UPDATE: High-Grade Corporate Borrowers Rush Back To Bond Market
03 Novembre 2011 - 7:30PM
Dow Jones News
Corporate borrowers returned to the debt markets in droves
Thursday, offering more than $9 billion of new investment-grade
bonds in a window between volatility earlier this week and an
expected gusher of issuance next week.
Leading the charge is unit of mining giant Xstrata Plc (XTA.LN)
with a four-part, $3 billion deal; Cigna Corp. (CI), with a
three-part $2.1 billion deal to help fund its $3.8 billion
acquisition of HealthSpring Inc. (HS); and medical devices maker
Becton, Dickinson and Co. (BDX), with $1.5 billion in 5- and
10-year senior notes.
Also in the market are toothpaste and cosmetics maker
Colgate-Palmolive Co. (CL), with $1 billion in 3-, 5- and 10-year
bonds; and toymaker Mattel Inc. (MAT) with a $600 million, two-part
deal to help fund its $680 million acquisition of HiT Entertainment
from a consortium led by Apax Partners funds.
Demand is strong because money managers have lots of cash on
hand and are under pressure to put it to work in investments that
earn decent returns but are still safe. Issuers, meanwhile, are
eager to borrow while rates are still low and investors view bonds
as a safer alternative to unpredictable stocks and other volatile
assets.
"Today's deal flow relates to the expiry of Sept. 30 [earnings]
blackout periods, several M&A-oriented financings, a growing
recognition that the interest rate opportunity is, indeed,
perishable, and the fact that next week is expected to be
exceptionally busy as well," said Bryan Jennings, head of fixed
income capital markets in the Americas at Morgan Stanley, which is
leading deals for Cigna, Becton Dickinson, Colgate-Palmolive,
Mattel and Boston Properties, alongside other firms.
Issuance exploded last week after European policy makers
announced a rescue deal for Greece, but optimism about the
viability of that plan soon faded. Corporate borrowers sold $13.7
billion of bonds last Thursday alone, according to data provider
Dealogic, in an end-of-month burst that brought the monthly total
to $45.2 billion.
Issuance levels "experienced a resurrection at the end of
October as spreads narrowed sharply and yields fell on hopes of a
resolution of the European sovereign crisis," David Munves,
divisional managing director at Moody's Capital Markets Research
Inc., wrote in a note Thursday.
Other recent big-volume days for corporate debt sales include
$7.4 billion on Oct. 12 and $12.3 billion on Sept. 14, Dealogic
data show.
In addition to the offerings from Xstrata, Cigna, Becton
Dickinson, Colgate and Mattel was a $500 million, 10-year deal for
privately held food and agricultural products maker Cargill Inc.;
an $850 million sale of 7-year debt for the commercial real-estate
firm Boston Properties Inc.(BXP), increased from a planned $400
million; and a $250 million deal for Tucson Electric Power Co., a
unit of UniSource Energy Corp. (UNS).
-By Katy Burne, Dow Jones Newswires; 212-416-3084;
katy.burne@dowjones.com
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