Cheap money means big borrowing by America’s largest corporations. A $450 million bond issue by McDonald’s (MCD) Wednesday will pay a record low 3.5% yield on 10-year debt, and other companies are also getting in on the low interest charged by the current capital markets.
According to The Wall Street Journal, corporate borrowing is surging even as investors see lower yields. Corporate debt issues are already at $1.4 trillion worldwide. That’s less than the $2.1 trillion worth of issues for the same period a year ago, but the European debt crisis had put the brakes on borrowing for most of May and June.
Although many U.S. companies are cash rich, low interest rates are spurring many to refinance existing debt, pushing down yields for bond investors.
Below is a list of the 12 largest bond issues so far this year. (The largest issue pairs, from Kraft (KFT) and Novartis (NVS), were part of the same two fund-raising efforts but carried different interest rates.)
| Issue Date | Issuer | Industry | Description | Rating | Proceeds ($US Bil.) |
|---|---|---|---|---|---|
| Source: Standard & Poor’s | |||||
| Feb. 4 | Kraft Foods | Manufacturing | 5.375% Global Bonds due ’20 | BBB- | 3.719 |
| Feb. 4 | Kraft Foods | Manufacturing | 6.500% Global Bonds due ’40 | BBB- | 2.971 |
| March 9 | Novartis Capital | Manufacturing | 1.900% Gtd Global Nts due ’13 | AA- | 1.997 |
| March 9 | Novartis Capital | Manufacturing | 2.900% Gtd Global Nts due ’15 | AA- | 1.990 |
| Feb. 4 | Kraft Foods | Manufacturing | 4.125% Global Bonds due ’16 | BBB- | 1.744 |
| June 30 | Wal-Mart Stores | Retail | 3.625% Global Notes due ’20 | AA | 1.498 |
| Feb. 24 | Comcast | Radio/TV/Telecom | 5.150% Sr Unsecurd Nts due ’20 | BBB+ | 1.398 |
| March 3 | Time Warner Cable | Radio/TV/Telecom | 4.875% Gtd Global Nts due ’20 | BBB | 1.395 |
| May 26 | Discovery Communications LLC | Radio/TV/Telecom | 5.050% Gtd Global Nts due ’20 | BBB- | 1.295 |
| March 30 | Linn Energy LLC | Natural Resource | 8.625% Senior Notes due ’20 | B | 1.268 |
| Jan. 11 | PepsiCo | Manufacturing | Global FRNs due ’11 | A+ | 1.250 |
| June 8 | Microsoft | Pers/Bus/Rep Svc | Zero Cpn Cvt Senior Nts due ’13 | AAA | 1.250 |
Published July 30, 2010
Similar Posts:
- The Risks and Benefits of Municipal Bond Funds (Fund Manager Spotlight)
- How to Make Sure Your Bonds Are Safe
- For Auto Makers, ‘Safety’ Is Buzzword for 2011
- Is a Roth Conversion Right for You?
- Getting Ready for April 15 and Beyond
