Corporate Bond Sales Top $237 Billion in Record August

Sales of corporate bonds globally surged to the most on record for August as issuers rushed to lock in record-low borrowing costs.

Siemens AG (SIE), Europe’s largest engineering company, and JPMorgan Chase & Co. (JPM) led borrowers selling $237.6 billion of debt this month, exceeding the $235.3 billion raised in August 2010, according to data compiled by Bloomberg. Yields fell to an unprecedented low of 3.72 percent on Aug. 28, according to Bank of America Merrill Lynch index data.

Offerings are increasing as issuers take advantage of demand with default rates below historic averages and optimism rising that Europe’s leaders may contain the region’s fiscal strains. While yields on corporate bonds average less than 4 percent, the spread to U.S. Treasuries is higher than before the credit crisis. Government bond yields have been suppressed by central banks easing monetary policy to stimulate growth.

Sales in the U.S. reached $94.6 billion, split between $63.9 billion in investment-grade debt and $30.7 billion in high-yield, while issuance in Europe totaled 33.6 billion euros ($42 billion), Bloomberg data show.

Siemens sold $3.3 billion of bonds denominated in pounds and euros yesterday in Europe’s biggest corporate fundraising since May, the data show. The Munich-based company’s offering included 350 million pounds ($553 million) of 2.75 percent, 13- year debt and 650 million pounds of 3.75 percent, 30-year securities, Bloomberg data show.

JPMorgan sold $2.5 billion of 2 percent, five-year bonds on Aug. 13 and $1.1 billion of 5.5 percent, perpetual preferred shares on Aug. 20, Bloomberg data show. The New York-based bank’s offering of shares, rated the highest level of speculative grade at Ba1 by Moody’s Investors Service, was increased from an initial $500 million amid demand from investors.

To contact the reporter on this story: Sarika Gangar in New York at sgangar@bloomberg.net;

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

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Corporate Bond Sales Top $237 Billion Worldwide in Record

Jason Alden/Bloomberg

A Siemens AG 350 class train exits a train wash at the company's Kings Heath train maintenance depot in Northampton, U.K Siemens sold $3.3 billion of bonds denominated in pounds and euros yesterday in Europe’s biggest corporate fundraising since May, the data show.

A Siemens AG 350 class train exits a train wash at the company's Kings Heath train maintenance depot in Northampton, U.K Siemens sold $3.3 billion of bonds denominated in pounds and euros yesterday in Europe’s biggest corporate fundraising since May, the data show. Photographer: Jason Alden/Bloomberg