High-grade bond issuance climbed within short reach of the highest monthly total on record, after four issuers combined yesterday to offer $8.25 billion of new supply, largely on the strength of registration-exempt bank notes offerings.
The total as of May 27 left month-to-date issuance at roughly $134 billion, or less than $2 billion shy of the all-time peak for any calendar month, in September 2013, when Verizon Communications skewed the total with a record-smashing single offering of $49 billion of notes backing its acquisition of the remaining stake in Verizon Wireless from Vodafone.
LCD high-grade issuance totals exclude sovereign, quasi-sovereign, supranational, and preferred and hybrid-structure deals.
UBS AG, via its Stamford, Conn.-branch, yesterday completed a $3 billion, four-part offering, including $750 million of FRNS due June 2017 at L+56, and $1.25 billion of same-dated 1.375% fixed-rate notes at T+80, or 1.423%; along with $250 million of FRNs due June 2020 at L+85, and a $750 million tap of the existing 2.35% notes due March 26, 2020, at T+90, or 2.432%.
The 2020 tap was printed at a tighter spread but higher yield relative to when the coupon was first printed on March 23 as a $750 million offering at T+97, or 2.355%.
PNC Bank also launched a $3 billion offering of senior notes, across $550 million of three-year floating-rate notes due June 1, 2018 at L+42 and $1.3 billion of same-dated fixed-rate notes at T+65; along with $750 million of five-year notes due June 1, 2020 at T+83, and $400 million of 10-year notes due June 1, 2025 at T+115.
The 2018 and 2020 issues were set at the firm end of guidance ranges (from T+65-67 for 2018 fixed-rate notes and from T+83-85 for 2020 fixed-rate notes) and through initial fixed-rate whispers in the areas of T+75 and T+90. But the 10-year spread was set at the wide end of talk from T+110-115, and in line with initial whispers in the T+115 area.
KeyBank launched a $1.75 billion, three-part offering, including $250 million of three-year FRNs at L+52; and $750 million of same-dated, fixed-rate notes at T+75; along with $750 million of 10-year notes at T+120. KeyBank was last in market in February, when it completed a $1 billion offering of 2.25% notes due March 2020 at T+80.
Away from the bank sector, Xcel Energy (NYSE: XEL) yesterday completed a $500 million, “no-grow” offering of holding-company senior debt at the tight end of talk, across $250 million each of 1.2% three-year notes at T+58 and 3.3% 10-year notes at T+120. Initial whispers started from T+70-75 for the 2018 issue, and in the T+130 area for the 2025 issue.
The company locked in funds to repay near-term debt and for general corporate purposes, according to regulatory filings. Xcel had consolidated short-term debt of $969 million as of March 31, including $548 million of debt at the holding-company level.
The Minneapolis-based utility holding company – which is parent to entities including Northern States Power Company, Northern States Power Company-Wisconsin, Public Service Company of Colorado, and Southwestern Public Service Company – is not a frequent issuer at the parent level, having last tapped the long-term debt markets more than two years ago, in a deal that at the time snapped an absence from the debt markets dating to September 2011. – John Atkins/Gayatri Iyer