Bloomberg News

GlaxoSmithKline Leads Borrowers Selling Most Debt Since March

May 02, 2012

GlaxoSmithKline. Photographer: Asim Hafeez/Bloomberg

GlaxoSmithKline. Photographer: Asim Hafeez/Bloomberg

GlaxoSmithKline Plc (GSK), the U.K.’s largest drugmaker, sold $5 billion of bonds in its first dollar- denominated offering in four years as companies market the most U.S. debt in more than a month.

Glaxo issued $1 billion of three-year notes and $2 billion each of five- and 10-year bonds, according to data compiled by Bloomberg. The deal is its first dollar sale since 2008, when the London-based company raised $9 billion in what was then the largest U.S. corporate bond offering in six years.

The company is leading borrowers including Hong Kong-based Hutchison Whampoa Ltd. (13) and Ericsson AB, the biggest maker of wireless network equipment, that are selling at least $14.6 billion in U.S. debt, the most since March 14, according to data compiled by Bloomberg. Foreign issuers including Barclays Plc (BARC) and BP Plc (BP/) are raising money in the U.S. bond market after yields on investment-grade debt fell to the lowest level ever last week.

“Almost half of corporate issuance is being seen from non- U.S. issuers,” Jennifer Powers, head of investment-grade capital markets for the Americas at Royal Bank of Scotland Group Plc, said today in New York. “Issuers are finding that the U.S. market is attractive or their home market is not open to them.”

Barclays Debt

Barclays, the U.K.’s second-largest lender by assets, sold $2 billion of 2.25 percent five-year debt to yield 153 basis points more than similar-maturity Treasuries, Bloomberg data show. A basis point is 0.01 percentage point.

Hutchison Whampoa, the telecommunications company whose chairman is billionaire Li Ka-shing, sold $1 billion of dollar- denominated perpetual bonds, its first offering since January. The notes carry a variable coupon, starting at 6 percent for the first five years, and were issued at a yield of 517.6 basis points more than similar-maturity U.S. Treasuries.

Ericsson, which last offered dollar-denominated debt more than a decade ago, sold $1 billion of 4.125 percent notes due May 2022 that yield 225 basis points more than Treasuries. It will use proceeds to refinance debt maturing through 2014 and for general corporate purposes, the Stockholm-based firm said in a regulatory filing.

Glaxo, which has about $23 billion of bonds outstanding, sold its three-year debt to yield 45 basis points more than Treasuries, the five-year portion at 75 basis points more than benchmarks, and the 10-year debt at a 100 basis-point spread. Proceeds will be used for general corporate purposes such as refinancing existing bonds, Glaxo said today in a filing.

Yields on investment-grade U.S. bonds fell to a record 3.37 percent on April 27, down from 3.895 percent at the end of last year, Bank of America Merrill Lynch index data show. The debt has returned 3.59 percent this year, compared with 0.01 percent for Treasuries, the data show.

BP, Europe’s second-biggest oil company, sold $1.75 billion of 3.245 percent 10-year notes and $1.25 billion of 1.846 percent five-year bonds, its largest single-day issuance in a year. The oil explorer’s financing arm, BP Capital Markets, issued the five-year debt at a spread of 103 basis points with a 133 basis-point premium for the 10-year bonds.

To contact the reporters on this story: Charles Mead in New York at cmead11@bloomberg.net; Sarika Gangar in New York at sgangar@bloomberg.net

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


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