British Sky Broadcasting, Pentair, DCP, Airgas sell as tone holds; Pentair notes trade better

By Aleesia Forni and Andrea Heisinger

New York, Nov. 19 - There was a modest supply of high-grade bonds hitting the new issue market on Monday as spreads moved tighter and worries about the fiscal cliff and tensions in the Middle East continued.

Pentair Finance SA, British Sky Broadcasting Group plc, DCP Midstream Operating LP and Airgas, Inc. each priced bonds.

There was also a split-rated sale from DDR Corp. done off the investment-grade syndicate desk.

BSkyB priced $800 million of 10-year notes under Rule 144A and Regulation S. Pentair also priced its upsized $600 million sale in two parts privately.

DCP Midstream sold $500 million of five-year senior notes tighter than talk.

Specialty and industrial gases maker Airgas priced $250 million of 10-year bonds in line with guidance.

DDR tapped the market for $150 million in a reopening of 4.625% notes due in July of 2022.

Toyota Motor Credit Corp. sold bonds in two separate sales of floating-rate notes. The U.S. funding arm of Toyota priced $300 million of two-year floaters and $200 million of floaters due 2014.

There were a couple of sovereign issuers announcing bond sales in the U.S. market for the week.

German development bank KfW gave plans for a $1 billion sale of two-year floating-rate notes to be priced on Tuesday.

Nordic Investment Bank is preparing to sell at least $500 million of five-year global notes.

The flow of new preferred stock share sales continued as Pitney Bowes Inc. and Kennedy-Wilson Holdings Inc. announced offerings.

The shortened week is expected to have between $5 billion and $15 billion of issuance, according to syndicate sources. Equities were up on the day, and borrowing rates and yields remain at favorable levels for issuers.

"The tone was pretty decent today, so I could see more tomorrow," a market source said late in the day. "It's the only other viable day."

There was upwards of $32 billion sold in the previous week despite the market only being open for four days.

The Markit CDX Series 18 North American Investment Grade index was 5 bps tighter at a spread of 111 bps.

In secondary trading, Pentair Finance's seven-year notes were quoted 3 bps tighter late in the session.

The market also saw Friday's issuance of 30-year bonds from Viacom Inc. trade 3 bps better on Monday.

BSkyB prices tight

British Sky Broadcasting Group was in the market with an $800 million sale of 3.125% 10-year notes (Baa1/BBB+/) at a spread of Treasuries plus 157 bps, an informed source told Prospect News.

The spread came in from guidance in the 160 bps area, the source said.

Pricing was done via Rule 144A and Regulation S.

Bookrunners were Barclays and J.P. Morgan Securities LLC.

BSkyB was last in the U.S. bond market with a $600 million sale of 9.5% 10-year notes in November of 2008 that priced at Treasuries plus 587.5 bps, the informed source said.

The mass media, broadband and telecommunications company is based in London.

DCP Midstream's $500 million

DCP Midstream Operating priced $500 million of 2.5% five-year guaranteed senior notes to yield Treasuries plus 185 bps, according to a market source and press release.

The notes (Baa3/BBB-/BBB-) were priced tighter than talk in the 200 bps over Treasuries area.

J.P. Morgan Securities LLC, RBS Securities Inc. and SunTrust Robinson Humphrey Inc. were bookrunners.

Proceeds are being used to repay borrowings under a $140 million term loan and a $343.5 million term loan and for general corporate purposes.

The offering is guaranteed by DCP Midstream Partners, LP.

DCP last tapped the bond market with a $350 million sale of 10-year notes on March 8.

The unit of DCP Midstream LLC is a Denver-based joint venture between Spectra Energy and ConocoPhillips.

Airgas sells $250 million

Airgas priced $250 million of 2.9%10-year senior notes at a spread of 130 bps over Treasuries, an informed source said.

The notes (Baa2/BBB/) were sold in line with guidance in the 130 bps over Treasuries area.

Bank of America Merrill Lynch, Goldman Sachs & Co. and Wells Fargo Securities LLC were bookrunners.

Proceeds are being used for general corporate purposes, including acquisitions, to repay commercial paper debt and to repurchase shares under a common stock repurchase program.

Airgas was last in the U.S. bond market with a $250 million sale of five-year paper on May 31, 2011.

The maker of specialty and industrial gases is based in Radnor, Pa.

DDR reopens 10-years

DDR has reopened its issue of 4.625% notes due on July 15, 2022 to add $150 million, a source close to the trade said.

The notes (Baa3/BBB-/BB+) sold at a spread of Treasuries plus 185 bps.

Total issuance is $450 million, including $300 million priced on June 19 at Treasuries plus 325 bps.

Bookrunners were Citigroup Global Markets Inc., Deutsche Bank Securities Inc., RBS Securities Inc., UBS Securities LLC and Wells Fargo Securities LLC.

Proceeds are being used for general corporate purposes, including debt repayment.

The real estate investment trust for shopping centers is based in Beachwood, Ohio.

Pentair prices in two parts

Pentair Finance sold an upsized $600 million of notes (Baa2/BBB/) in two maturities, a syndicate source said.

The size was increased from $500 million. Full terms of the trade were not available at press time.

There was $350 million of three-year notes priced at a spread of 103 bps over Treasuries.

A $250 million tranche of seven-year notes sold at Treasuries plus 165 bps.

The seven-year notes were quoted at 162 bps bid, 153 bps offered near the end of the day's trading.

Full terms were unavailable at press time.

Pricing was done under Rule 144A and Regulation S.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC ran the books.

Proceeds are being used to repay commercial paper as it becomes due and for general corporate purposes.

The unit of the industrial manufacturing company Pentair Ltd. has its U.S. headquarters in Minneapolis and global in Schaffausen, Switzerland.

Toyota sells two issues

Toyota Motor Credit sold $300 million of two-year floating-rate medium-term notes, series B, (Aa3/AA-/) at par to yield Libor plus 17 basis points, according to an FWP with the Securities and Exchange Commission.

They also priced $200 million of floaters due in February of 2014 to yield Libor plus 4 bps.

RBC Capital Markets LLC and Toyota Financial Services Securities USA Corp. were agents for both sales.

The funding arm of Toyota is based in Torrance, Calif.

KfW preps floaters

KfW is preparing a $1 billion offering of two-year floating-rate notes (Aaa/AAA/AAA) with pricing expected on Tuesday, a market source said.

The floaters have guidance in the Libor plus 9 bps area, the source said.

Bookrunners are BNP Paribas Securities Corp., Deutsche Bank Securities Inc. and Goldman Sachs & Co.

The German government-owned development bank is based in Frankfurt.

NIB pricing five-years

Nordic Investment Bank is planning a benchmark size sale of five-year global notes to be priced in the coming week, a market source said.

The notes (Aaa/AAA/) have initial guidance in the mid-swaps plus 0 bps area.

Bookrunners are Bank of America Merrill Lynch, Deutsche Bank Securities Inc., HSBC Securities (USA) Inc. and Nomura Securities International Inc.

NIB was last in the U.S. bond market with a $1.25 billion sale of five-year notes on Jan. 31.

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

Preferred sales continue

There were two new issues of preferred stock announced on Monday. Each is expected to be $75 million or more in size.

Pitney Bowes is expected to price at least $75 million of $25-par senior notes due November 2022, a trader told Prospect News.

The notes are expected to be rated Baa2/BBB. Price talk is 5.25% to 5.375%.

The Stamford, Conn.-based office supply manufacturer can call the notes at par on or after November 2015 or prior to that date with a make-whole premium.

Morgan Stanley & Co. Inc. and Bank of America Merrill Lynch are bookrunners.

Proceeds will be used for general corporate purposes. The securities are expected to be listed on the New York Stock Exchange.

Plans for a sale of $25-par securities were given by Kennedy-Wilson Holdings.

The company announced it will issue a minimum of $75 million of $25-par senior notes due Dec. 1, 2042, a trader said.

Price talk is around 7.25%.

Morgan Stanley & Co. Inc. and Bank of America Merrill Lynch are bookrunners.

Proceeds will be used for general corporate purposes, including acquisitions and co-investments. The company may also use funds to repay outstanding balances under an unsecured revolving credit facility.

Kennedy-Wilson is a Beverly Hills-based real estate investment and services company.

A market source remarked that the Pitney issue might be "hard to sell" given what its business is and another noted that Kennedy-Wilson was a name that "nobody ever heard of."

Neither issue had priced as of press time Monday.

Viacom bonds tightens

The secondary market saw Viacom's $250 million of 4.375% 30-year senior bonds, which priced at a spread of Treasuries plus 178 basis points on Friday, trade 3 bps better at 175 bps bid, 170 bps offered.

The entertainment company is based in New York City.

Stephanie N. Rotondo contributed to this review

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