Royal Bank of Scotland sells $1.5 billion notes; credit spreads tighten; financial paper mixed

By Aleesia Forni and Cristal Cody

New York, March 30 – Royal Bank of Scotland Group plc entered Wednesday’s primary market following a dovish speech from Federal Reserve chair Janet Yellen on Tuesday.

The $1.5 billion issue of 10-year senior notes sold around 20 basis points inside initial price thoughts at a final spread of Treasuries plus 300 bps, garnering an order book that was more than two times oversubscribed.

The day’s lone deal continues what has been a mostly slow week for the high-grade primary market, with issuers keeping to the sidelines for the most part ahead of Friday’s all-important payrolls data release.

The week that will close out the month of March has hosted around $12.53 billion of new investment-grade issuance thus far. This figure is just shy of what was predicted to be around a $15 billion to $20 billion week.

Investment-grade credit spreads tightened over the session. The Markit CDX North American Investment Grade index closed 5 bps tighter at a spread of 78 bps.

In the secondary market, Goldman Sachs Group Inc.’s 3.75% senior notes due 2026 firmed 3 bps.

Mitsubishi UFJ Financial Group, Inc.’s new 3.85% senior notes due 2026 headed out flat.

Morgan Stanley’s 3.875% senior notes due 2026 eased 2 bps over the day.

RBS new issue

Royal Bank of Scotland priced a $1.5 billion issue of 4.8% 10-year senior notes during the session on Wednesday at Treasuries plus 300 bps, according to a market source and an FWP filed with the Securities and Exchange Commission.

The notes sold at 99.819 to yield 4.823%.

Pricing came on top of guidance and tighter than initial price thoughts set in the 320 bps area over Treasuries.

RBS Securities Inc. is the global coordinator, lead manager and bookrunner and is joined by BofA Merrill Lynch, Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC as joint lead managers and bookrunners.

Proceeds will be used for general corporate purposes.

The financial services company is based in Edinburgh.

Goldman improves

Goldman Sachs’ 3.75% notes due 2026 firmed 3 bps in secondary trading to 167 bps bid, a market source said.

Goldman Sachs sold $1.75 billion of the notes (A3/BBB+/A) on Feb. 22 at a spread of Treasuries plus 203 bps.

The financial services company is based in New York City.

MUFG stable

Mitsubishi UFJ Financial Group’s 3.85% notes due 2026 were unchanged on the day at 161 bps bid, according to a market source.

The company sold $2.5 billion of the notes (A1/A) on Feb. 23 at Treasuries plus 215 bps.

The financial services company is based in Tokyo.

Morgan Stanley eases

Morgan Stanley’s 3.875% notes due 2026 traded 2 bps softer on Wednesday at 166 bps bid, a market 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.

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