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BP leads the way in strong high grade market

By Mike Gambale and Danielle Robinson

NEW YORK, Feb 10 (IFR) - BP Capital Markets received peak orders of US$8bn on Tuesday for a US$2.75bn multi-tranche deal, as investors rushed to grab the first chance this year to buy an oil major's bonds in bulk.

Bookrunners received large orders from a group of investors keen to make a play on high-quality energy names like BP as the spreads on their outstanding bonds tightened after oil prices came off their lows in the past week.

BP started out cheap at initial price thoughts offering about 20bp over comparables on two, three and five-year fixed and floating rate notes. This premium had disappeared by the time the deal was launched - a tightening that resulted in more than a few drops in orders, for a final book of US$6.5bn.

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"There is a view among some accounts on this sector that the price of oil has bottomed," said one banker. "Not everyone is so bullish, which is probably why you saw so many drops as the spread tightened."

BP's outstanding 2020s have rallied about 10bp in the past week and about 20bp since mid-December.

BP was one of eight borrowers raising US$8.78bn on Tuesday, bringing the week's tally to US$21.03bn. The average NIC (NasdaqGS: EGOV - news) fell to just 2.86bp as accounts looked to put inflows to work in a market which has seen less supply than expected so far this year.

Also driving demand for deals on Tuesday was a strong bid from Europe and Asia, as non-US investors look to buy into dollar deals that are higher yielding than corporate bonds in euros.

Deutsche Bank (LSE: 0H7D.L - news) was able to attract US$5bn of demand for US$2.5bn three-year fixed and floating rate notes, almost 40% of which came from Europe and Asia.

DB was able to pull in pricing on its senior unsecured by 10bp to price at 90bp, or 7bp of NIC.

Citi built a US$4.6bn peak book for a US$2bn five-year and priced flat to 1bp wider than comparables, as investors looked to get into a rallying bank sector.

"There's been quite a bit of tightening," said one banker covering financials. "the new KeyBank 20s were 7bp tighter than their reoffer at 80bp yesterday and Morgan Stanley (Xetra: 885836 - news) 's 2020s are now 20bp better from their pricing level at the end of January."

Lazard Group was a huge hit, offering a US$400m 10-year that was tightened by 35bp from IPTs to launch and priced flat to comps, on books of US$1.2bn.

BP CAPITAL MARKETS

BP Capital Markets plc, expected ratings A2/A (n/n), announced a US$ benchmark 4-part SEC-Reg (Madrid: SL001.MC - news) senior unsecured note offering via Credit Agricole, Goldman Sachs (NYSE: GS-PB - news) , Mizuho and Royal Bank of Scotland. Structure will consist of a 2-year (2/10/2017) FRN, a 3-year (2/13/2018) FXD and/or FRN and a 5-year (2/13/2020) FXD. UOP: GCP. Settlement date 2/13/2015.

IPTs: 2-year FRN 3mL+50-55bp, 3-year FXD T+85bp area, 3-year FRN 3mL+equivalent, 5-year FXD T+100bp area.

PRICE GUIDANCE: 2yr FRN 3mL+40bp area, 3yr FXD T+70bp area, 3yr FRN Libor equiv, 5yr FXD T+85bp area. Area is +/- 5bp.

LAUNCH: US$2.75bn 4-part. US$400m 2yr FRN at 3mL+35bp, US$850m 3yr FXD at T+65bp, US$250m 3yr FRN at 3mL+42.5bp, US$1.25bn 5yr FXD at T+80bp.

PRICED: US$2.75bn 4-part total.

- US$400m 2yr (2/10/2017) FRN. At 100, floats at 3mL+35bp.

- US$850m 1.674% 3yr (2/13/2018) FXD. At 100, yld 1.674%. T+65bp. MWC+10bp

- US$250m 3yr (2/13/2018) FRN. At 100, floats at 3mL+42.5bp.

- US$1.25bn 2.315% 5yr (2/13/2020) FXD. At 100, yld 2.315%. T+80bp. MWC+12.5bp

BOOK: US$6.5bn final, US$8bn peak.

NIC: 3-year FXD: -2bp (using a 15bp 3/5s curve; FV=G+63bp)

5-year FXD: 2bp (vs. 2.521% '20 at G+78bp)

COMPS: (3/5s curve worth 15-20bp)

2.521% January 15, 2020 at G+78bp

3.535% November 4, 2024 at G+125bp

CITIGROUP (NYSE: C - news)

Citigroup Inc, Baa2/A-, announced a US$1bn SEC registered 5-year (2/18/2020) senior note offering. Citi is the sole bookrunner. UOP: GCP.

IPTs: T+105-110

PRICE GUIDANCE: T+98bp area (+/- 3bp)

LAUNCH: US$2bn (upsized from US$1bn) at T+95bp.

PRICED: US$2bn 2.40% 5yr (2/18/2020). At 99.780, yld 2.447%. T+95bp.

BOOK: US$4bn (US$4.6bn peak)

NIC: 1bp

COMPS:

2.500% July 29, 2019 at G+94bp

DEUTSCHE BANK

Deutsche Bank AG (London), A3/A/A+, announced a US$ benchmark SEC registered 2-part senior unsecured note offering that consists of a 3-year (2/13/2018) fixed and/or FRN. Deutsche is the sole bookrunner. Settle: 2/13/2015.

IPTs: 3yr FXD T+100bp area, 3yr FRN Libor equiv

PRICE GUIDANCE: 3yr FXD T+90bp area, 3yr FRN 3mL+68bp area

LAUNCH: US$2.5bn 2-part. US$2bn 3yr FXD at T+90bp, US$500m 3yr FRN at 3mL+68bp.

PRICED: US$2.5bn 2-part.

- US$2bn 1.875% 3yr (2/13/2018) FXD. At 99.881, yld 1.916%. T+90bp.

- US$500m 3yr (2/13/2018) FRN. At 100, floats at 3mL+68bp.

BOOK: US$4.75bn (peak north of US$5bn)

NIC: 7bp (add 8bp for maturity extension; FV=G+83bp)

COMPS:

1.350% May 30, 2017 at G+75bp

LAZARD GROUP LLC

Lazard Group LLC, Ba1/BBB+/BBB+, announced a US$400m (no grow) SEC-Reg 10-year senior note offering. Citigroup is an active bookrunner, with Goldman Sachs as passive bookrunner.

Co-manager is LAZARD. UOP: together with cash on hand, to redeem or otherwise retire $450 million of its outstanding 6.85% Senior Notes due June 15, 2017, and to pay fees and expenses related to the foregoing. BIZ: Lazard, one of the world`s preeminent financial advisory and asset management firms, operates from 43 cities across 27 countries in North America, Europe, Asia, Australia, Central and South America.

IPT: T+215bp area

PRICE GUIDANCE: T+180-185bp

LAUNCH: US$400m at T+180bp

PRICED: US$400m 3.75% 10-yr (2/13/2025). At 99.718, yld 3.784%. T+180bp. 1st pay: 9/01/2015.

BOOK: US$1.2bn

NIC: flat (5/10s curve worth 35bp; FV=G+180bp)

COMPS:

4.250% November 14, 2020 at G+145bp

ERAC USA FINANCE LLC

ERAC USA Finance USA LLC (ENTERP), Baa1/BBB+, announced a US$400m 144a/RegS 30-year (2/15/2045) senior notes. The active bookrunners include Goldman Sachs, JP Morgan and Royal Bank of Canada, with Mitsubishi as a passive bookrunner. The notes are guaranteed by Enterprise Holdings Inc; CoC: 101%; Par call: 6 months prior to maturity. UOP: GCP.

IPTs: T+220bp area

LAUNCH: US$500m (upsized from US$400m) at T+200bp

PRICED: US$500m 4.500% 30yr (2/15/2045). At 98.848, yld 4.571%. T+200bp.

BOOK: US$3.25bn

NIC: 7bp (vs. 5.625% '42 at T+195bp; subtract a couple of basis points for high dollar price, FV=T+193bp)

COMPS:

7.000% October 15, 2037 at T+210bp (US$135)

5.625% March 15, 2042 at T+195bp (US$116)

AFFILIATED MANAGERS GROUP

Affiliated Managers Group Inc (AMG), A3/BBB+, announced a $300m SEC registered long 10-year (8/01/2025) senior unsecured notes. The active bookrunners include Bank of America (Other OTC: BKMRP - news) , Citigroup and JP Morgan, with Deutsche Bank, Mitsubishi, Royal Bank of Canada and Wells Fargo as the passive bookrunenrs. The notes contain a MWC. UOP: to repay a portion of currently outstanding indebtedness under our revolving credit facility and for GCP. Pricing expected today. Settle: 2/13/2015.

IPTs: T+170bp area

PRICE GUIDANCE: T+160bp (the #)

LAUNCH: US$350m (upsized from US$300m) at T+160bp

PRICED: US$350M 3.5% 10yr (8/01/2025). At 99.239, yld 3.588%. T+160bp.

BOOK: US$1bn

NIC: 5bp (vs. Outstanding 4.25% '24s at G+155bp)

COMPS:

4.250% February 15, 2024 at G+155bp

JOHNS HOPKINS

The John Hopkins University, Aa2/AA/AA+, announced a US$165m 2-part 3(a)4 exempt from SEC registration 2015 Series A taxable bonds that includes a US$15m 7/01/2018 bullet and a US$150m 7/01/2045 term bond. The active bookrunners include Goldman Sachs and JP Morgan. Co-mgr: MS. The notes contain a MWC. Settle: 2/18/2015.

IPTs: 3yr T+45bp area vs 3yr in 2018, 30yr T+125bp area vs OLB in 2045

PRICE GUIDANCE: T+98bp area (+/- 3bp)

LAUNCH: US$165m 2-part. US$15m 3yr at T+45bp, US$150m 30yr at T+118bp.

PRICED: US$165m 2-part total

- US$15m 1.477% 3yr (7/01/2018). At 100, yld 1.477%. T+45bp. MWC+10bp.

- US$150m 3.753% 30yr (7/01/2045). At 100, yld 3.753%. T+118bp. MWC+20bp.

BOOK: 3-year: 1.7x oversubscribed

30-year: 2.5x oversubscribed

THIRD POINT

Third Point Re (USA) Holdings Inc., rated BBB- by A.M. Best, announced a US$ 10-year SEC-Reg senior unsecured notes via Credit Suisse (LSE: 0QP5.L - news) and Deutsche Bank. Covenants include a CoC, ratings step, limitation on leverage. UOP: To fund the initial capitalization of Third Point Re (USA) Holdings Inc.'s wholly owned insurance subsidiary. BIZ: Third Point Reinsurance Ltd (NYSE: TPRE - news) is a property and casualty reinsurance company.

IPT: 7.00% area

LAUNCH: US$115m at 7.00%

PRICED: US$115m 7% 10-year. At 100, yld 7%. MWC+50bp

BOOK: Undisclosed (Reporting by Mike Gambale and Danielle Robinson; Editing by Shankar Ramakrishnan)