Cartoons a Better Credit Risk Than Banks?

Last week's U.S. corporate bond market wasn't full of excitement, but just one company floated nearly a quarter of the week's $24 billion-plus of new issues. Here's a rundown of the week's highlights.

Vodafone (NASDAQ: VOD  ) dialed up five separate issues ranging from three to 30-year maturities for a total of $6 billion. Six billion in fresh cash, and all investors get for the use of proceeds is "We intend to use the net proceeds from the sale of the Notes for general corporate purposes." 

DuPont (NYSE: DD  ) mixed up some 10- and 30-year paper for $2 billion of new cash. The money will be used for general corporate purposes and to redeem a billion dollars of maturing paper. 

Praxair (NYSE: PX  ) opened the valves on $900 million spread over three- and 10-year notes. The new money is slated for "general corporate purposes, including acquisitions and share repurchases under the company's share repurchase program." Fellow industrial gasser Airgas (NYSE: ARG  ) was also in the market with five- and seven-year notes totaling $600 million for "general corporate purposes, including to fund acquisitions, to repay indebtedness under our commercial paper program, and to repurchase shares pursuant to our stock repurchase program." 

Disney (NYSE: DIS  ) sketched out $800 million in two-year floating rate paper. Mickey, Goofy, and friends must have a pretty good credit rating, since the note's interest rate is set below LIBOR.

American Axle (NYSE: AXL  ) turned the gears on $400 million of eight-year, 6-1/4% high-yield paper. The money's being used to fund a tender offer for up to $300 million of 7.875% notes. Any money left after the tender offer is complete will go for general corporate purposes.

PolyOne (NYSE: POL  ) issued $600 million of 10-year notes  to fund its acquisition of Spartech. Since the cash portion of the acquisition is only about $84 million, there's plenty of money left to repay a term loan and contribute $50 million to its pension fund.

There may not have been much excitement, but it is interesting that cartoon characters from the big screen can borrow money at lower rates than the characters running the world's banks.

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  • Report this Comment On February 19, 2013, at 9:54 PM, funfundvierzig wrote:

    DuPont's $2 billion of fresh borrowed cash will be used for "general corporate purposes". We suspect there are some very specific bills coming due which will quickly eat up the cash:

    * The continuing costs of fielding DuPont Imprelis claims directly submitted to the Company's conflicted and stonewalling internal resolution process, and the costs of settling tens of thousands of Imprelis claims in federal and state courts.

    We see contingency litigation liabilities for this defective, falsely if not fraudulently marketed tree-killing DuPont Ag product running to $1 billion or more.

    * The likely payment of the federal jury verdict between $1 billion to $3 billion slapped on DuPont for its outrageous and willful theft and use of Monsanto's superior, patent-protected seed technology.

    "General corporate purposes"? What a slick PR spin, folks. ...funfun..

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