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(Updates details of offerings in second paragraph.)
Oct. 27 (Bloomberg) -- BP Plc, Verizon Communications Inc. and Morgan Stanley are leading borrowers selling at least $17 billion of debt today as Europe’s leaders instill confidence into credit markets that drained in August and September.
BP, operator of the Macondo well in the Gulf of Mexico that caused the worst ever U.S. oil spill last year, sold $2 billion of bonds, according to data compiled by Bloomberg. Morgan Stanley raised $1 billion of 5.5 percent bonds maturing in July 2021, adding to an existing offering. New York-based Verizon may issue $4.6 billion, said a person with knowledge of the transaction, who declined to be identified because terms aren’t set.
A benchmark gauge of U.S. corporate credit risk decreased the most in more than a year after European leaders boosted their rescue fund’s capacity to 1 trillion euros ($1.4 trillion) in a bid to curb the region’s fiscal crisis and prevent it from infecting bank balance sheets worldwide. The bond sales planned for today in the U.S. would be the most since May 24.
“Everything’s gone away, everything’s good, lots of Neosporin, the market’s all better,” said Timothy Cox, executive director of debt capital markets at Mizuho Securities USA Inc. in New York, referring to an antibiotic. “We’ve got low Treasury rates, a mending situation in Europe, corporate earnings have been pretty solid. People realize the balance sheets of corporations are extremely pristine and very healthy.”
Bond sales have climbed from $7.6 billion last week as relative yields on investment-grade corporate debt fall to 231 basis points, or 2.31 percentage points, the lowest since Sept. 9, according to Bank of America Merrill Lynch index data. Yields on benchmark 10-year Treasuries rose to 2.38 percent today.
BP Capital Markets Plc issued $1 billion of five-year notes that paid 107 basis points more than comparable-maturity Treasuries, along with $1 billion of 10-year bonds that paid a 117 basis-point spread, Bloomberg data show.
The London-based oil company last issued dollar-denominated bonds in March, when it sold $3.7 billion of debt, Bloomberg data show.
International Business Machines Corp., the biggest computer-services provider, sold $1.35 billion of 0.875 percent, three-year notes and $500 million of 2.9 percent, 10-year debt. Verizon, the second-largest U.S. phone company after AT&T Inc., is marketing a four-part bond sale to retire outstanding securities and pay back commercial paper.
‘It’s About Time’
Railroad CSX Corp. sold $600 million of senior unsecured 30-year bonds and U.S. Bancorp, the nation’s biggest regional lender, issued $1.25 billion of 2.2 percent, five-year debt. SunTrust Banks Inc. issued $750 million of debt today.
“It’s about time,” Cox said. “My gut tells me people are really going to want to get their hands on high-quality names. There is a lot of cash in the market.”
The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, plunged 12.2 basis points to a mid-price of 113.6 basis points at 4:27 p.m. in New York, according to index administrator Markit Group Ltd. That’s the lowest level since Aug. 17 and the biggest daily decline since May 2010.
--With assistance from Joseph Ciolli and John Parry in New York. Editors: Pierre Paulden, Sharon L. Lynch
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