Yankee banks on issuance spree in US high-grade market

By Danielle Robinson

NEW YORK (Frankfurt: HX6.F - news) , April 9 (IFR) - Credit Agricole (TLO: ACA.TI - news) and Mizuho continued the string of Yankee issuers taking advantage of US earnings blackout this week to tap the market Wednesday for a combined US$6bn.

Those two issues, along with another two countable trades, brought the day's investment-grade tally to US$7bn, pushing the week's total to $19.832bn so far.

Credit Ag issued US$3bn of five-year fixed rate notes and FRNs as well as 10-year notes, while Mizuho raised US$3bn of three-year fixed and floating rate notes, as well as five and 10-year fixed.

Those deals followed BPCE's US$1.5bn 4% 10-year senior unsecured offering on Tuesday.

The fact that all three have issued 10-year securities speaks to the cost benefits now on offer in the US market across the entire curve, following a tremendous rally in credit spreads and Treasury yields in the first quarter.

"Banks are always looking for the most attractive funding and have always found that in the US dollar market at the short end of the curve, but now they are also finding it in 10-years as well," said one syndicate manager.

And in a month that has been distinctly lighter in supply, demand is overwhelming: Mizuho attracted a US$15.5bn book at the peak, while Credit Ag's reached US$7.5bn.

Credit Ag's deal is its first in the senior unsecured market since September last year, and follows a US$1.75bn perpetual non-call 10-year 7.875% AT1 in January.

Led by Citigroup (NYSE: C - news) , Bank of America (TLO: BAC.TI - news) , Morgan Stanley (Berlin: DWD.BE - news) , Royal Bank of Canada and itself, the French bank was able to price the 10-year about flat to where it would take money in a similar tenor in euros, according to sources.

As for new issue concession, the five-year looked to offer about 10bp over the roughly 80bp G-spread levels on comparables like ACAFP 2.625% 10/18s at G+768bp, SG 2.625% 10/18s at G+83bp and BPCE2.5% 12/18s at G+79bp.

BPCE priced its deal on Tuesday with an implied 5s/10s curve of around 40 to 45bp, while Credit Ag appears to have priced its 10-year with a 40bp curve. BNP Paribas (Milan: BNP.MI - news) , slightly higher rated at A-plus versus Credit Ag's single A, has a 5s/10s curve of around 30bp.

In the euro market Credit Ag usually trades about 5-7bp through BPCE, but that difference should narrow in the US dollar trades just done because Credit Ag's deal was under 144A, which in theory should have less liquidity than the index-eligible BPCE trade, which was done under rule 3a2.

Mizuho meanwhile saw its senior unsecured deal hugely oversubscribed. The deal follows its US$1.5bn 10-year subordinated Tier 2 Yankee trade in late March.

The five and 10-year tranches of the new deal were the most sought after, attracting final book sizes of US$6bn and US$3.9bn respectively.

The three year fixed attracted US$2.9bn of orders and the floating rate tranche US$2.7bn.

The deal was led by Bank of America Merrill Lynch, Goldman Sachs, JP Morgan (Other OTC: JPYYL - news) and Mizuho itself.

NICs looked to be negative 6bp on the three-year, about 11bp on the five and 2bp on the 10 versus Mizuho outstandings.

Jackson National Life Global Funding also enjoyed strong demand for a US$500m 2.3% five-year note maturing in April 2019, which priced at T+73bp via Deutsche Bank (Xetra: DBK.DE - news) and JP Morgan. That compared with IPTs of 85bp area and guidance of 75bp area on orders of US$800m.

The NIC looked to be just 3bp versus the MetLife Global Funding 2.3% April 2019s at G+70bp.

MIZUHO

Mizuho Bank had drawn orders of over USD3bn for its offering of multi-tranche, US dollar-denominated 144A/Reg S benchmark bonds shortly after lunch in Asian trading.

The 3-year fixed-rate note was launched at initial price thoughts to yield 70bp-75bp, the 3-year floater at the three-month Libor equivalent, the 5-year fixed-rate piece to yield 95bp-100bp and a 10-year fixed-rate piece to yield 120bp-125bp.

Mizuho Financial Group will guarantee the notes, which are expected to carry ratings of A1 from Moody's and A+ from S&P.

The proceeds from the bonds will be used for general corporate purposes. Bank of America Merrill Lynch, Goldman Sachs, JP Morgan and Mizuho Securities are the joint lead managers and joint bookrunners. Barclays (LSE: BARC.L - news) is a passive bookrunner.

IPTs: 3yr FXD T+70-75bp, 3yr FRN 3mL+equivalent, 5yr FXD T+95-100bp, 10yr FXD T+120-125bp

PRICE GUIDANCE: 3yr FXD T+60bp area (+/-5bp), 3yr FRN 3mL+equivalent, 5yr FXD T+90bp area (+/-5bp), 10yr FXD T+110bp area (+/-2bp)

LAUNCHED: USD3bn 4-pt deal - USD500m 3-year FXD at T+55bp - USD500m 3-year FRN at 3mL+43bp - USD1.5bn 5-year FXD at T+85bp - USD500m 10-year FXD at T+108bp

PRICED: USD3bn 4-pt deal. - USD500m. Cpn 3mL+43bp. Due 4/16/17. Ip par. Yld 3mL+43bp. - USD500m. Cpn 1.30%. Due 4/16/17. Ip USD99.856. Yld 1.349%.T+55bp. - USD1.5bn. Cpn 2.45%. Due 4/16/19. Ip USD99.822. Yld 2.488%. T+85bp. - USD500m. Cpn 3.75%. Due 4/16/23. Ip USD99.744. Yld 3.781%. T+108bp.

BOOKS: USD15.5bn (3yr FXD USD2.9bn, 3yr FRN USD2.7bn, 5yr FXD USD6bn, 10yr FXD USD3.9bn)

NIC (NasdaqGS: EGOV - news) : 3yr neg 6bp, 5yr 11bp, 10yr 2bp

COMPS: MIZUHO 2.55% March 17, 2017 at G+61bp MIZUHO 1.55% October 17, 2017 at G+66bp MIZUHO 1.85% March 21, 2018 at G+74bp MIZUHO 2.95% October 17, 2022 at G+98bp MIZUHO 3.50% March 21, 2023 at G+106bp SUMIBK (Aa3/A+) 1.30% January 10, 2017 at G+49bp SUMIBK (Aa3/A+) 2.45% January 10, 2019 at G+61bp SUMIBK (Aa3/A+) 3.95% January 10, 2024 at G+94bp MUFG (Aa3/A+) 1.20% March 10, 2017 at G+43bp MUFG (Aa3/A+) 2.30% March 10, 2019 at G+61bp MUFG (Aa3/A+) 3.75% March 10, 2024 at G+95bp

CREDIT AGRICOLE

Credit Agricole SA, A2/A/A (s/n/s), announced a USD benchmark multi-tranche offering via Citigroup, Bank of America, Credit Agricole, Morgan Stanley and Royal Bank of Canada (Toronto: RY-PC.TO - news) . Structure will consist of a 5-year (4/15/2019) FXD and/or FRN, and a 10-year (4/15/2024) FXD. 144a/RegS w/o reg rights. Settlement date 4/15/2014.

IPTs: 5yr FRN L+equivalent, 5yr FXD T+100bp area, 10yr FXD T+140bp area

PRICE GUIDANCE: 5yr FRN 3mL+equivalent, 5yr FXD T+90-95bp, 10yr FXD T+130-135bp.

LAUNCHED: USD3bn 3-pt deal. - USD500m 5yr FRN at 3mL+80bp - USD1.25bn 5yr FXD at T+90bp - USD1.25bn 10yr FXD at T+130bp

PRICED: USD3bn 4-pt deal. - USD500m. Cpn 3mL+43bp. Due 4/16/2017. Ip par. Yld 3mL+43bp. - USD500m. Cpn 1.30%. Due 4/16/2017. Ip USD99.856. Yld 1.349%.T+55bp. - USD1.5bn. Cpn 2.45%. Due 4/16/2019. Ip USD99.822. Yld 2.488%. T+85bp. - USD500m. Cpn 3.75%. Due 4/16/2023. Ip USD99.744. Yld 3.781%. T+108bp.

BOOK: USD 7.5bn (USD800m 5yr FRN, USD3.2bn 5yr FXD, USD3.5bn 10yr FXD)

NIC: 5yr 10bp, 40bp 5s/10s curve.

COMPS: ACAFP (A2/A) 2.625% October 3, 2018 at G+78bp SOCGEN (Paris: FR0000130809 - news) (A2/A) 2.625% October 1, 2018 at G+83bp BPCE (A2/A) 2.500% December 10, 2018 at G+79bp BNP (Paris: FR0000131104 - news) (A1/A+) 2.450% March 17, 2019 at G+67bp BNP (A1/A+) 3.250% March 3, 2023 at G+98bp BPCE (A2/A) 4.000% April 15, 2024 at G+126bp

JACKSON NATIONAL LIFE GLOBAL FUNDING

Jackson National Life Global Funding, A1/AA/AA (s/s/s), announced a USD300m 5-year FA-backed note offering via Deutsche Bank and JP Morgan.

IPT: T+85bp area

PRICE GUIDANCE: T+75bp area (+/-2bp)

LAUNCHED: USD500m (upsized USD300m) at T+73bp

PRICED: USD500m. Cpn 2.30%. Due 4/16/2019. Ip USD99.709. Yld 2.362%. T+73bp. First (Other OTC: FSTC - news) pay 10/16/2014. Settlement date 4/16/2014.

BOOKS: USD800m

NIC: 3bp

COMPS: METLF (Aa3/AA-) 2.30% April 10, 2019 at G+70bp MASSMU (Aa2/AA+) 2.35% April 9, 2019 at 55/50

GERDAU

Brazilian steelmaker Gerdau (Baa3/BBB-BBB-) has announced a senior unsecured 144a/RegS USD500m (will not grow) 30-year bond. Bank of America Merrill Lynch, Itau, JP Morgan and Santander are the leads. Use of proceeds is general corporate purposes. There is an optional redemption of a six month par call. Governing law is New York law. Settlement is T+5.

IPT: high 7s

PRICE TALK: USD500m at 7 3/8 (+/-1/8)

LAUNCHED: USD500m at 7.25%

PRICED: USD500m 30-year; par; 7.25% yield

BOOKS: USD6bn (Reporting by Danielle Robinson; Editing by Marc Carnegie)