Bloomberg News

Amgen Sells $3 Billion of Bond to Fund Stock Dividend Payments

June 27, 2011

June 27 (Bloomberg) -- Amgen Inc. sold $3 billion of bonds in the largest debt sale this month as borrowing costs for investment-grade companies fall to about the lowest this year.

The world’s largest biotechnology firm sold five, 10- and 31-year debt, according to data compiled by Bloomberg. Proceeds are slated for general corporate purposes including debt repayment, buying back shares and quarterly dividends, the Thousand Oaks, California-based company said today in a regulatory filing.

Amgen said in April it will start paying its first dividend after its cash hoard grew to $17.4 billion. Its shares have slumped 27 percent since the end of 2005. Yields on investment- grade debentures fell to 3.69 percent on June 24 from 3.73 percent on June 17, according to Bank of America Merrill Lynch index data. That’s within one basis point of this year’s low on June 1.

The $750 million of 2.3 percent, five-year notes yield 90 basis points more than similar-maturity Treasuries, the $1 billion of 4.1 percent, 10-year debt pays a spread of 120 basis points and $1.25 billion of 5.65 percent bonds due in 2042 yield 140 basis points more than benchmarks, Bloomberg data show. A basis point is 0.01 percentage point.

The offering is the largest dollar-denominated debt sale since Hewlett-Packard Co. issued $5 billion on May 25, according to data compiled by Bloomberg.

Issuance globally declined last week to $33.1 billion, a 16 percent decline from the $39.5 billion issued in the five days ended June 17 and the least since $13.3 billion of debt was sold in the period ended Dec. 31, Bloomberg data show.

Amgen last issued debt in September 2010 with a $1.5 billion two-part offering, according to data compiled by Bloomberg.

Its $900 million of 3.45 percent bonds due in 2020 traded at 96.9 cents on the dollar on June 13 to yield 86.1 basis points more than Treasuries, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority.

--Editors: Pierre Paulden, Alan Goldstein

To contact the reporters on this story: Will Robinson in New York at wrobinson11@bloomberg.net; Tim Catts in New York at tcatts1@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net


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