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AmEx, Merck Lead $16.5 Billion of Company Bond Issuance in U.S.

American Express Co. (AXP), the biggest credit-card issuer by purchases, and drugmaker Merck & Co. (MRK) led borrowers selling or planning to issue at least $16.5 billion of bonds in the U.S. today.

Merck, which yesterday had its unsecured debt rating cut one level by Moody’s Investors Service, sold $6.5 billion of bonds in six parts to fund share repurchases, according to data compiled by Bloomberg.

The biggest slice of the issue from Whitehouse Station, New Jersey-based Merck was for $1.75 billion of 2.8 percent, 10-year notes that yield 87 basis points more than similar-maturity Treasuries, Bloomberg data show. That compares with a 75 basis-point spread on $1 billion of 2.4 percent bonds due 2022 that the drugmaker sold in September.

AmEx issued $1.85 billion consisting of $1 billion of 1.55 percent, five-year securities that pay 75 basis points more than benchmarks and $850 million of five-year, floating notes at 59 basis points more than Libor, Bloomberg data show. Proceeds will be used to repay $1 billion of 4.875 percent debt maturing July 15, the company said in a regulatory filing.

Tenet Healthcare Corp. (THC), the third-largest U.S. hospital company, issued $1.05 billion of 4.375 percent, 8.5-year secured notes at a relative yield of 271 basis points, Bloomberg data show. Proceeds will be used to redeem $925 million of 8.875 percent, first-lien securities due July 2019, according to a company statement distributed today by Business Wire. The new securities are rated B+ by Standard & Poor’s.

Tenet Healthcare

The extra yield investors demand to own dollar-denominated corporate bonds rather than government debentures has increased 2 basis points this week to 203 basis points after reaching a more than five-year low of 201 basis points on May 7, according to Bank of America Merrill Lynch index data. A basis point is 0.01 percentage point.

Merck’s offering included $1 billion of 0.7 percent, three-year debt priced to yield 32 basis points more than similar-maturity Treasuries and $500 million of three-year, floating-rate notes that pay 19 basis points more than the three-month London interbank offered rate, the data show.

The company also sold $1 billion of five-year, floating notes at a spread of 36 basis points more than Libor, an equal portion of 1.3 percent, five-year securities at 52 basis points more than benchmarks, and $1.25 billion of 4.15 percent, 30-year debentures at 102, Bloomberg data show.

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

Matt Robinson in New York at Mrobinson55@bloomberg.net.

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

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