Bloomberg News

BAE, John Deere, Darden Sell Bonds Following Decline in Volume

October 05, 2011

Oct. 5 (Bloomberg) -- BAE Systems Plc, John Deere Capital Corp. and Darden Restaurants Inc. sold a combined $2.65 billion of bonds, after issuance in the first two days of the week fell 96 percent from a week earlier.

The $1.25 billion three-part sale by BAE Systems was the first issue by Europe’s largest defense company since June 2009, including $500 million of 4.75 percent notes due in 2021. John Deere Capital issued $500 million of floating-rate notes due in 2013 and $500 million of 3.15 percent bonds due in 2021. Orlando, Florida-based Darden sold $400 million of 4.5 percent, 10-year debt.

Relative borrowing costs are at the highest levels in more than two years after Standard & Poor’s stripped the U.S. of its top credit grade in August and Greece strives to avoid a default. The issuance decline comes after the Federal Reserve’s plan to replace $400 billion of short-term debt in its portfolio with longer-term Treasuries failed to prompt borrowing.

The offering from Darden was the first since 2007 for the operator of the Olive Garden and Red Lobster chains. London- based BAE Systems also issued $350 million of five-year, 3.5 percent notes and $400 million of 5.8 percent, 30-year bonds.

Sales of dollar-denominated debt in the U.S. market on the first three days of this week have decreased 74 percent to $3.4 billion from the $12.9 billion sold between Sept. 26 and 28, according to data compiled by Bloomberg.

BAE Systems and Darden may use the proceeds to repay debt and for general corporate purposes, according to people with knowledge of the transactions. John Deere Capital also intends to use its proceeds for general corporate purposes.

--With assistance from Tim Catts in New York. Editors: Mitchell Martin, John Parry

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

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


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