Citigroup, Duke Energy price amidst 'excellent' issuance conditions; Duke firms; Citi active

By Cristal Cody and Aleesia Forni

Virginia Beach, April 1 - Citigroup Inc., Duke Energy Corp. and Union Electric Co. were among the issuers pricing deals during a solid session for the high-grade bond market on Tuesday.

The largest sale of the day came from Citigroup, which sold $2.25 billion of notes in fixed- and floating-rate tranches.

Citigroup sold both tranches of the five-year offering at the tight end of price talk.

There was $250 million of floaters priced at par to yield Libor plus 77 basis points and $2 billion of 2.55% notes priced at Treasuries plus 85 bps.

In other primary action on Tuesday, Duke Energy priced a $1 billion of senior notes in tranches due 2017 and 2024.

The issue was upsized from $750 million.

Duke sold $400 million of three-year floaters at par to yield Libor plus 38 bps and $600 million of 3.75% 10-year notes at Treasuries plus 100 bps.

Both tranches of notes were priced at the tight end of talk.

The session also saw Deutsche Bank AG, London Branch, price a $1.25 billion tap of its 2.5% notes due 2019, though details of the sale were not available at press time.

Sweden's Kommuninvest i Sverige AB came to market with a $1 billion sale of 1% three-year notes on Tuesday priced at mid-swaps plus 6 bps, according to an informed source.

Also on Tuesday, Union Electric, doing business as Ameren Missouri Co., hit the primary with $350 million of 3.5% 10-year senior notes priced at Treasuries plus 75 bps.

The notes were talked in the Treasuries plus 80 bps area.

National Rural Utilities Cooperative Finance Corp. sold a $325 million issue of floating-rate notes at par to yield Libor plus 5 bps, according to an FWP filed with the Securities and Exchange Commission.

Prospect Capital Corp. announced price talk on Tuesday for a planned 5.25-year senior notes offering at 5% to 5.25%.

The issue is expected to price this week.

The day also saw Nordic Investment Bank announce plans to price a five-year issue of senior notes.

In other market action on Tuesday, Fannie Mae announced that it would not issue Benchmark Notes on its April 1 announcement date this month.

More than $6 billion of high-grade paper priced on Tuesday, bringing the week's total supply to roughly $10.7 billion.

New issues in the investment-grade market are largely meeting strong demand, as the market's tone remains constructive.

Sources noted that Citigroup's new issue was more than two times oversubscribed, while the $1 billion deal from Duke Energy saw an order book that was roughly four times oversubscribed.

"[Market] conditions continue to be excellent right now," a market source said late Tuesday.

The source added that he expects "light activity" for the primary market in the coming weeks as companies head into corporate earnings blackouts.

Investment-grade bonds traded mostly better over the day, with new issues including Citigroup's five-year notes and Massachusetts Institute of Technology's 100-year bond active in aftermarket trading, according to sources.

The Markit CDX North American Investment Grade series 22 index tightened 1 bp to a spread of 68 bps.

Duke Energy's two tranches of notes traded 2 bps tighter in aftermarket trading, according to a trader.

Union Electric's 3.5% notes due 2024 firmed about 1 bp.

Citigroup's new notes due 2019 traded going out at 83 bps bid, 81 bps offered as the session closed, according to a trader.

MIT's new 100-year bond traded at 106 bps bid, 102 bps offered late in the day, a trader said.

Citi prices tight

Citigroup priced $2.25 billion of senior notes due 2019 in fixed- and floating-rate tranches on Tuesday, according to a market source.

The sale included $250 million of five-year floaters priced at par to yield Libor plus 77 bps.

There was also $2 billion of 2.55% five-year notes sold with a spread of Treasuries plus 85 bps.

Pricing was at 99.846 to yield 2.583%.

The notes sold at the tight end of talk.

A trader quoted the notes at 83 bps bid, 81 bps offered at the session's close.

Citigroup Global Markets Inc. was the sole bookrunner.

The financial services company is based in New York.

Duke upsizes

Duke Energy sold an upsized $1 billion issue of senior notes (A3/BBB/BBB+) in two parts on Tuesday, according to a market source and an FWP filed with the SEC.

The issue's size was increased from $750 million.

A $400 million tranche of three-year floating-rate notes sold at par to yield Libor plus 38 bps. The three-year notes were talked at Libor plus 40 bps area.

There was also $600 million of 3.75% 10-year notes that priced at 99.941 to yield 3.757%, or Treasuries plus 100 bps. The 10-year notes were talked at the Treasuries plus 105 bps area.

Duke Energy's floating-rate notes due 2017 firmed 2 bps to 36 bps bid, a trader said.

The 3.75% notes due 2024 traded better at 98 bps bid in the secondary market.

Barclays, RBC Capital Markets LLC, Scotia Capital (USA) Inc. and UBS Securities LLC were the bookrunners.

Proceeds will be used to repurchase eight series of Duke Energy Ohio Inc.'s tax exempt bonds, and remaining proceeds will be used for general corporate purposes.

The diversified energy company is based in Charlotte, N.C.

Kommuninvest new issue

Sweden's Kommuninvest priced $1 billion of 1% notes due April 11, 2017 on Tuesday at mid-swaps plus 6 bps, an informed source said.

The notes sold at 99.773 to yield 1.077%.

Citigroup Global Markets, Deutsche Bank Securities Inc., HSBC Securities and Mizuho Securities were the bookrunners.

Pricing was done under Rule 144A and Regulation S.

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

Union Electric prices

Union Electric, doing business as Ameren Missouri Co., sold $350 million of 3.5% 10-year senior notes (A2/A/A) on Tuesday with a spread of Treasuries plus 75 bps, according to a market source and an FWP filed with the SEC.

Pricing was at 99.982 to yield 3.502%.

The notes were talked to yield in the Treasuries plus 80 bps area.

Union Electric's 3.5% notes due 2024 traded slightly tighter at 74 bps bid, 72 bps offered in secondary trading, according to a trader.

Proceeds will be used to repay a portion of the company's short-term debt.

BofA Merrill Lynch, Mitsubishi UFJ Securities (USA) Inc., Morgan Stanley & Co. LLC and SunTrust Robinson Humphrey Inc. were the joint bookrunners.

The public utility holding company and unit of Ameren Corp. is based in St. Louis.

National Rural sells floaters

National Rural Utilities priced $325 million of floating-rate notes (A2/A/) at par to yield Libor plus 5 bps, according to an FWP filed with the SEC.

U.S. Bancorp Investments Inc. was the agent.

The market lender for electric cooperatives is based in Herndon, Va.

Prospect Capital sets talk

Prospect Capital set price talk for its planned offering of senior notes (/BBB/) due 2019 at 5% to 5.25%, according to a 497AD filed with the SEC.

The active bookrunners are Barclays, Goldman Sachs & Co., RBC Capital Markets and UBS Securities.

BNP Paribas Securities Corp. is a passive bookrunner, and BMO Capital Markets is the lead manager.

Proceeds will be used to repay debt under the company's credit facility.

The financial services company is based in New York City.

Nordic eyes sale

Nordic Investment Bank announced an offering of five-year notes on Tuesday, a market source said.

J.P. Morgan Securities LLC, Nomura Securities Co. Ltd., TD Securities (USA) LLC and HSBC Securities are on the books.

The financier for five Nordic countries is based in Helsinki, Finland.

Fannie Mae passes

Fannie Mae announced that it will not use its April 1 Benchmark Notes announcement date this month, according to a company news release.

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

Bank/brokerage CDS flat to lower

Investment-grade bank and brokerage CDS prices were mostly unchanged to lower, according to a market source.

Bank of America Corp.'s CDS costs were flat at 63 bps bid, 66 bps offered. Citigroup's CDS costs firmed 3 bps to 73 bps bid, 76 bps offered. JPMorgan Chase & Co.'s CDS costs eased 1 bp to 56 bps bid, 59 bps offered. Wells Fargo & Co.'s CDS costs were unchanged at 36 bps bid, 39 bps offered.

Merrill Lynch's CDS costs ended flat at 68 bps bid, 71 bps offered. Morgan Stanley's CDS costs tightened 4 bps to 82 bps bid, 85 bps offered. Goldman Sachs Group, Inc.'s CDS costs firmed 4 bps to 89 bps bid, 92 bps offered.

Paul Deckelman contributed to this review.

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