Deutsche Bank sells tier 2 notes; Bank of America, Goldman tighten; energy bonds improve

By Aleesia Forni and Cristal Cody

Virginia Beach, March 27 – Deutsche Bank AG sold Friday’s lone new issue, pricing a $1.5 billion offering of subordinated tier 2 notes.

The deal attracted $3.75 billion of orders and priced around 10 basis points tight of initial price talk.

Despite weaker-than-expected U.S. economic data and ongoing market fatigue, the investment-grade market’s total supply reached $28 billion this week, bringing March’s total new issuance to more than $161 billion.

Meanwhile, Lipper reported inflows of $1.21 billion into corporate high-grade bond funds for the week ended March 25.

The total was down from last week’s inflows of $1.732 million, bringing the year-to-date total inflows to $24.635 billion.

Investment-grade bonds were mostly better on the day, while credit spreads headed out unchanged to modestly softer, sources said.

Bank of America Corp.’s 4% notes due 2025 were quoted 8 bps better in afternoon trading.

Goldman Sachs Group Inc.’s 3.5% senior notes due 2025 tightened 7 bps.

JPMorgan Chase & Co.’s 3.125% notes due 2025 firmed 4 bps.

Exxon Mobil Corp.’s senior notes (Aaa/AAA/) brought earlier in the month traded flat to 2 bps tighter.

Southwestern Energy Co.’s 4.95% senior notes due 2025 firmed 2 bps.

The Markit CDX North American Investment Grade series 23 index was unchanged at a spread of 64 bps.

U.S. and European investment-grade spreads have widened in March, Barclays Bank plc analysts said in a note on Friday.

European investment-grade spreads are 13 bps wider “despite the positive demand technicals and better fundamental backdrop,” the analysts said. “While this is surprising, it must be taken in the context of 35 bps of spread tightening in the prior twelve months. U.S. investment-grade spreads have outperformed, as they widened only 7 bps.”

Deutsche Bank tier 2 notes

Deutsche Bank sold on Friday a $1.5 billion offering of 4.5% 10-year subordinated tier 2 notes (Ba1/BBB-/A-) with a spread of 260 bps over Treasuries, according to an informed source and an FWP filed with the Securities and Exchange Commission.

Pricing was at 99.61 to yield 4.549%.

The notes sold on top of guidance, which had firmed from initial talk in the 270 bps area over Treasuries.

Deutsche Bank Securities Inc. was the bookrunner.

Proceeds will be used for general corporate purposes and to further strengthen the Frankfurt-based bank’s regulatory capital base.

Bank of America tight

Bank of America’s 4% notes due 2025 tightened 8 bps to 197 bps bid on Friday, a market source said.

The company sold $2.5 billion of the notes (Baa2/A-/A) on Jan. 16 at Treasuries plus 225 bps.

The financial services company is based in Charlotte, N.C.

Goldman stronger

Goldman Sachs’ 3.5% notes due 2025 firmed 7 bps to 138 bps bid in the secondary market, according to a source.

Goldman sold $1.7 billion of the notes (Baa1/A-/A) on Jan. 20 at 170 bps over Treasuries.

The financial services company is based in New York City.

JPMorgan firms

JPMorgan Chase’s 3.125% notes due 2025 firmed 4 bps in secondary trading to 123 bps bid, a source said.

JPMorgan sold $2.5 billion of the notes (A3/A/A+) on Jan. 16 at Treasuries plus 145 bps.

The financial services company is based in New York City.

Exxon Mobil flat to better

Exxon Mobil’s 1.912% notes due 2020 firmed 2 bps during the session to 34 bps bid, a market source said.

The company sold $1.15 billion of the notes on March 3 at Treasuries plus 30 bps.

Exxon Mobil’s 2.709% notes due 2025 were unchanged at 70 bps bid after widening earlier in the week, the source said.

Exxon Mobil priced $1.75 billion of the 10-year notes at Treasuries plus 58 bps in the March 3 offering.

The oil and gas company is based in Irving, Texas.

Southwestern Energy mixed

Southwestern Energy’s 4.95% notes due 2025 firmed 2 bps to 282 bps bid on Friday, according to a market source.

Southwestern Energy sold $1 billion of the notes (Baa3/BBB-/) on Jan. 20 at Treasuries plus 318 bps.

The independent natural gas and oil company is based in Houston.

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