High-grade market struggles to sell US$8.775bn

By Mike Gambale and Danielle Robinson

NEW YORK, Sept 9 (IFR) - The US high-grade bond market continued to show signs of fatigue Tuesday, as some of the US$8.775bn in new deals struggled to get over the line amid the recent flood of supply.

More than US$67bn has printed in the last five active trading days, and bankers said volume may need to slow to give deluged investors a chance to digest the onslaught.

Although some deals like Dow Chemicals, Amphenal Corp and Air Lease Corp priced at least 10bp tighter than whispered levels on most tranches, others like Hospitality Properties Trust and Ecopetrol (NYSE: EC - news) only moved pricing in by about 5bp from IPTs.

Buckeye Partners had the most difficult time of the lot on Tuesday, with no progression from IPTs to pricing on either its US$300m 10-year, which printed at T+187.5bp, or the US$300m 30-year, at T+237.5bp. At those levels, Buckeye paid 30bp-35bp in new issue concession.

"The tone softened in the second half of the day when the Dow lost 100 points, and I think if we had not had so much supply lately then our market might have ignored a 100-point drop," said one syndicate manager.

Dow Chemical fared among the best today, raising a US$5.3bn book for a US$2bn offering of 10, 20 and 30-year securities.

Yet trading in the aftermarket continues to lack strength.

Even (Taiwan OTC: 6436.TWO - news) on Dow's deal, grey market quotes showed the 10-year at 120/117 (pxd +115), 20-year at 124/121 (pxd +120) and the 30-year at 154/151 (pxd +150).

Despite the exhaustion, however, HSBC had amassed more than US$11bn in orders for its debut CoCo dollar bonds by the closing of US trading on Tuesday.

According to market sources, the book on Tuesday afternoon was slightly skewed more toward the perpetual non-call 10-year CoCo than the perpetual non-call five-year, both in dollars.

Bankers not involved in the deal expect the order book to balloon in Asia, given HSBC's blue-chip brand recognition in the region.

"They are the perfect name to attract Asia private banking as well as global asset manager and hedge fund demand," said a rival banker. "So they may have a crazy book of interest."

The deal includes dollar and euro denominated Additional Tier 1 bonds that convert into equity if the bank's Common Equity Tier 1 ratio falls below 7%.

The non-call fives with a call date in 2020s are being whispered to investors at 5.75%-6%, while the non-call 10s with a call date in 2024 have IPTs of 6.5%-6.75%.

The deal is expected to price on Wednesday.

THE DOW CHEMICAL COMPANY (Xetra: 850917 - news)

The Dow Chemical Company (DOW), Baa2/BBB/BBB (s/s/s), announced a US$ benchmark SEC registered 3-part offering that includes a 10-year, 20-year and 30-year senior unsecured notes. The notes contain a MWC, and a 3-month par call on the 10-year tranche and a 6-month par call on the 20-year & 30-year tranches.

The active bookrunners include Citigroup (NYSE: C - news) , Deutsche Bank (Xetra: 514000 - news) , Mizuho, and Royal Bank of Scotland (LSE: RBS.L - news) . UOP: GCP, which may include repaying or refinancing indebtedness or other obligations, funding pension contributions, funding capital expenditures and financing working capital. Settle: T+5.

IPTs: 10-year +125bp area, 20-year 135-140, 30-year 155-160

PRICE GUIDANCE: 10-year T+120bp area, 20-year T+125bp area, 30-year T+150bp area. Area is +/- 5bp.

LAUNCH: US$2bn 3-part. US$900m 10-year at T+115bp, US$600m 20-year at T+120bp, US$500m 30-year at T+150bp.

PRICED: US$2bn 3-part.

- US$900m. Cpn 3.50%. Due 10/1/2024. Ip USD98.730. Yld 3.652%. T+115bp

- US$600m. Cpn 4.25%. Due 10/1/2034. Ip USD97.636. Yld 4.429%. T+120bp

- US$500m. Cpn 4.625%. Due 10/1/2044. Ip USD98.338. Yld 4.729%. T+150bp.

BOOK: US$5.3bn total. 10-year: US$2.2bn, 20-year: US$1.7bn, 30-year: USD$1.4bn

NICS: 10-year: flat (vs. 3.00% '22 comp)

30-year: 5bp (vs. 4.375% '42 comp)

COMPS:

3.000% November 15, 2022 at G+115bp

4.375% November 15, 2042 at T+145bp

BRITISH SKY BROADCASTING (LSE: BSY.L - news)

British Sky Broadcasting, Baa1/BBB+, announced a US$ benchmark 144a/Reg S (no reg rights) 2-part offering that consists of a 5-year (9/16/2019) and a 10-year (9/16/2024) senior notes. The notes are guaranteed British Sky Broadcasting Limited, BSkyB Finance UK, Sky In-Home Service Limited, Sky Subscribers Services Ltd. The active bookrunners include Barclays (LSE: BARC.L - news) , JP Morgan, Morgan Stanley (Xetra: 885836 - news) and SocGen (Paris: FR0000130809 - news) .

IPTs: 5-year +105bp area, 10-year +145bp area

PRICE GUIDANCE: 5-year T+90-95bp, 10-year T+130-135bp.

LAUNCH: US$2bn 2-part. US$750m 5-year at T+90bp, US$1.25bn 10-year at T+130bp.

PRICED: US$2bn 2-part total.

- US$750m 2.625% 5-year (9/16/2019). At 99.851, yld 2.657%. T+90bp. MWC+15bp.

- US$1.25bn 3.75% 10-year (9/16/2024). At 99.62, yld 3.796%. T+130bp. MWC+20bp.

BOOK: US$8.75bn total

NICS: 5-year: 3bp (5/10s curve worth 40bp, bringing fair value to G+87bp)

10-year: 3bp (vs. 3.125% Nov '22)

COMPS:

3.125% November 26, 2022 at G+127bp

FOX (Baa1/BBB+) 4.000% October 1, 2023 at G+110bp

DTV (Baa2/BBB+) 4.450% April 1, 2024 at G+125bp

RDELG(Baa1/BBB+) 3.125% October 15, 2022 at G+120bp

TWC (Baa2/BBB) 4.000% September 1, 2021 at G+88bp

BT (Baa2/BBB) February 14, 2019 at G+69bp

VIV (Baa2/BBB) 4.750% April 12, 2022 at G+175bp

AIR LEASE CORP

Air Lease Corporation (NYSE: AL - news) (AL), NR/BBB-, announced a US$750m SEC registered 2-part offering that consists of a long 3-year (1/18/2018) and a 10-year senior unsecured notes. The notes contain a 101% put, and a 3-month par call on the 10-year tranche.

The active bookrunners are Bank of America, Credit Suisse (NYSE: CS - news) , JP Morgan and Royal Bank of Canada (Toronto: RY-PC.TO - news) . UOP: General corporate purposes which may include, among other things, the purchase of commercial aircraft and the repayment of existing indebtedness. Settle: 9/16/2014.

IPTs: 3-year +150bp area, 10-year +200bp area

PRICE GUIDANCE: 3-year T+125bp area, 10-year T+190bp area. Area is +/- 5bp.

LAUNCH: US$1bn (upsized from US$750m) 2-part. US$500m 3-year at T+120bp, US$500m 10-year at T+185bp.

PRICED: US$1bn 2-part total.

- US$500m 2.125% 3-year (1/15/2018). At 99.65, yld 2.235%. T+120bp. MWC+20bp. 1st pay: 1/15/2015.

- US$500m 4.25% 10-year (9/15/2024). At 99.196, yld 2.435%. T+185bp. MWC+30bp. 1st pay: 3/15/2015.

BOOK: US$3bn total

NICS: 3-year: 5bp (3/5s curve worth 20bp)

10-year: flat (5/10s curve worth 50bp)

COMPS:

3.375% January 15, 2019 at G+135bp

3.875% April 1, 2021 at G+165bp

HOSPITALITY PROPERTIES TRUST

Hospitality Properties Trust (HPT), Baa2/BBB- (s/s), announced a US$250m SEC registered 10.5-year (3/15/2025) senior unsecured notes. The notes contain a make-whole call and a 6-month par call prior to maturity.

The active bookrunners include Bank of America, Citigroup, Royal Bank of Canada, UBS (NYSEArca: FBGX - news) and Wells Fargo. Co Managers: BBVA/Jeff/MS/BBT/Chevy/Comerica (OTC BB: CMPWW - news) /Daiwa/FTN/Mizuho/PNC/RBSCFG/Regi ons/Sovereign/ TD/BTMU/USB. UOP: To repay amounts outstanding under our revolving credit facility and for general business purposes.

IPTs: T+220bp area

PRICE GUIDANCE: T+215-220bp

LAUNCH: US$350m (upsized from US$250m) at T+215bp

PRICED: US$350m 4.50% 10.5-year (3/15/2025), At 98.78, yld 4.648%. T+215bp. MWC+35bp.

BOOK: US$1bn

NICS: 18bp (vs. 4.625% '24)

COMPS:

4.500% June 15, 2023 at G+192bp

4.625% March 15, 2024 at G+197bp

AMPHENOL CORP

Amphenol Corporation (NYSE: APH - news) (APH), Baa1/BBB+ (s/s), announced a US$500m SEC registered 2-part offfering that consists of a 3-year (9/15/2017) and a 7-year (9/15/2021) senior unsecured notes. The notes contain a make-whole call, and a 1-month par call on the 7-year tranche. The active bookrunners include JP Morgan, Mitsubishi and TD Securities. UOP: Repay outstanding 4.75% Senior Notes due Nov 2014 and GCP. Settle: T+3.

IPTs: 3-year low 70s, 7-year +115bp area

PRICE GUIDANCE: 3-year T+60bp area, 7-year T+100bp area. Area is +/- 5bp.

LAUNCH: US$750m (upsized from US$500m) 2-part. US$375m 3-year at T+55bp, US$375m 7-year at T+95bp.

PRICED: US$750m 2-part total.

- US$375m 1.55% 3-year (9/15/2017). At 99.898, yld 1.585%. T+55bp. MWC+10bp.

- US$375m 3.125% 7-year (9/15/2021). At 99.912, yld 3.139%. T+95bp. MWC+15bp.

BOOK: 3-year: US$1.2bn, 7-year: US$1.2bn

NICS: 3-year: negative 1bp (3/5s curve worth 30bp, bringing fair value to G+56bp)

7-year: negative 6bp (5/7 curve worth 15bp, bringing fair value to G+101bp)

COMPS:

2.550% January 30, 2019 at G+86bp

4.000% February 1, 2022 at G+134bp

GLW (A3/A-/A-) 1.450% November 15, 2017 at G+36bp

GLW (A3/A-/A-) 3.700% November 15, 2023 at G+86bp

TEL (Baa1/A-) 2.350% August 1, 2019 at G+63bp

TEL (Baa1/A-) 3.450% August 1, 2024 at G+96bp

BUCKEYE PARTNERS L.P.

Buckeye Partners L.P., (BPL), Baa3/BBB-/BBB-, announced a US$600m SEC registered 2-part offering that consists of a 10-year (10/15/2024) and 30-year (10/15/2044) senior notes. The active bookrunners JP Morgan, Morgan Stanley, SunTrust, Wells Fargo, with Barclays, BNP Paribas (Xetra: 887771 - news) , Deutsche Bank and Royal Bank of Canada as the passive bookrunners. The notes contain a MWC, and then a 3mo par call on the 10yr tranche and a 6mo par call on the 30yr tranche.

UOP: to fund a portion of the purchase price of the South Texas Transaction and related expenses, (ii) to fund the redemption of all $275.0 million aggregate principal amount of outstanding 5.300% Notes due October 15, 2014 and (iii) for general partnership purposes. Settle: T+3 (9/12/2014).

IPTs: 10yr +187.5bp area, 30yr 237.5bp area

PRICE GUIDANCE: 10-year T+187.5bp (the #), 30-year T+237.5bp (the #)

LAUNCH: US$600m 2-part. US$300m 10-year at T+187.5bp, US$300m 30-year at T+237.5bp.

PRICED: US$600m 2-part total.

- US$300m 4.35% 10-year (10/15/2024). At 99.825, yld 4.371%. T+187.5bp. MWC+30bp.

- US$300m 5.60% 20-year (10/15/2044). At 99.876, yld 5.608%. T+237.5bp. MWC+37.5bp.

BOOK: US$800m

NICS: 10-year: 30bp (vs. 4.15% July '23)

30-year: 35bp (vs. 5.85% Nov '43)

COMPS:

4.150% July 1, 2023 at G+157bp

5.850% November 15, 2043 at T+202bp

KMP (Baa2/BBB) 4.250% September 1, 2024 at G+182bp

KMP (Baa2/BBB) 5.400% September 1, 2044 at T+222bp

ETP (Baa3/BBB-) 4.900% February 1, 2024 at G+170bp

ETP (Baa3/BBB-) 5.950% October 1, 2043 at T+212bp

SXL (Baa3/BBB-) 4.250% April 1, 2024 at G+158bp

SXL (Baa3/BBB-) 5.300% April 1, 2044 at T+195bp

MEXICHEM

Mexichem, Baa3/BBB-/BBB, has announced a new benchmark 2044. The company had mandated BBVA, JP Morgan, Morgan Stanley and Santander to arrange a series of fixed income investor meetings in the US and Europe. The use of proceeds will be to refinance short-term indebtedness, finance certain acquisitions and general corporate purposes.

IPT: T+280bp area

PRICE GUIDANCE: T+275bp area (+/-5bp)

LAUNCH: US$750m at T+270bp.

PRICED: US$750m 9/17/2044: 99.150; 5.875%C; 5.936%Y

BOOK: US$2.75bn

NICS: flat

COMPS:

Alfa 2044 T+265bp

ECOPETROL

Colombian oil company Ecopetrol SA (ECOPET), Baa2/BBB/BBB, has announced a US dollar-denominated benchmark SEC registered senior unsecured 2025. Citigroup and JP Morgan are the lead managers on the transaction. Ecopetrol is 88.49% owned by the Republic of Colombia. Outstanding Ecopetrol 2019s were trading with a G-spread of 160bp on Tuesday morning.

IPTs: T+180bp area

PRICE GUIDANCE: T+180bp area

LAUNCH: US$1.2bn at T+175bp

PRICED: US$1.2bn 4.125% 11-year (01/16/2025). At 99.001, 4.426%. T+175bp.

BOOK: Over US$1.9bn

NATIONAL PENN BANCSHARES (NasdaqGS: NPBC - news)

National Penn Bancshares Inc., rated A- by Kroll, announced a USD100m 10-year senior unsecured SEC-Reg (Madrid: SL001.MC - news) notes via Sandler O'Neill and Credit Suisse. UOP: for general corporate purposes, which may include financing of possible acquisitions.

BIZ: National Penn Bancshares, Inc., with approximately $8.6 billion in assets, is a bank holding company headquartered in Allentown, Pennsylvania. National Penn Bank operates 111 branch offices comprising 110 branches in Pennsylvania and one branch in Maryland.

PRICED: US$125m (upsized from US$100m). Cpn 4.25%. Due 9/30/2024. Ip par. Yld 4.25%. T+175bp. Settlement date 9/16/2014. (Reporting by Mike Gambale,; Danielle Robinson; Editing by Marc Carnegie)