JPMorgan Leads $9 Billion of U.S. Corporate Bond Sales

(Corrects to remove reference to debt collateral in third paragraph.)

JPMorgan Chase & Co. (JPM), the biggest U.S. bank, is leading more than $9 billion of bond sales after announcing a 20 percent dividend increase and an equity buyback program.

The bank is marketing three-year benchmark notes that are expected to yield 130 basis points more than similar-maturity Treasuries, according to a person familiar with the offering who asked not to be identified because terms are not set. A benchmark bond is at least $500 million in size.

International Lease Finance Corp. (ILFC), the plane-leasing unit of American International Group Inc. (AIG), is also selling three- and seven-year senior notes, according to a person familiar with that transaction who also asked not to be identified because the terms are not set.

JPMorgan, which the Federal Reserve said yesterday had passed its stress test for capital adequacy under an “extremely adverse” economic scenario, announced a $15 billion equity buyback as yields at about record lows offer attractive borrowing rates for companies. Investment-grade bonds yield 3.49 percent, within 10 basis points of the all-time low of 3.4 percent reached on March 2, according to the Bank of America Merrill Lynch U.S Corporate Master index.

“When a credit has wind at its back, it can do whatever it wants in the market,” Timothy Cox, executive director of debt capital markets at Mizuho Securities USA Inc. in New York, said about the JPMorgan bond sale in a telephone interview.

‘Very Anxious’

The New York-based bank is leading more than $9 billion of debt sales today, following issuance of $60.1 billion last week, the most in records going back to 1999, according to data compiled by Bloomberg.

“Treasurers have been very anxious to tap the market,” Cox said. “Some people think ‘if I don’t get in here now, I may miss the boat.’ ” Mizuho Corporate Bank Ltd. issued $1.5 billion of five-year, 2.55 percent notes yesterday, Bloomberg data show. Cox, who helped manage the sale, said that investors placed orders for almost $7 billion of bonds. “The new-issue market still is green for go,” he said.

JPMorgan announced a five-cent increase in its quarterly dividend to 30 cents a share. It authorized $12 billion of stock buybacks for 2012. The firm was among 15 major banks that passed the Fed’s stress test.

ILFC’s three-year notes are expected to yield 5.125 percent and the seven-year debt may pay 6.125 percent, said the person familiar with the offering.

To contact the reporters on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net; Zeke Faux at zfaux@bloomberg.net;

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net.

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