Last week's new U.S. dollar-denominated corporate bond issues floated in at just more than $19 billion. Companies based outside the U.S. continued to be significant players, borrowing more than $7 billion last week. High-yield issuers sold $5 billion in the junkyard. Here's a rundown of some of the debt deals.
Reynolds American (NYSE:RAI) lit up the markets with $2.55 billion in tranches of three-,10-, and 30-year debt. Reynolds is using the money to redeem higher-rate bonds due next year, repay a term loan facility, and repurchase shares. The bonds and loan facility will use about $1.75 billion of the new money.
Marathon Oil (NYSE:MRO) pumped $2 billion of three- and 10-year notes from bond market reserves. It's using the money to repay $1.8 billion in commercial paper and for general corporate purposes.
Oil and gas exploration and production company Halcon Resources (NYSE:HK) oiled its new 8.5-year, $750 million high-yield notes with an 8.875% coupon. Halcon is acquiring 81,000 acres of oil and gas assets in North Dakota for $1.45 billion in cash and equity. The newly borrowed funds will cover the cash portion of the transaction.
Medical-device maker CR Bard (NYSE:BCR) injected $500 million of new capital by selling 1.35%, five-year notes. Plans for the money are "general corporate purposes, including repayment of commercial paper and acquisitions." In addition to the new borrowing, CR Bard announced last week that it is acquiring Neomend -- a developer and supplier of sprayable surgical sealants and anti-adhesion products -- for $140 million.
Corning (NYSE:GLW) is taking advantage of today's low rates to buy back some of its higher-rate debt. The company sold $250 million of 1.45% coupon, five-year paper to fund a tender offer for several higher-rate debt instruments. The deal should save Corning about $13 million per year in debt service expenses. This borrow-buyback may as well be free money for Corning.
Royal Bank of Canada (NYSE:RY) was one of last week's billion-dollar borrowers. I was unable to find any information on the uses for the new money. However, Royal Bank's press releases last week included a 30 million share buyback plan and the acquisition of Ally's Canadian auto-finance business. There was no indication of whether the debt issue was related to either of those transactions.
Companies are continuing to take advantage of today's low rates to save money by taking down higher-rate paper, making acquisitions or capital improvements, and buying back shares. There seems to be no shortage of lenders, and a few of last week's offerings were increased in size because of high demand. Many of these transactions look like great deals for the companies involved. I'm just not sure they're such great deals for the bond buyers.
Russ Krull has no positions in the stocks mentioned above. The Motley Fool owns shares of Corning. Motley Fool newsletter services recommend Corning. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.