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The demand for corporate bonds continued unabated Monday, as eight issuers came to market with new issues totaling nearly $4.6 billion. Should we continue to see strong issuance in the credit sector, I believe we could meet or exceed last week's nearly $40 billion in supply.

The following were the issues brought on March 12:

One thing that gets your attention pretty quickly is the high-yield finance and asset management issues.

CIT Group (CIT) came with $1.5B of a 6 year senior unsecured note (prospectus here).

What I found interesting in the offering memorandum was under the capitalization section:

Consists of the following aggregate principal amount of Series C Notes (exclusive of FSA adjustments in the case of the 7.000% Series C Notes):

$1,300.0 million 5.250% Series C Notes due April 1, 201
$1,500.0 million 4.750% Series C Notes due February 15, 2015 (as adjusted only)
$1,554.2 million 7.000% Series C Notes due May 4, 2015
$3,094.5 million 7.000% Series C Notes due May 2, 2016
$4,116.3 million 7.000% Series C Notes due May 2, 2017
$700.0 million 6.625% Series C Notes due April 1, 2018
$1,750.0 million 5.500% Series C Notes due February 15, 2019 (as adjusted only)

Why is this interesting? Note the 4.75% Series C due 2015 and the 5.50% Series C due 2019. These are listed in the "as adjusted" section of the capitalization section. Looking back through the company's filings, I found an 8-k dated February 7, 2012, for the Series C issuance. An excerpt:

On February 2, 2012, CIT Group Inc. ("CIT") completed a private placement of $3.25 billion aggregate principal amount of Series C Second-Priority Secured Notes, consisting of $1.5 billion principal amount of notes due 2015 (the "2015 Notes") and $1.75 billion principal amount of notes due 2019 (the "2019 Notes," together, the "Notes"). The 2015 Notes were issued to investors at par and will bear interest at a rate of 4.750% per annum and the 2019 Notes were issued to investors at par and will bear interest at a rate of 5.500% per annum. Interest on the Notes will be payable semi-annually in cash in arrears on February 15 and August 15 of each year, commencing August 15, 2012.

The Notes are obligations of CIT and are secured by the same collateral that secures CIT's outstanding Series A Notes. In addition, the Notes are guaranteed by the same subsidiaries of CIT (the "Guarantors") that guarantee CIT's outstanding Series A Notes. The guarantees and collateral for the Notes will be released upon the Notes receiving an investment grade rating from each of Moody's and S&P after giving effect to the release. In addition, the guarantees and/or collateral for the Notes will be automatically released if the same guarantees and/or collateral for the Series A Notes are released at the same time or if the Series A Notes have been paid off in full.

With this new issue, the Series A will be paid off and the guarantees and/or collateral for the Series C will fall away. Secured debt will fall below 40%, making CIT a more attractive investment from both a debt and equity standpoint.

Norfolk Southern (NSC) (prospectus here) priced $600 million ten years at 110bps over treasuries. While the deal seems tight for a BBB rated company, the company is well positioned to benefit from an improving economy and the corresponding improvement in credit metrics. The deal is priced more akin to a utility given this outlook.

US Steel (X) (prospectus here) priced $400 million ten year bonds at a yield of 7.50%. As the proceeds are being used to redeem $300.0 million of their 5.650% senior notes due 2013, debt only increases $100 million to $3.7 billion (excluding pension liabilities). The deal contains a $101 change of control covenant (triggered if there is a change of control and the notes are downgraded by one "gradation." The remaining covenants are essentially investment grade covenants. Not fond of the covenant package investors receive.

I continue to expect issuance levels to remain at strong levels and low absolute yields - relative spreads are still attractive.

Source: Notable Corporate Bonds Issued March 12