Goldman meets blowout demand; Cisco issues $7 billion; financial paper flat; Home Depot firms

By Aleesia Forni and Cristal Cody

New York, Feb. 22 – A hodgepodge of issuers stormed Monday’s primary, bringing $18 billion of new investment-grade issuance to market.

Goldman Sachs Group Inc.’s $3.6 billion three-part issue was a highlight of the session.

The new issue was swamped with orders, with the book reaching more than $13 billion, or around 3.7 times oversubscribed.

Tranches of the bond were between 13 basis points and 17 bps inside initial price thoughts.

The new deal comes on the heels of the $675 million issue of 6.3% preferred stock the financial giant sold on Feb. 16.

One market source noted that the overwhelming success of Goldman’s deal might “sort of push others” in the financial sector to bring bonds to market in the coming sessions.

Elsewhere on Monday, Cisco Systems Inc. sold a $7 billion offering of notes in six parts, all at the tightest side of guidance.

The primary also saw new deals from companies including Caterpillar Financial Services Corp., UnitedHealth Group Inc., Express Scripts Holding Co. and Roche Holdings Inc.

“It was a banner day,” one market source said of the deluge of new deals meeting a solid reception.

In only one session, the primary is already more than halfway toward what was expected to be around a $30 billion week.

High-grade credit spreads opened the session 2 bps tighter and continued to improve another 3 bps over the day. The Markit CDX North American Investment Grade index ended 5 bps tighter at a spread of 113 bps.

Investment-grade corporate bonds were mostly flat in secondary trading on Monday.

Goldman Sachs’ existing paper was mostly unchanged.

Morgan Stanley’s 3.875% senior notes due 2026 were flat.

Citigroup Inc.’s 3.7% subordinated notes due 2026 were stable over the session.

Home Depot Inc.’s notes (A2/A/A) traded flat to 1 bp tighter on Monday.

AT&T Inc.’s notes (Baa1/BBB+/A-) were unchanged in the secondary market.

Cisco sells $7 billion

In Monday’s largest offering, Cisco Systems sold $7 billion of senior notes (A1/AA-) in six tranches, according to an informed source.

The sale included a $1.25 billion 1.4% tranche of two-year notes sold at Treasuries plus 65 bps.

A $1 billion tranche of two-year floaters sold at par to yield Libor plus 60 bps.

And $1 billion of 1.6% three-year notes priced with a spread of Treasuries plus 70 bps.

The company also issued $2.5 billion of 2.2% five-year notes at 100 bps over Treasuries and $500 million of 2.6% seven-year notes at Treasuries plus 110 bps.

A $750 million tranche of 2.95% 10-year notes priced at 120 bps over Treasuries.

All tranches of the sale sold at the tightest side of guidance.

The joint bookrunners are BofA Merrill Lynch, Barclays, J.P. Morgan Securities LLC, Wells Fargo Securities LLC, BNP Paribas Securities Corp. and HSBC Securities.

Proceeds will be used for general corporate purposes.

Based in San Jose, Calif., Cisco produces internet protocol-based networking and other communications and information technology products.

Goldman new issue

Goldman Sachs Group sold $3.6 billion of senior notes (A3/BBB+/A) in three parts on Monday, according to an informed source.

A $1.25 billion 2.875% tranche of five-year notes sold at 99.834 to yield 2.911%, or Treasuries plus 168 bps.

The notes sold at the tight end of guidance set in the 170 bps area over Treasuries and inside initial price thoughts set in the Treasuries plus 180 bps to 185 bps range.

There was $600 million of five-year floating-rate notes priced at par to yield Libor plus 177 bps. Talk was at the Libor equivalent to the fixed-rate tranche.

Finally, a $1.75 billion tranche of 3.75% 10-year notes sold at 203 bps over Treasuries. Pricing was at 99.769 to yield 3.778%.

Guidance was in the Treasuries plus 205 bps area after having tightened from talk in the 220 bps area over Treasuries.

Goldman Sachs & Co. is the bookrunner.

The financial services company is based in New York City.

UnitedHealth prices

And UnitedHealth Group priced $2.5 billion of senior notes (A3/A+/A) in three tranches during Monday’s session, a market source said.

There was $750 million of 1.7% three-year notes sold at 99.963 to yield 1.713%, or Treasuries plus 80 bps.

Also, $750 million of 2.125% five-year notes sold at 99.695 to yield 2.189%. The notes sold with a spread of Treasuries plus 95 bps.

Finally, $1 billion of 3.1% 10-year notes sold at 99.921 to yield 3.109%, or 135 bps over Treasuries.

Bookrunners were Wells Fargo, Barclays, Goldman Sachs, Mizuho Securities and U.S. Bancorp Investments Inc.

The Minnetonka, Minn.-based diversified health company plans to use the proceeds from the offering to finance its acquisition of Catamaran Corp.

Express Scripts prices tight

Also on Monday, Express Scripts Holding sold $2 billion of senior notes (Baa2/BBB+/BBB) in two tranches, according to an FWP filed with the Securities and Exchange Commission.

The company sold $500 million of 3.3% five-year notes sold at Treasuries plus 210 bps. Pricing was at 99.79 to yield 3.346%.

Guidance was in the 215 bps area over Treasuries after being tightened from the 240 bps area.

Also, $1.5 billion of 4.5% 10-year bonds priced at 99.467 to yield 4.567%, or 280 bps over Treasuries.

The notes were talked in the area of 295 bps over Treasuries, which was tightened from the 295 bps area.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, JPMorgan and BofA Merrill Lynch are the joint bookrunners.

Proceeds will be used to fund a tender offer, to fund the repurchase of common stock and for general corporate purposes.

Express Scripts is a St. Louis-based pharmacy benefit management provider.

Roche 10-years

Roche Holdings sold $1 billion of 2.625% 10-year senior notes on Monday at Treasuries plus 98 bps, a market source said.

The notes (A1/AA) sold via Rule 144A and Regulation S at 99.004 to yield 2.737%.

Pricing was at the tightest side of guidance set in the Treasuries plus 100 bps area.

Bookrunners were Citigroup, MUFG and Credit Suisse.

Proceeds will be used for general corporate purposes.

Caterpillar two-parter

The primary also hosted Caterpillar Financial Services, which sold $750 million of senior notes (A2/A/A) in fixed- and floating-rate tranches due 2018, according to two separate FWP filings with the Securities and Exchange Commission.

A $450 million tranche of 1.5% notes sold at 99.977 to yield 1.512%. The issue sold at Treasuries plus 75 bps.

The notes came inside initial price thoughts set in the 90 bps area over Treasuries.

And $300 million of floating-rate notes sold at par to yield Libor plus 70 bps. The tranche was talked at the Libor equivalent to the fixed-rate tranche.

Bookrunners were BofA Merrill Lynch, Citigroup and Societe Generale.

The funding arm of heavy equipment maker Caterpillar is based in Nashville.

Magellan upsizes

In other primary happenings on Monday, Magellan Midstream Partners, LP sold an upsized $650 million issue of 5% 10-year senior notes (Baa1/BBB+) at Treasuries plus 325 bps, at the tightest side of guidance and nearly 40 bps inside initial price thoughts.

The notes sold at 99.875 to yield 5.016%, according to a market source and an FWP filed with the SEC.

The deal was upsized from $500 million.

Barclays, U.S. Bancorp Investments Inc., Wells Fargo, PNC Capital Markets LLC and SMBC Nikko Securities America, Inc. are the bookrunners.

Proceeds will be used for general partnership purposes and to repay borrowings outstanding under the company’s revolving credit facility and commercial paper program.

The energy transportation, storage and distribution company is based in Tulsa, Okla.

Paccar three-, five-year notes

Paccar Financial Corp., meantime, sold on Monday $500 million of three- and five-year notes (A1/A+), according to a market source.

The issuer brought to market $250 million of 1.65% three-year notes with a 78 bps spread over Treasuries. Pricing came at the tightest side of guidance set in the Treasuries plus 80 bps area.

And $250 million 2.25% five-year notes sold at 103 bps over Treasuries.

The notes were talked in the 105 bps area over Treasuries.

Bookrunners were BofA Merrill Lync, Citigroup, MUFG and TD Securities.

Paccar Financial is the Bellevue, Wash.-based financing arm of Paccar Inc.

Goldman steady

Goldman’s 4.25% subordinated notes due 2025 were unchanged in the secondary market at 278 bps bid, according to a market source.

Goldman sold $2 billion of the notes (Baa2/BBB+/A-) on Oct. 16 at a spread of 230 bps plus Treasuries.

The financial services company is based in New York City.

Morgan Stanley flat

Morgan Stanley’s 3.875% notes due 2026 headed out on Monday unchanged at 195 bps bid, a source said.

Morgan Stanley sold $3 billion of the notes (A3/BBB+/A) on Jan. 22 at 185 bps plus Treasuries.

The financial services company is based in New York City.

Citigroup stable

Citigroup’s 3.7% notes due 2026 traded flat in the secondary market at 180 bps bid, a market source said.

Citigroup sold $2 billion of the notes (Baa1/BBB+/A) on Jan. 5 at a spread of Treasuries plus 148 bps.

The financial services company is based in New York.

Home Depot improves

Home Depot’s 4.25% notes due 2046 tightened 1 bp on Monday to 145 bps bid, according to a market source.

The bonds priced in a $350 million tranche on Feb. 3 at Treasuries plus 150 bps.

Home Depot is an Atlanta-based home improvement retailer.

AT&T unchanged

AT&T’s 4.125% notes due 2026 were unchanged from Friday at 212 bps bid, a source said.

The company sold $1.75 billion of the notes (Baa1/BBB+/A-) on Jan. 29 at 220 bps plus Treasuries.

AT&T is a Dallas-based telecommunications company.

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