offered. J.P. Morgan's CDS costs declined 4 bps to 98 bps bid, 103 bps offered. Wells Fargo's CDS costs were 1 bps tighter at 76 bps bid, 81 bps offered.

Merrill Lynch's CDS costs were 7 bps tighter at 133 bps bid, 143 bps offered. Morgan Stanley's CDS costs declined 14 bps to 188 bps bid, 198 bps offered. Goldman Sachs' CDS costs rose 7 bps to 153 bps bid, 163 bps offered.

UnitedHealth's $2.5 billion

UnitedHealth Group was in the bond market with a $2.5 billion sale of senior notes (A3/A/A-) in four maturities to help pay for the acquisition of Brazil's Amil Participacoes SA, a market source told Prospect News.

There was $625 million of 0.85% three-year notes sold at a spread of Treasuries plus 45 bps. Guidance was in the 50 bps area with the tranche selling at the tight end of that.

A $625 million tranche of 1.4% five-year notes priced at 65 bps over Treasuries. Price talk was in the 70 bps area and the notes were sold at the low end of that.

A $625 million tranche of 2.75%10-year notes was sold at a spread of Treasuries plus 95 bps. The notes sold at the low end of guidance in the 100 bps area.

Finally, there was $625 million of 3.95% 30-year bonds priced at a spread of Treasuries plus 110 bps. The bonds were priced at the tight end of guidance in the 115 bps area.

Bookrunners were Bank of America Merrill Lynch, Goldman Sachs & Co. J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC.

Proceeds are being used to pay a portion of the acquisition price for Amil, along with related fees and expenses, and the possible refinancing of Amil's debt. Any remainder will be used for general corporate purposes.

UnitedHealth was last in the bond market with a $1 billion trade of notes in two tranches on March 5. A 2.875% 10-year note was priced at 95 basis points over Treasuries, while a 4.375% 30-year bond sold at 125 bps over Treasuries.

The diversified health and well-being company is based in Minnetonka, Minn.

PNC prices tight

PNC Bank priced $1 billion of 2.7% 10-year subordinated notes at a spread of Treasuries plus 90 bps, an informed source said.

A trader quoted the notes at 86 bps bid near the end of the session.

The notes (A3/A-/A) were sold at the tight end of talk in the 95 bps area. There was about $3.25 billion in investor demand on the books as of mid-afternoon, a source said.

Bookrunners were Bank of America Merrill Lynch, Citigroup Global Markets Inc., Morgan Stanley & Co. LLC and PNC Capital Markets LLC.

The subsidiary of PNC Financial Services Group is based in Pittsburgh.

CSX sells long bonds

CSX sold $800 million of 4.1% senior notes due 2044 (Baa2/BBB/) at spread of Treasuries plus 115 bps, a syndicate source said.

Citigroup Global Markets Inc., Credit Suisse Securities LLC and Morgan Stanley & Co. LLC were active bookrunners.

Proceeds are being used for general corporate purposes including debt repayment of 5.75% notes due March of 2013.

CSX was last in the bond market with a $300 million sale of 4.4% bonds due 2043 priced at 133 basis points over Treasuries on February 23.

The transportation company is based in Jacksonville, Fla.

Owens Corning's crossover

Owens Corning priced $600 million of 4.2% 10-year senior notes (Ba1/BBB-/BBB-) to yield 240 bps over Treasuries, according to a market source and FWP with the Securities and Exchange Commission.

The notes traded at 227 bps bid, 222 bps offered late in the day.

A trader said that the notes were initially talked in the 300 bps area and later in the 250 bps area. The size of the deal was increased slightly from $500 million.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC were bookrunners.

Proceeds are being used to purchase outstanding debt tendered for in an offer on October 17, to repay outstanding borrowings under an $800 million revolving credit facility and for general corporate purposes.

Owens Corning was last in the bond market with a $350 million offering of 9% 10-year notes priced on June 3, 2009 to yield 9.25%.

The glass fiber technology and maker of composite and building materials is based in Toledo, Ohio.

Goldman's preferreds

Goldman Sachs Group brought $750 million of 5.95% series I noncumulative perpetual preferreds, a market source said.

The deal was initially slated to be $250 million.

The preferreds (Ba2/BB+/BB+) will be issued as depositary shares representing a 1/1,000th interest.

Paper was trading at par in the gray market as of midday, a trader said.

After the bell, a trader said the deal had seen "a lot of demand," adding that it was "very institutional."

He quoted the issue at $25.03 bid, $25.10 offered.

Another market source saw the preferreds at $25.08 bid, $25.13 offered.

The investment bank has applied to list the new securities on the New York Stock Exchange under the ticker symbol "GSPI."

Goldman Sachs & Co. was bookrunner.

Proceeds will be used to provide additional funds for operations and for general corporate purposes.

Goldman Sachs is based in New York.

Kommuninvest's notes

Kommuninvest i Sverige priced $1.75 billion of five-year notes (Aaa/AAA/) under Rule 144A and Regulation S, a market source said.

Pricing was at a spread of mid-swaps plus 25 bps, which was tighter than guidance in the mid-swaps plus 27 bps area.

Full terms of the trade were not available at press time.

Bookrunners were Bank of America Merrill Lynch, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and RBS Securities Inc.

Kommuninvest offers funding to municipalities of Sweden and is based in Orebro.

Ontario preps five-years

The Province of Ontario is planning a benchmark sized sale of five-year notes (Aa2/AA-/), a market source said.

The sale is expected to go overnight and price on Thursday, the source said.

Bookrunners are Barclays, Citigroup Global Markets Inc., CIBC World Markets Corp. and Morgan Stanley & Co. LLC.

J.P. Morgan tighter

The secondary saw the $3 billion 6.3% issue from JPMorgan due 2019 trade at 56 bps bid near the day's close.

The notes were quoted at 75 bps bid on Monday.

J.P. Morgan priced the 10-year bonds on April 16, 2009 at 305 bps over Treasuries.

19 bps from Monday's levels.

Nova Scotia firms

Also in the secondary, Bank of Nova Scotia's 1.85% notes due 2015 tightened 8 bps from Monday's levels to 19 bps bid, according to a market source.

The bank priced the $1 billion issue at 147 bps over Treasuries in January.

Merrill Lynch tightens

Merrill Lynch's 6.875% notes due 2018 were seen trading at 195 bps bid, compared to Monday's levels of 218 bps bid.

On April 22, 2008, the bank priced $5.5 billion ten-year notes at 320 bps over Treasuries.

Paul A. Harris and Stephanie N. Rotondo contributed to this review

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