US IG WRAP-Borrowers in mad dash to beat expected Qualcomm jumbo

By Danielle Robinson

NEW YORK, May 11 (IFR) - Eleven borrowers, including financials Lloyds Bank and Capital One, rushed to the US investment-grade bond market on Monday before an expected rush of jumbo trades this week - among them Qualcomm (Swiss: QCOM.SW - news) 's debut issue.

Of Monday's deals, Capital One Financial Corp will appeal to those looking for yield, with a perpetual non-call five-year Tier 1 preferred, while Lloyds Bank is offering three-year fixed and floating rate notes as well as a 10-year fixed rate tranche.

Daimler Finance is looking to place benchmark-sized tranches of threes, fives and 10s, while data firm Verisk Analytics (NasdaqGS: VRSK - news) returns to the market after a three-year absence with benchmark 10 and 30-year offerings.

"May is typically a busy month so it's no surprise to see these names all come to market today," said one syndicate manager.

Most of the biggest concessions on offer in the past week have been on longer-dated bonds following Treasury rate volatility.

So far they have performed in the secondary. The 30-year paper sold by Apple (NasdaqGS: AAPL - news) , Abbvie (Xetra: 4AB.DE - news) and Shell (LSE: RDSB.L - news) were on Monday trading inside new issue spread by 4bp, 7bp and 11bp respectively.

Puget Sound Energy, Appalachian Power and EPR Operating are targeting 30-year maturities today.

Some US$30bn-US$35bn of supply is tipped for this week. That follows more than US$50bn last week when issuers offered double digits concessions to help ensure success.

Chipmaker Qualcomm wraps up roadshows on Monday for an offering expected to be around US$10bn in size and will be the latest tech company to leverage up against a large offshore cash pile to pay for share buybacks.

Apple did that just last week, offering coupons of between 0.9% to 4.375% on an US$8bn trade that made it cheaper to issue debt to fund buybacks than pay punishing tax rates on repatriated offshore cash.

According to Moody's, all but one of the top five holders of cash in the US that are not financials are in the tech sector: Apple, Microsoft (NasdaqGS: MSFT - news) , Google (Xetra: A0B7FY - news) and Cisco. Pfizer (NYSE: PFE - news) is the fifth.

"The market feels okay," said the banker. "Books are building pretty steadily, although a little slower than normal but that's because there is so much volume." (Reporting by Danielle Robinson; Editing by Natalie Harrison and Shankar Ramakrishnan)