Already a Bloomberg.com user?
Sign in with the same account.
Deere & Co
Honda Motor Co Ltd
General Electric Co
Corporate issuers led by Deere & Co. (DE) and Honda Motor Co. (HMC) offered the most dollar-denominated debt today in almost six months after yields on U.S. investment-grade bonds dropped to a record low.
Deere, the largest maker of agricultural equipment, and Tokyo-based Honda led borrowers selling or planning to sell at least $17.1 billion of bonds, the most since $26.9 billion on March 5, according to data compiled by Bloomberg. Sales this year have averaged $5.7 billion per day while August issuance, the busiest on record for the month, averaged about $5 billion.
Borrowers are tapping the market as investors return from U.S. holidays, with September standing as the most active month of the quarter during the past three years. Unprecedented low interest rates are encouraging companies to sell debt before potential volatility from a meeting of the European Central Bank and from U.S. payroll data at the end of the week, said Simon Mayes at BNP Paribas SA.
“Things are back in full swing now,” Mayes, head of the financial institutions group syndicate in New York, said in a telephone interview. “We definitely expect it to be busy for the next couple of weeks, and it’s going to be front-loaded this week.”
Yields on investment-grade securities fell below 3 percent for the first time on Aug. 31, reaching a record low 2.98 percent, according to the Bank of America Merrill Lynch U.S. Corporate Master index. The extra yield investors demand to own company bonds rather than government debentures was at 186 basis points, or 1.86 percentage points.
Deere issued $1 billion of debt, selling $500 million each of 0.7 percent, three-year notes to yield 42 basis points more than similar-maturity Treasuries and 1.2 percent, five-year debt at a relative yield of 62 basis points, Bloomberg data show. The bonds may be rated A2, the sixth level of investment grade, by Moody’s Investors Service, according to a person familiar with the transaction who asked not to be identified because the terms aren’t set. Barclays Plc, Deutsche Bank AG and HSBC Holdings Plc managed the sale for the Moline, Illinois-based company.
Honda, Japan’s third-largest carmaker, sold $1.5 billion of debt through its U.S. unit, Bloomberg data show. The company issued $1 billion of 1 percent, three-year notes at a relative yield of 77 basis points and $500 million of 1.5 percent, five- year debt at a spread of 95 basis points.
The debt may be rated A1, the fifth level of investment grade, by Moody’s, according to a person familiar with the transaction. Bank of America Corp., BNP Paribas and Deutsche Bank are managing the offering, said the person, who asked not to be identified because the terms aren’t set.
Policy makers will convene at the European Central Bank meeting Sept. 6, when ECB President Mario Draghi is expected to flesh out plans for a sovereign bond-purchase program that would aid nations struggling to fund themselves.
U.S. payrolls probably increased 125,000 in August following a gain of 163,000 in July and unemployment exceeded 8 percent for a 43rd month, economists surveyed by Bloomberg News said ahead of Labor Department figures Sept. 7.
Public Service Co. of Colorado (3487Q), the Denver-based electricity and natural gas provider, sold $800 million of notes, Bloomberg data show. The company issued $300 million of 2.25 percent, 10-year debt at a spread of 68 basis points and $500 million of 3.6 percent, 30-year securities at 95 basis points. The debt may be rated A2, the sixth level of investment grade, by Moody’s, the data show. Bank of America, Credit Suisse Group AG, Goldman Sachs Group Inc., and Royal Bank of Scotland Group Plc managed the sale.
General Electric Co. (GE), the biggest maker of power-generation equipment with $32 billion of bonds maturing in the rest of 2012, sold $2 billion of 3.15 percent, 10-year notes and an add- on offering of $800 million of 1.625 percent, three-year notes, Bloomberg data show.
U.S. sales reached $74.5 billion in September 2011 and $162.2 billion for the same period in 2010, the highest on record for the month, Bloomberg data show.
“With estimates around $100 billion for the month from many market participants, I think there is an element of trying to be at the front of the queue while the going is good,” according to Mayes.
To contact the reporter on this story: Sarika Gangar in New York at firstname.lastname@example.org;
To contact the editor responsible for this story Alan Goldstein at email@example.com;