High-grade squeezes in US$10bn before Fed

By Mike Gambale and Danielle Robinson

NEW YORK, Oct 28 (IFR) - Borrowers rushed to the high-grade dollar market on Tuesday to raise more than US$10bn ahead of any potential volatility brought on by the Federal Open Market Committee tomorrow.

"It's been a decent day," said one syndicate manager, noting a 1% rise in US stocks.

"You've seen some sectors widen out a little as new supply comes in, but books were generally a good size - and no one had to pay an unusually large new issue concession."

Hong Kong investment holding company Hutchison Whampoa was the highlight, hitting both the euro and dollar market.

Its US$2bn 1.625% three-year and US$1.5bn 3.625% 10-year securities followed pricing of a EUR1.5bn 1.375% October 2021 seven-year note at mid-swaps plus 68bp during London hours on books of EUR5.75bn.

Demand was even more impressive in the Yankee market, with books of US$6bn on the three and US$5.5bn on the 10-year.

That enabled bookrunners Bank of America Merrill Lynch, Citigroup (NYSE: C - news) , Goldman Sachs (NYSE: GS-PB - news) and HSBC to pull in pricing to T+88bp on the three-year from IPTs of 110bp area, and to T+135bp on the 10s from whispers of 150bp.

At those levels the deal offered about 8bp of new issue concession on the shorter tranche versus its outstanding 2% 2017s at G+80bp and around 10bp on the longer-dated piece.

Blue chip industrial Boeing (NYSE: BA - news) meanwhile paid about 3bp of new issue premium on US$250m of three-year FRNs, US$300m of 2.3% seven-year notes and US$300m of 2.85% 10-year securities, after attracting a total of US$4.7bn of demand.

Wells Fargo weighed in with a US$2bn 30-year subordinated Tier 2 capital note, which attracted a hefty US$5bn of demand. The deal priced at T+165bp, compared with outstanding Wells subordinated 5.375% 2043s at T+155bp.

Although 10bp in concession seemed generous considering such a large book, Wells had to keep in mind that its competitors had 30-year sub debt trading in the mid-to-high 100s.

Elsewhere, Capital One tapped the retail US$25 par market to issue US$500m of fixed-for-life perpetual non-call five-year notes to yield 6.7% from initial price thoughts of 6.875%.

The retail deal also attracted roughly US$200m of demand from institutional accounts before tightening. Ultimately about US$85m was allocated to institutions and the reset to retail.

The offering, the first benchmark-sized US$25 par Tier 1 in over a month, provides other US banks with a good pricing reference for that part of the market after the recent volatility.

Comparables included Cap One's 6.25% outstanding Tier 1 fixed-for-life perps trading at US$24.60 for a yield to call of 6.44%.

Another comp was Bank of America's 6.625% fixed-for-life perp trading at US$25.14 with a yield to call of 6.72%.

WELLS FARGO & CO

Wells Fargo & Co., A3/A/A+ (s/n/s), announced a USD benchmark 30-year (11/4/2044) subordinated holdco SEC-Reg (Madrid: SL001.MC - news) self-led notes. UOP: GCP. Settlement date 11/4/2014.

IPT: T+175bp area

PRICE GUIDANCE: T+170bp area (+/- 5bp)

LAUNCH: US$2bn at T+165bp

PRICED: US$2bn 4.65% 30-year (11/04/2044). At 99.312, yld 4.693%. T+165bp. 1st pay: 5/04/2015.

BOOK: US$5bn

NIC (NasdaqGS: EGOV - news) : 10bp based on outstanding sub 2043s at T+155bp OR: 2bp looking at sr/sub diff - add 10bp to 3.30% for 10/30s curve, for fair value of T+113bp. Sr/sub differential is 50bp, for fair value of T+163bp)

COMPS:

3.300% 2024 at G+103bp (sr)

5.375% November 2, 2043 at T+155bp (sub)

C (Baa3/BBB+/A-) 5.300% May 6, 2044 at T+180bp (sub)

THE BOEING COMPANY

The Boeing Company (BA), A2/A/A, announced a US$850m (no grow) SEC registered 3-part offering that consists of a US$250m 3-year (10/31/2017) FRN, US$300m 7-year (10/31/2021) fixed, and a US$300m 10-year (10/31/2024) fixed senior unsecured notes. The notes contain a MWC, and a 3mo par call on the 10yr tranche.

The active bookrunners include Citigroup on all tranches; Credit Suisse (NYSE: CS - news) and Goldman Sachs only on the 3yr FRN; Bank of America and Morgan Stanley (Xetra: 885836 - news) only on the 7yr tranche; Deutsche and JP Morgan only on the 10yr tranche. Passive book: Only on 3yr FRN - BBVA, CA-CIB, SMBC; Only on 7yr FXD - BARC, MUFG, WFS; Only on 10yr FXD - BNP Paribas (Xetra: 887771 - news) , Mizuho and Royal Bank of Scotland. UOP: GCP. Settle: 10/31/2014.

IPTs: 3yr FRN 3mL+20bp area, 7yr T+70bp area, 10yr T+87.5bp area

PRICE GUIDANCE: 3-year FRN 3mL+15bp area (+/- 2.5bp), 7-year T+65bp area (+/-5bp), 10-year T+80bp area (+/- 5bp)

LAUNCH: US$850m 3-part. US$250m 3-year FRN at 3mL+12.5bp, US$300m 7-year at T+60bp, US$300m 10-year at T+75bp.

PRICED: US$850m 3-part total

- US$250m 3-year (10/30/2017) FRN. At 100, floats at 3mL+12.5bp.

- US$300m 2.30% 7-year (10/30/2021). At 98.407%, yld 2.55%. T+60bp. MWC+10bp.

- US$300m 2.85% 10-year (10/30/2024). At 98.474, yld 3.028%. T+75bp. MWC+15bp.

BOOK: Total book US$4.7bn. 3-year: US$750m, 7-year: US$1.75bn, 10-year: US$2.2bn

NIC: 7-year: 3bp (7/10s curve worth 15bp, for fair value of G+57bp)

10-year: 3bp (vs. GD 2.25% Nov '22)

COMPS:

0.950% May 15, 2018 at G+53bp

4.875% February 15, 2020 at G+56bp

GD (A2/A) 2.250% November 15, 2022 at G+72bp

HON (A2/A) 3.350% December 1, 2023 at G+68bp

FORD MOTOR CREDIT CO

Ford Motor Credit Company LLC, Baa3/BBB-/BBB- (s/s/p), announced a US$ benchmark SEC registered 2-part offering that consists of a 5-year (11/4/2019) fixed and 5-year (11/4/2019) FRN. The active bookrunners include BNP Paribas, Bradesco, Deutsche Bank (Xetra: 514000 - news) , Morgan Stanley and Royal Bank of Scotland (LSE: RBS.L - news) . UOP: GCP. Settlement date 11/4/2014.

IPTS: 5yr FXD T+120bp area, 5yr FRN Libor equiv

PRICE GUIDANCE: 5-year FXD T+110bp area (+/- 5bp), 5-year FRN Libor equiv

LAUNCH: US$1.65bn 2-part. US$1.25bn 5-year at T+110bp, US$400m 5-year FRN at 3mL+93bp.

PRICED: US$1.65bn 2-part. - US$1.25bn. Cpn 2.597%. Due 11/4/19. Ip par. Yld 2.597%. T+110bp - US$400m. Cpn 3mL+93bp. Due 11/4/19. Ip par. Yld 3mL+93bp.

BOOK: Total book US2.85bn. 5-year FRN: US$450m, 5-year FXD: US$2.4bn

NIC: 5bp (add 4bp for maturity differential, for fair value of G+105bp)

COMPS:

2.375% March 12, 2019 at G+101bp

HUTCHISON WHAMPOA

Hutchison Whampoa International Ltd, expected ratings A3/A-/A-, announced a US$ benchmark 2-tranche (3-year & 10-year) senior unsecured notes via Bank of America, Citigroup, Goldman Sachs and HSBC. 144A/Reg S.

IPTs: 3-year: T+110bp area, 10-year: T+150bp area

PRICE GUIDANCE: 3-year T+90bp area (+/- 2bp), 10-year T+135-140bp

LAUNCH: US$3.5bn 2-part. US$2bn 3-year at T+88bp, US$1.5bn 10-year at T+135bp.

PRICED: US$3.5bn 2-part. First (Other OTC: FSTC - news) pay 4/30/2015. Settlement date 10/31/2014.

- US$2bn. Cpn 1.625%. Due 10/31/2017. Ip US$99.770. Yld 1.704%. T+88bp

- US$1.5bn. cpn 3.625%. Due 10/31/2024. Ip US$99.884. Yld 3.639%. T+135bp.

BOOK: US$11.5bn total. 3-year: US$6bn, 10-year: US$5.5bn

NIC: 3-year: 8bp, 10-year: 10bp

COMPS:

2.000% November 8, 2017 at G+80bp

5.750% September 11, 2019 at G+87bp

4.625% January 13, 2022 at G+125bp

3.250% November 8, 2022 at G+124bp

GATX CORP (NYSE: GMT - news)

GATX Corporation (GMT), Baa2/BBB, announced a US$250m SEC registered long 5-year (3/30/2020) senior unsecured notes. The notes contain a 101% put upon CoC and downgrade to below IG (LSE: IGG.L - news) . Optional Redemption: Make whole call; 1 month par call prior to maturity. The active bookrunners include Bank of America, Citigroup and Morgan Stanely.

UOP: to repay commercial paper maturing within 7 days and bearing an effective interest rate of approximately 0.32% as of October 27, 2014; to repay the approximately US$88m outstanding balance under our secured floating rate term loan facility due December 19, 2020 bearing a current effective interest rate of approximately 2.1% and for general corporate purposes, including working capital and capital expenditures. Settle: T+3.

IPT: T+120bp area

PRICE GUIDANCE: T+120bp (the #)

LAUNCH: US$250m at T+120bp.

PRICED: US$250m 2.60% 5-year (3/30/2020). At 99.50, yld 2.70%. T+120bp. MWC+20bp. 1st pay: 3/30/2015.

BOOK: Just over US$500m

NIC: 9bp (using 2.50% July 2019 comp, add 10bp for maturity differential, for fair value of G+111p)

COMPS:

2.500% July 30, 2019 at G+101bp

3.900% March 30, 2023 at G+140bp

LIBERTY MUTUAL GROUP

Liberty Mutual Group Inc, Baa2/BBB, announced a US$250m 144A/Reg S add-on to 4.85% 8/01/2044 (US$750m outstanding). The active bookrunners include Bank of America and Citigroup.

IPTs: T+200bp area

PRICE GUIDANCE: T+185bp area (+/-5bp)

LAUNCH: US$300m (upsized from US$250m) at T+180bp.

PRICED: US$300m 4.85% (8/01/2044) tap. At 99.930, yld 4.854%. T+180bp.

BOOK: Just under US$1bn

NIC: 1bp

COMP:

4.850% August 1, 2044 at T+179bp

CODELCO

Corporacion Nacional del Cobre de Chile (Codelco), A1/AA-/A+, announced a US$ benchmark 144A/Reg S (no reg rights) 30-year senior unsecured notes. The active bookrunners are Bank of America, HSBC and Mizuho. UOP: GCP, including capex and the repayment of indebtedness.

IPTs: very low 200s

LAUNCH: US$980m 30-year at T+190bp

PRICED: US$980m Cpn 4.875%. Due 11/4/2044. Ip US$98.588. Yld 4.966%. T+190bp

BOOK: Just above US$4.6bn

NIC: 9bp

GLOBAL BANK

Panama's Global Bank (BBB-/BBB-) has announced a new 144A/Reg S senior unsecured USD300m minimum five-year (10/30/2019) bond issue, with initial price thoughts of high 300s over US Treasuries. Citigroup and Deutsche Bank are joint lead managers on the issue, while Commerzbank (Xetra: CBK100 - news) is co-manager. Settle: 10/31/2014.

IPTs: T+high 300s

GUIDANCE: T+375bp (+/-5bp)

LAUNCH: USD400m 5-yr at T+370bp

PRICED: USD400m: 99.652: 5.125%C; 5.205%Y; T+370bp

BOOK:

DRAWBRIDGE SPECIAL OPPORTUNITIES FUND (Ran off HY desk)

Drawbridge Special Opportunities Fund LP, expected ratings BBB (S&P only), announced a US$50m add-on to its 5.00% 8/1/2021 senior notes via Wells Fargo(left) and Natixis (Paris: FR0000120685 - news) . Investor (Other OTC: IVSBF - news) call at 11:30am. 144a for life. Deal will be immediately fungible.

UOP: General corporate purposes, including new investment opportunities. BIZ: Private investment partnership focused on making highly diversified investments in both private and public credit primarily throughout the United States and Western Europe, but also in Australia, Asia and elsewhere on an opportunistic basis.

PRICED: US$100m (orig US$50m). Cpn 5.000%. Due 8/1/2021. Ip par. Yld 4.998%. +307bp vs. 2.125% 6/30/2021 UST. MWC T+50bp. First pay 2/1/2015. Settlement date 10/31/2014. Cusip # 26150TAA7.

NOT COUNTABLE

CAPITAL ONE FINANCIAL CORP

Capital One Financial Corp, Ba1/BB/BB, announced a US$250m (10m shares at US$25 par) perpetual nc5 (12/1/2019) via Morgan Stanley(physical), Bank of America, JP Morgan, UBS (NYSEArca: FBGX - news) and Wells Fargo. Price talk 6.875% area. DRD/QDI eiligble. First pay 3/1/2015.

UOP: For general corporate purposes in the ordinary course of our business. General corporate purposes may include repayment of debt, acquisitions, additions to working capital, capital expenditures and investments in our subsidiaries. Settlement date T+3.

PRICE GUIDANCE: 6.75% area (+/-5bp). Books are subject.

LAUNCH: US$500m at 6.700%

PRICED: US$500m at 6.700%. First pay 3/1/2015. Settlement date 10/31/2014. Cusip # 14040H709.

COMPS:

Issue Date Issuer Ticker Coupon Ratings PX SY YTC

09/02/14 BAC BAC W 6.625% Ba3 BB $25.14 6.65 6.72

07/14/14 WFC WFC T 6.000% Baa3 BBB $24.95 6.07 6.23

06/16/14 JPM JPM E 6.300% Ba1 BBB- $25.16 6.35 6.40

06/09/14 COF COF C 6.250% Ba1 BB $24.60 6.44 6.89

04/22/14 MS MS G 6.625% Ba3 BB $25.46 6.54 6.24

02/05/14 C C L 6.875% Ba3 BB $25.81 6.77 6.41 (Reporting by Mike Gambale and Danielle Robinson; Editing by Natalie Harrison and Marc Carnegie)