Confidence Boost Allows High Grade Bond Deals To Hit Markets Wednesday

Market conditions didn't start off great Wednesday but a group of high-grade issuers see a window of opportunity before the expected holiday slowdown.

By tapping the U.S. bond markets this week, issuers can also avoid potential headline risks from deficit talks once the bipartisan super-committee delivers its plan to Congress on Nov. 23.

"There's no sense in waiting for the holidays and then getting caught in a market that's volatile," said Richard Testa, co-head of investment grade capital markets at Mitsubishi UFJ Securities.

The biggest deal entering the market is a $2 billion issue from BHP Billiton Finance, which is offering a three-part deal comprised of three-, five-, and 10-year bonds, according to a person familiar with the deal.

The bonds are guaranteed by its parent, natural resources company BHP Billiton Ltd. (BHP) According to data provider Dealogic, BHP was last in the U.S. markets in March 2009 when it sold $3.25 billion.

The senior unsecured notes are expected to carry ratings of A1 from Moody's Investors Service and A-plus from Standard & Poor's and Fitch Ratings.

Lead managers are J.P. Morgan and Barclays Capital. The deal is registered with the Securities and Exchange Commission and proceeds are for general corporate purposes, the person added.

Statoil ASA (STO) is borrowing $1.5 billion in a three-part issue of senior unsecured notes maturing in five, 10, and 30 years, according to a person familiar with the deal. The bonds are guaranteed by Statoil Petroleum ASA.

The Norwegian energy company last borrowed in the U.S. debt markets in August 2010, when it issued $2 billion, Dealogic said.

Lead underwriters are Bank of America Merrill Lynch, Deutsche Bank, and J.P. Morgan. The proceeds are being used for general corporate purposes.

The deal is expected to be rated Aa2 by Moody's Investors Service and AA-minus by Standard & Poor's.

Another major deal: Lowe's Companies Inc (LOW) plans to sell $1 billion of senior unsecured notes in 10-year and 30-year bonds, which are anticipated to be rated A3 by Moody's Investors Service and A-minus by Standard & Poor's.

Lowe's, a home improvement retailer, is raising funds for capital expenditure and to buy back common stock.

Underwriters are Bank of America Merrill Lynch, J.P. Morgan, and SunTrust Robinson Humphrey.

Jody Lurie, corporate credit analyst at Janney Capital Markets, said companies are jumping into the market in advance of what should be a slower period next week, thanks to decent economic data including Tuesday's retail sales report. She said the data has boosted investor confidence, despite overseas concerns.

Among smaller deals, Brazilian bank Banco do Brasil SA (BBAS3.BR) plans to issue $500 million of five-year bonds via the U.S. debt market, according to a person familiar with the deal.

The issue, expected to be rated Baa1 by Moody's Investors Service, is to be used for general corporate purposes.

Lead underwriters are Bradesco Securities, Citi, HSBC, and J.P. Morgan.

The bank last tapped the U.S. market in May 2011 with a $1.5 billion issue, according to Dealogic.

Rockwell Collins Inc. (COL) is also borrowing $250 million in a 10-year deal expected to be rated A1 by Moody's Investors Service and A by Standard & Poor's and Fitch Ratings, according to a person familiar with the deal.

The communications and aviation electronics company is using the proceeds for general corporate purposes including the repurchase of common stock and repayment of commercial paper. Underwriters are Bank of America Merrill Lynch, Citi, and Wells Fargo Securities.

Rockwell was last in the U.S. markets in May 2009, when it issued $300 million, Dealogic shows.

American Express Credit Corp. is pricing an undetermined amount of debt, according a person with the deal. The issue is an add-on its $1.3 billion five-year note sale in September.

It is expected to carry ratings of A2 from Moody's Investors Service, BBB-plus from Standard & Poor's, and A-plus from Fitch Ratings. Underwriters are Citi, Goldman Sachs, and UBS.

-By Patrick McGee, Dow Jones Newswires; 212-416-2382; patrick.mcgee@dowjones.com

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