Bloomberg News

McDonald’s Plans $750 Million of Debt as Yields Near Record Lows

February 02, 2012

Feb. 2 (Bloomberg) -- McDonald’s Corp., the world’s largest restaurant chain, is tapping the debt market for $750 million in a two-part offering as low yields accelerate U.S. bond sales.

McDonald’s is selling $500 million of 30-year notes that may yield 80 basis points more than similar-maturity Treasuries, according to a person familiar with the deal. The firm is also offering $250 million of 2.625 percent 10-year notes that may pay a spread of 52 basis points, said the person, who declined to be identified because the offering is private. Oak Brook, Illinois-based McDonald’s sold $500 million of the debt on Sept. 27, according to data compiled by Bloomberg. The notes traded yesterday at 101.6 cents on the dollar to yield 2.45 percent, a 61 basis-point spread, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Yields on investment-grade corporate bonds in the U.S. have fallen to 3.56 percent from 3.97 percent at the time of the September sale and are close to the record 3.503 percent reached Aug. 9, according to Bank of America Merrill Lynch index data.

McDonald’s is looking to tap the debt market after its Jan. 24 forecast of a drop in profit this year because of currency fluctuations. It follows investment-grade bond sales of $15.2 billion yesterday, including issues from International Business Machines Corp. and Procter & Gamble Co.

The sale is being managed by Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc. McDonald’s has $966 million of bonds maturing this year, Bloomberg data show.

The restaurant chain is rated A2 by Moody’s Investors Service and an equivalent A by Standard & Poor’s.

--Editors: Mitchell Martin, Dennis Fitzgerald

To contact the reporter on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net;

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


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