[INFORMA FINALE: Calendar Clears; Another 30yr Bank Sub]
February 7, 2017
The ex-SSA grand total today came to $4.25bn from four countable trades. Three deals today had been in our pipeline. MPLX priced a $2.25bn 10s/30s 2-part (which drew in a $12.20bn book; Symantec priced a $1.1bn 8 nc 3 split-rated trade that counts for our total; and Fondo Mivivienda added $150m with a tap of its 3.50s of '23. We also got a $750m 30yr sub tap from Citi - the second 30yr bank sub tap this week.
In 2016, we only show four 30yr bank deals overall hitting the tape for a total of $5.4bn for the entire year:
The count so far this year is already up to three for a total of $2.650bn: today's Citi trade, Monday's First Republic Bank $400m 30yr sub tap, and the $1.5bn 30yr sr unsecured notes from Barclays priced on Jan 3.
In 2015, we saw $13.750bn in 30yr bank paper from 11 deals.
Of note today, the SSA arena beat out the ex-SSA total, coming it at $5.5bn from four trades.
For the third day in a row, the average NIC came in negative (-7.5bp). On Monday the average NIC was -3.625bp. Last Thursday, the average was -2.86bp.
As for tallies, the ex-SSA weekly is up to $10.95bn ($23.61bn estimate for week); Feb is now at $23.525bn (avg est $95.84bn), and YTD sits at $197.558bn.
Here's today's rundown:
[MPLX LP]"MPLX" (Baa3/BBB-/BBB- s/s/s) hit the market today with a $2.25bn SEC registered 2-part sr notes (10y due 3/1/27 and 30y due 3/1/47). MWC then 3mos par call on 10y and 6mos on 30y. UOP: general partnership purposes, which may incl, from time to time, acquisitions (including the planned dropdown of assets from MPC) and capex. Settle 2/10 (T+3).
VIA Barc/Citi/MUFG/WFS joint active books on both tranches. Passives: BAML/Miz/RBC/STRH/UBS/USB (10y); BNPP/BAML/Miz/STRH/TD/UBS (30y).
Having held two days of investor calls on Feb 1 and 2, MPLX announced today's deal with benchmark size, and initial price thoughts of "very high 100s" (we call that +187.5-200bp; or +193.75 mid) on the 10yr, and the 30yr talked with a 50bp curve (+243.75bp).
Official guidance emerged at 180a/225a on the 10s/30s (both +/- 5bp).
Ultimately, a $2.25bn deal priced as follows:
$1.25bn 4.125% 3/1/27 99.834 4.145% T+175. MW+30.
$1bn 5.20% 3/1/47 99.304 5.246% T+220. MW+35.
As for r/v, the outstanding MPLX 4.875s of 6/1/25 were quoted T+168bp (G182; $105.58). Adding in 10bp for an 8s/10s curve gets you to T+192bp (very close to the IPT level). So at the T+175bp pricing level, concession comes in at negative 17bp.
The 50bp 10s/30s curve is in line 10s/30s curves in the sector, so we'll call NIC negative 17bp on this tranche as well.
Comps away included the following.
Phillips 66 Partners L.P. (Baa3/BBB/NA) PSXP 3.55s of 10/1/26 T+155bp (G156; $96.88)
- 47bp 10s/30s with PSXP 4.90s of 10/1/46 quoted T+203bp ($97.22)
Valero Energy Partners (Baa3/BBB-/BBB-) VLP 4.375s of 12/15/26 T+180bp (G181; $101.42)
Buckeye Partners L.P. (Baa3/BBB-/BBB-) BPL 3.95s of 12/1/26 T+177bp (G177; $98.38)
- 68bp 10s/30s with BPL 5.60s of 10/15/44 T+245bp ($101.58)
Boardwalk Pipelines, LP (Baa3/BBB-/BBB-) BWP 4.45s of 7/15/27 T+200bp (G199; $100.20)
Energy Transfer Partners L.P. (Baa3/BBB-/BBB-) ETP 4.20s of 4/15/27 T+186bp (G185; $99.67)
- 50bp 10s/30s with ETP 5.30s of 4/15/47 T+235bp ($99.77)
Plains All American Pipeline LP / PAA Finance Corp (Baa3/BBB- neg/ BBB ) PAA 4.50s of 12/15/26 T+192bp (G193; $101.52)
- 35bp 10s/30s with PAA 4.90s of 2/15/45 T+228bp ($93.99)
As for the MLP/Sponsor relationship, Marathon Petroleum Corp (Baa2/BBB/BBB) was quoted as follows:
MCP 3.625s of 9/15/24 T+150bp (G167; $98.28). Adding in 15bp for a 7s/10s curve gets you to T+182bp - wide of where the MLP landed today.
MPC 5.85s of 12/15/45 were quoted T+286bp ($99.31), 66bp wide of today's MPLX 30yr pricing level.
For reference, Phillips 66 (A3/BBB+/NA) PSX 4.875s of 11/15/44 were quoted T+156bp ($104.25) versus the above PSXP 4.90s of '46 at 203bp (sponsor 47bp inside MLP)
Valero Energy Corp (Baa2/BBB/BBB) VlO 3.40s of 9/15/26 were quoted T+154bp (G155; $95.78) versus the above VLP 4.375s of '26 at G181. (sponsor 26bp inside MLP)
At the end of the day, MPLX seemed to spur a bit of a food fight, with final book size coming in at $12.20bn total (split $5.70bn 10yr; $6.50bn 30yr).
"MLPs are undersupplied, as is the long end of the curve," said one source.
[Citigroup Inc] "C" (Baa3/BBB/A- s/s/s) hit the market today with a $750m reopening of 4.75% sub notes due 5/18/46. Settle 2/13 (T+4).
VIA Citi sole lead manager.
Announced as benchmark size, we heard initial thoughts as 185a.
Official guidance emerged at T+175bp area +/- 2bp.
Ultimately, a $750m deal priced at T+173bp. ($750m tap of 4.75% 5/18/46 subs at 99.742 4.766% T+173. Total outstanding $1.75bn.)
As for r/v, the outstanding was quoted T+173bp (G177; $99.63) pre-announce. So at the T+173bp pricing level, concession was flat.
Book size was heard as $1.9bn.
[FONDO MIVIVIENDA SA] (Lewis Merl)
[Fondo Mivivienda SA] "MIVIVI" (BBB+/BBB+) (stb/stb) (S&P/Fitch) emerged today with a dual currency US$150m 144A/Reg S senior unsecured Tap of 3.5% due 01/31/23 (amount o/s US$500m) and PEN1.5bn (~$455.79m USD equiv) 144A/Reg S (pays in USD) due February 2024 (7Y). GDN Rating: BBB+/A- (stb/stb) (S&P/Fitch). Via MS/Scotia (B&D) as joint books. UOP: GCP. Settles T+5. RATIO: One GDN represents S/ 1,000 principal amount of notes (Purchase orders must be made in unit amounts & aggregate amount in PEN). Tap Listing Luxembourg (Euro MTF) / Application will be made to list the GDNs on the Irish Stock Exchange. GDN Clearing: DTC/Euroclear/Clearstream. New York law. Min denom US$150k&$1k.
Announced yesterday as a USDT BD (Tap) / PEN/USD TBD (GDN) size, IPTs were heard as TAP: T+180bp area / GDN: Low 7% area.
Guidance then emerged today as TAP: T+175bp area (+/- 5bp) / GDN: 7.0% area (+/-12.5bp).
The deal then launched a TAP: US$150m / GDN: PEN1.5bn size and ultimately priced as follows:
TAP: US$150m Tap of 3.5% due 01/31/23 3.537% at 99.802. T+170bp. MW+25bp.
GDN: PEN1.5bn 7.0% due 02/14/24 at 100.
Final booksize was heard as TAP: US$700m (4.67x covered) / GDN: PEN2.3bn (1.53x covered).
As for r/v, looking at the Tap, the o/s MIVIVI US$500m 3.5% due 01/31/23 (issue date - 01/24/13) were quoted G+166bp (3.69%, $99) pre-announce. At a pricing level of T+170bp, new issue concession on today's trade is 4bp.
Turning to the PEN GDN, with this being a debut GDN trade, there is no direct comp and NIC will be listed as NA. For reference, respondents looked at the sovereign GDN from last year. The o/s PERU PEN1,599.308bn 6.25% due 08/12/28 at 99.85 (issue date - 09/29/16) were quoted 6.30% ($100.50, G8.5bp). Adjusting for maturity difference (7Y/Long 11Y), we subtracted 50bp, bringing FV to 5.80%.
It is of note that though a coverage ratio of 1.5x on the GDN may seem small, especially considering a large book for the USD print (US$700m - 4.67x covered), the last GDN trade this year, the Banco Supervielle ARS4,768,170,00 FRN due 08/09/20 also had a 1.5x coverage ratio. According to respondents, the USD trade had demand due to Peru Corp scarcity, while in relation to the GDN trade there are fewer international investors for local currency trade, causing books to be smaller.
Today's print was expected as Fondo Mivivienda, the 100% government-owned for-profit financial institution that promotes mortgage financing in Peru, announced on 01/20 that it mandated MS/Scotia to organize a series of fixed-income investor meetings in the US and Europe commencing on Tuesday, January 31, 2017 (schedule: 01/31 London/Lima, 02/01 Boston, 02/02 Los Angeles, 02/03 New York). A PEN-denominated (in the form of Global Depositary Notes) and/or a USD-denominated 144A/Reg S senior unsecured intermediate benchmark bond offering was expected to follow, subject to market conditions.
According to Fitch rating report yesterday, the notes sold in the international offering will be consolidated with and form a single series and will be fully fungible with the notes concurrently offered in Peru in the local offering. The notes will rank pari passu with the existing and future senior unsecure and unsubordinated obligations of FMV. The notes will be effectively subordinated to all of future secured indebtedness to the extent of the value of the collateral securing such indebtedness and certain other obligations that in the event of liquidation are granted preferential treatment under Peruvian law.
[SYMANTEC SPLIT RATED ROUNDS OUT THE TOTAL]
Split-rated: $1.1bn (up from $1bn) Symantec Corp (SYMC) 144A/Reg S sr notes due 04/15/25 (8y). NC3 (MWC T+50bp), then at 102.50, 101.25, 100). Equity claw: 3y 35% at 105. Baa3/BB+/BB+ (negative/stable/positive). Via BAML (B&D)/JPM joint physical books, Barc/Citi/Mizuho/MUFG/RBC/SMBC/TD/WFS joint books. No reg rights. Settles Feb 9 (T+2). 144A CUSIP: 871503AU2. Price talk 5.25%-5.50%. Launched: $1.1bn at 5.00% at par. Roadshow 02/02-06 (Thurs/Fri West Coast, Mon NYC) (originally ending 02/07, Bstn meetings canceled). Books closed at 11am today.
Priced: 5.00% at 100. +271bp vs 2% 02/15/25.
[The European Investment Bank](EIB), rated Aaa/AAA/AAA (all stable) priced $3bn (no grow) long 3y global notes. FCA/ICMA stabilization. Settle 2/14.
Via GS/MS/TD joint leads.
Official guidance emerged at: m/s +14 area.
UPDATE: spread set at MS+12.
PRICED: $3bn 1.75% 5/15/20 99.706 1.844% T+42.5 (MS+12).
[Tennessee Valley Authority] (TVA) exp Aaa/AA+ hit the market with $1bn (no grow) 3(a)2 exempt 10y sr notes due 2/1/27. No call. UOP: refi existing debt or for other power system purposes. Pricing Tuesday. Settle 2/10 (T+3).
Via BAML/Barc/Miz/MS (B&D) joint books.
Initial thoughts were heard at: T+low 50s.
Official guidance emerged at: T+50 area (+/- 2).
LAUNCHED: $1bn 2/1/27 10y at T+48.
PRICED: $1bn 2.875% 2/1/27 99.923 2.884% T+48.
[KfW]Aaa/AAA/AAA (s/s/s) hit the market with $1bn (no grow) SEC registered 19mo global notes due 9/13/18. BARC/CITI/MS joint books. Guaranteed by the FEDERAL REPUBLIC OF GERMANY. FCA/ICMA stabilisation. Expected to price sometime today.
Initial thoughts were heard at: MS-4 area. GUIDANCE: MS-4 area.
UPDATE: spread set at MS-4. Books USD650m+. Global books to close at 9am NYT / 2pm UKT.
PRICED: $1bn 1.25% 9/13/18 99.859 T+17.45 (MS-4).
[Dexia Credit Local] announced $500m 144a Reg S 2yr (2/15/19) unsecured guaranteed floating rate notes. Aa3/AA/AA-. The Notes benefit from an unconditional and irrevocable first demand guarantee, severally but not jointly, from the States of Belgium (51.41%) France (45.59%) and Luxembourg (3.00%). Denoms: 250k/1k. Expected to price sometime today. S/D 2/15.
Initial thoughts were heard as: 3ML+50
PRICED: $500m 3mL+50 2/15/19 FRN, at 100.
[SSA ON TAP]
[Bank Nederlandse Gemeenten](BNG) Aaa/AAA/AA+ (s/s/s) announced 144A/Reg S dollar benchmark due 15-Feb-2019. Pay date 15 February.
Via BMO, BNPP, GSI, & Nomura
Initial thoughts were heard at: m/s+13a, taking IoIs for 8 Feb's biz
[M&A TODAY] (Greg Hill)
With the addition of a $1.1bn deal from Symantec today, our YTD M&A total now stands at $5.6bn - from 7 M&A trades. CBOE - $650m, Regency - $650m, Tech Data $1bn, Crown Castle $500m, Standard industries $500m, Estee lauder $1.2 of the $1.5 towards M&A, Symantec $1.1bn.
[Symantec & LifeLock - Priced $1.1bn Today]
[Symantec Corp] (SYMC) today priced $1.1bn 144A/Reg S sr notes due 2025 (8y). NC3 (par + 1/2 coupon). Baa3/BB+/BB+ (negative/stable/positive). No reg rights. Settles Feb 9 (T+2).
On 11/21/2016, Symantec Corp announced that it had entered into a definitive agreement to acquire LifeLock, Inc. for $24 per share or $2.3bn in enterprise value.
On 12/12/16, in a prelim proxy, the financing is confirmed to be a $750m sr unsec bridge loan facility provided by BAML/Barc/Citi/JPM/WFS. Prior to the closing date of the merger SYMC expected to issue sr notes in a registered public offering or private placement. The merger agreement also permited SYMC to secure a replacement debt commitment in lieu of drawing on the commitment.
Moody's: rated $1bn SYMC 144A/Reg S sr notes due 2025 (8y) Baa3 (negative outlook, changed from under review for downgrade). Via BAML (B&D)/JPM+.
S&P/Fitch: rated $1bn SYMC 144A/Reg S sr notes due 2025 (8y) BB+/BB+ (stable, removed from CreditWatch negative/positive). Via BAML (B&D)/JPM+. S&P also lowered the corporate credit and sr unsec rating to BB+ from BBB-.
[MPLX LP Dropdown of Assets From MPC]
MPLX LP(MPLX) Baa3/BBB-/BBB- (s/s/s) hit the market with $2.25bn 2 part sr notes (10y due 3/1/27 and 30y due 3/1/47). The proceeds of the new issue are for general partnership purposes, which may include, from time to time, acquisitions (including the planned dropdown of assets from MPC) and capex.
Although, related to M&A we don't definitively know what the proceeds will be used for so we will not count this towards our M&A totals.
Background - Dropdown of Assets
The dropdown of all MLP-Qualifying assets is expected in 2017). These planned dropdowns are subject to regulatory clearances including tax, requisite approvals and market and other conditions. Details of the transaction are expected to be announced following receipt of the requisite approvals and tax clearance for all dropdowns.
A proposed transaction representing around $250m of this annual EBITDA is already under review and is expected to close by the end of Q1.
MPC plans to dropdown an additional ~$350m of EBITDA-generating assets by the end of the Q4 2017.
The remaining ~$800 million of EBITDA-generating assets, with ~$600 million of annual EBITDA related to fuels distribution, are expected to be offered to MPLX as soon as practicable once the company has received the necessary tax clearance. If tax clearance is delayed for the fuels distribution business, then ~$200m would be dropped no later than the Q1 of 2018, with the remaining ~$600m dropped following receipt of the necessary tax clearance.
MPC also expects the partnership to finance the dropdown transactions with debt and equity in approximately equal proportions, with the equity financing to be funded through MPLX LP units issued to MPC.
According to the press release on Feb 1st, MPLX announced its 2017 capital spending and investment plan of $1.4bn to $1.7bn organic growth, plus approx. $100m for maintenance capital. About 75% of these growth investments are directed to the development of natural gas and gas liquids infrastructure expansion.
MPLX's has long-term intent to maintain an investment-grade credit profile.
[Algonquin Power & Utilities Corp - Ratings Update]
Since the completion of the merger - S&P has revised its outlook of Algonquin "AQN" (BBB) and Empire District Electric (BBB) ratings to stable from negative. S&P has also affirmed ratings on the companies, including 'BBB' long-term corporate credit rating on APUC.
Algonquin "APUC" recently announced it had received all of the proceeds under the final installment of the C$1.15bn convert debentures that it used to finance the acquisition of Empire District, in February 2016.
Holders of approximately 91% of the convertible debentures have elected to convert the debt into APUC common shares, reducing the company's debt load.
In terms of financing, Algonquin has obtained a US$1.6bn fully committed bridge facility from CIBC, JPM, Scotia, and Wells Fargo ($1.065bn 1yr Bridge B and $535m bridge A). Permanent financing is expected to be obtained by placements of common equity, pfd equity, convertible debentures, and LT debt. On the M&A call, management noted that the debt financing portion will be completed closer to the expected closing of Q1 of next year.
[Broadcom & Brocade Merger on Track H2 '17]
[Broadcom Ltd] (AVGO) (na/BBB+) On February 3rd the FTC required additional information regarding the acquisition of Brocade. The FTC's second request extends the waiting period under the HSR Act. The transaction is expected to close in the second half of Broadcom's fiscal year 2017 (which begins on April 30, 2017 and ends on October 28, 2017)
The transaction is subject to other regulatory approvals including clearance required under antitrust laws of the European Union, Japan, and the People's Republic of China.
Evercore is acting as financial advisor in connection to the merger.
[INTERNATIONAL COMPANY FOR WATER AND POWER PROJECTS] ("ACWA Power"), a leading developer, investor, co-owner and operator of a portfolio of power generation and water desalination plants in the Kingdom of Saudi Arabia, has mandated Jefferies as Global Coordinator & Sole Structuring Advisor along with Citi, CCB Singapore, Mizuho and Standard Chartered Bank as Joint Lead Managers & Joint Bookrunners to arrange a series of fixed income investor meetings in the US, Europe, Asia and the Middle East commencing on November 23, 2016. ACWA Power Management and Investment One Limited ("Issuer") is a wholly-owned subsidiary of ACWA Power, which holds an interest in a portfolio of nine power generation and water desalination plants in the Kingdom of Saudi Arabia. The Issuer will consider a benchmark US Dollar Senior Secured 144A/Reg S Bond offering with expected investment grade ratings from two international ratings agencies. FCA/ICMA stabilization rules and other applicable stabilization rules apply. A capital markets transaction will follow, subject to market conditions. *UPDATE 12/07 - RDSHW COMPLETE, WILL ACCESS MARKET IN EARLY 2017.
[BANK NEDERLANDSE GEMEENTEN] (BNG), the Dutch public sector agency, rated Aaa (stable) / AAA (stable) / AA+ (stable), on 11/3/16 announced that it has mandated BNP PARIBAS, HSBC and TD SECURITIES to organize a series of fixed income investor calls over the coming weeks on its Sustainability Bond Framework. An inaugural USD-denominated Reg-S/ 144a Sustainability Bond transaction may follow, subject to market conditions. FCA/ICMA stabilization.
[HYUNDAI CAPITAL SERVICES] has mandated CITI/HSBC/NOM as Joint Bookrunners to arrange investors meetings commencing October 17 with possible USD-denominated 144A/Reg-S bond to follow. Baa1/A-. INVESTOR MEETINGS BEGIN OCT 17.
[KOREA HYDRO & NUCLEAR POWER CO LTD] (�KHNP"), rated Aa2 (Stable) by Moody's, AA (Stable) by S&P and AA- (Stable) by Fitch, has mandated BNP PARIBAS and Citigroup to arrange a series of fixed income investor meetings in the U.S., commencing from 18 October 2016. SCHEDULE: 10/18 New York, 10/19 Boston, 10/20 Chicago.
[INDUSTRIAL BANK OF KOREA] Aa2/AA-/AA- by Moody's/S&P/Fitch, has mandated HSBC and Nomura to arrange a series of fixed income investor meetings in Singapore and Hong Kong, commencing on 22 August 2016. A 144A/Reg S USD-denominated bond offering may follow, subject to market conditions. (8/18/16)
RDSHW SCHED 08/22-08/25.
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