October picked right up from September with nearly $36 billion of new corporate bond issues last week. There were a few sizable deals, and nearly half the borrowing was from companies headquartered outside the U.S.
General Electric (GE 2.66%) led all borrowers by throwing the switch on $7 billion of new debt spread across three-, 10-, and 30-year paper. The money is being used to "repay debt, including all or a portion of our $5 billion aggregate principal amount 5% Notes due 2013, and for general corporate purposes." Today's low interest rates will save GE nearly $70 million per year and add $2 billion in cash to the balance sheet. I'm sure Federal Reserve Chairman Ben Bernanke got a nice thank-you card from CEO Jeff Immelt. GE Capital also joined the party by rolling out $835 million of 40-year debt.
Heineken (HINKY.PK 3.56%) tapped a keg full of cash with $3.25 billion spread across four tranches ranging from three to 30 years. The money will help fund the acquisition of Asia Pacific Breweries.
REIT Realty Income (O 1.82%) rented $800 million of new capital. The company will be drawing on its acquisition credit facility for the purchase of American Realty Capital Trust. The new money will be used to pay down that credit facility.
NYSE Euronext (NYX +0.00%) exchanged new five-year notes for $850 million. The money will fund tender offers to buy back some higher-coupon paper. The move should save the company about $24 million per year in debt service costs. Sounds like another thank-you note to the Fed Chairman is in order.
A cell tower deal with T-Mobile was behind Crown Castle (CCI +0.21%) ringing up the market for $1.65 billion of 10-year borrowing. The issue falls in the high-yield category, although I don't think 5.25% is all that high.
Here are the rest of the billion-dollar borrowers from last week.
|
Company |
Headquarted |
Amount Borrowed |
|---|---|---|
|
Banco Bilbao Vizcaya Argentaria |
Spain |
$2 billion |
|
Bank of America |
U.S. |
$1.75 billion |
|
GDF Suez |
France |
$1.5 billion |
|
Toyota Motor Credit |
U.S. |
$1.5 billion |
|
VTB Capital |
Russia |
$1.5 billion |
|
CEMEX |
Mexico |
$1.5 billion |
|
Bank of Nova Scotia |
Canada |
$1.35 billion |
|
Societe Generale |
France |
$1.25 billion |
Source: Reuter's.
Companies don't appear to be having any trouble issuing bonds, regardless of credit rating. Sixteen of last week's issues fell in the high-yield or junk category.
Bond issues are rarely exciting, and they don't get the press of a big IPO or acquisition announcement, but it is important for investors to keep tabs on the borrowing habits of companies they own and what those companies are doing with the money.
Our senior industrials analyst has prepared a premium report on General Electric covering much more than its borrowing habits. For your copy of the report, simply click here now.
- Add Realty Income to My Watchlist.
- Add NYSE Euronext to My Watchlist.
- Add Heineken N.V to My Watchlist.
- Add General Electric to My Watchlist.
- Add Crown Castle International to My Watchlist.
