CareFusion, Volkswagen price during muted primary; DirecTV weaker, AT&T better in secondary

By Cristal Cody and Aleesia Forni

Virginia Beach, May 15 - The high-grade primary bond market was subdued on Thursday despite rallying Treasuries, with new deals pricing from CareFusion Corp. and Volkswagen AG.

Volkswagen priced a $3.5 billion issue of notes in five parts during the session.

The company priced $300 million of 18-month floaters at par to yield Libor plus 17 basis points and $250 million of two-year notes at par to yield Libor plus 22 bps.

A $500 million tranche of three-year floaters priced at par to yield 37 bps over Libor, while a $1.45 billion tranche of 1.25% three-year notes priced at Treasuries plus 47 bps.

The company also priced $1 billion of 2.125% five-year notes with a spread of Treasuries plus 60 bps.

"Even with the sort of weaker tone today, [the deal] went well," a market source said of the Volkswagen deal.

The source added that the deal's orderbook was roughly 1.5 times oversubscribed, and all tranches of the sale priced at the tight end of talk.

Also on Thursday, CareFusion brought to market $1 billion of senior notes in tranches due 2017, 2024 and 2044.

The sale included $300 million of 1.45% notes due 2017 priced at Treasuries plus 70 bps and $400 million of 3.875% 10-year notes priced at Treasuries plus 140 bps.

A $300 million tranche of 4.875% 30-year bonds sold with a spread of 160 bps over Treasuries.

All three tranches sold at the tight end of talk.

NRW.Bank also priced a new offering of notes, though full details were not available at press time.

Thursday's $4.5 billion of new issuance brings the week's total supply to more than $33 billion, topping earlier expectations of a $25 billion to $30 billion week.

New issues from CareFusion and Volkswagen priced late and were not seen in the secondary market as the session closed.

DirecTV Holdings LLC's 4.45% notes due 2024 widened in trading on Thursday, according to market sources.

The company's bonds were stronger on reports that AT&T Inc. is pursuing an acquisition of the satellite TV provider.

AT&T's 3.9% notes due 2024 rose more than 2 points over the session and traded about 5 bps wider, according to market sources.

"It's changing a lot," one source said of AT&T's paper.

Trading overall picked up over the session, though investment-grade bond spreads stayed mostly softer, according to market sources.

"It's been active all day," a trader said. "Trading volume looks to be about 20% above the daily average volume."

The Markit CDX North American Investment Grade series 22 index eased 2 bps to a spread of 65 bps.

Volkswagen prices tight

Volkswagen priced $3.5 billion of notes in five tranches due 2015, 2016, 2017 and 2019, an informed source said.

The sale included $300 million of floating rate notes due 2015 priced at par to yield Libor plus 17 bps.

A $250 million tranche of notes due 2016 priced at par to yield Libor plus 22 bps.

There was also $500 million of three-year floaters priced at par yielding 37 bps over Libor.

A $1.45 billion tranche of 1.25% three-year notes sold at 99.938 to yield 1.271%, or Treasuries plus 47 bps.

Finally, the company sold $1 billion of 2.125% notes due 2019 with a spread of Treasuries plus 60 bps.

Pricing was at 99.953 to yield 2.135%.

All tranches of the sale priced at the tight end of talk.

BofA Merrill Lynch, BNP Paribas Securities Corp., Citigroup Global Markets Inc. and RBS Securities Inc. were the joint bookrunners.

Volkswagen is a Wolfsburg, Germany-based auto-maker.

CareFusion prices $1 billion

CareFusion sold $1 billion of senior notes (Baa3/BBB/BBB) in three parts on Thursday, according to a market source and an FWP filed with the Securities and Exchange Commission.

A $300 million tranche of 1.45% notes due 2017 priced at 99.861 to yield 1.498%, or Treasuries plus 70 bps.

The joint bookrunners for the three-year tranche were Barclays, BofA Merrill Lynch, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc. and Mitsubishi UFJ Securities

A second tranche was $400 million of 3.875% 10-year notes priced with a spread of Treasuries plus 140 bps.

Pricing was at 99.837 to yield 3.895%.

Barclays, BofA Merrill Lynch, JPMorgan, Morgan Stanley, HSBC Securities (USA) Inc. and U.S. Bancorp Investments Inc. were bookrunners for the tranche of notes due 2024.

Finally, $300 million of 4.875% 30-year bonds priced at 99.315 to yield 4.919%, or Treasuries plus 160 bps.

The bookrunners for the 30-year tranche were Barclays, BofA Merrill Lynch, JPMorgan, Morgan Stanley, Deutsche Bank Securities and Mitsubishi UFJ Securities.

All three tranches sold at the tight end of talk.

The company intends to use proceeds to repay $450 million of its 5.125% senior notes due 2014. Remaining proceeds will be used for general corporate purposes.

The medical products spin-off of Cardinal Health is based in San Diego.

DirecTV eases

DirecTV's 4.45% notes due 2024 (Baa2/BBB/) widened to 145 bps bid, 137 bps offered in trading on Thursday afternoon, a trader said.

The notes were quoted late Wednesday at 135 bps offered.

The bonds slipped to 104.49 from 106.63 in the previous session, according to a market source.

DirecTV Holdings and co-issuer DirecTV Financing Co. sold $1.25 billion of the 10-year notes on March 17 at 99.63 to yield 4.496%, or a spread of Treasuries plus 180 bps.

The digital entertainment company is based in El Segundo, Calif.

AT&T active

AT&T's 3.9% notes due 2024 traded weaker at 110 bps bid, 106.5 offered on Thursday, according to a trader.

The notes headed out on Wednesday at 105 bps bid, 100 bps offered.

The bonds jumped in secondary trading to close at 104.8 on Thursday, up from 102.18 on Wednesday, according to a market source.

AT&T sold $1 billion of the 10-year notes (A3/A- /A) on March 5 at 99.696 to yield 3.937%, or a spread of Treasuries plus 125 bps.

The telecommunications company is based in Dallas.

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage CDS prices rose, according to a market source.

Bank of America Corp.'s CDS costs eased 3 bps to 67 bps bid, 71 bps offered. Citigroup Inc.'s CDS costs rose 3 bps to 60 bps bid, 74 bps offered. JPMorgan Chase & Co.'s CDS costs eased 3 bps to 55 bps bid, 59 bps offered. Wells Fargo & Co.'s CDS costs widened 3 bps to 34 bps bid, 38 bps offered.

Merrill Lynch's CDS costs eased 3 bps to 72 bps bid, 76 bps offered. Morgan Stanley's CDS costs rose 3 bps to 73 bps bid, 77 bps offered. Goldman Sachs Group, Inc.'s CDS costs widened 3 bps to 82 bps bid, 86 bps offered.

Paul Deckelman contributed to this review.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.