Toyota to AvalonBay Lead $27 Billion of Bond Sales in U.S.

Toyota Motor Corp. (7203) and AvalonBay Communities Inc. (AVB) led bond sales in the U.S. of at least $27 billion this week, the slowest pace this month, as relative yields narrowed.

Toyota, the world’s largest automaker, raised $350 million and Arlington, Virginia-based AvalonBay sold $400 million of seven-year notes, according to data compiled by Bloomberg. Sales fell from $90.6 billion last week, when Verizon Communications Inc. issued a record $49 billion in an eight-part offering, and compares with a 2013 average of $29.7 billion.

The extra yield investors demand to own corporate bonds rather than government debentures narrowed to 217 basis points as of yesterday from 221 basis points on Sept. 13, according to the Bank of America Merrill Lynch U.S. Corporate & High Yield Index. Yields decreased to 4.1 percent from 4.28 percent.

Toyota’s U.S. finance unit, Toyota Motor Credit, issued two-year, floating-rate notes to yield 15 basis points more than the three-month London interbank offered rate, Bloomberg data show. The offering, expected to be rated Aa3 by Moody’s Investors Service, was increased from an initial $300 million, according to a person with knowledge of the transaction who asked not to be identified citing lack of authorization to speak publicly.

AvalonBay Offering

AvalonBay, the second-largest U.S. apartment real estate investment trust by market value, issued 3.625 percent debt to yield 140 basis points more than similar-maturity Treasuries, Bloomberg data show. The offering, its first sale this year, traded yesterday at 101.2 cents on the dollar to yield 3.42 percent, up 1.5 cents from the sale price of 99.7 cents, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Equity Residential (EQR) is the largest apartment REIT by market value.

Sales of investment-grade debentures reached at least $20.1 billion, compared with $73.2 billion last week, while offerings of speculative-grade bonds reached at least $7.5 billion, compared with $17.4 billion in the prior period, Bloomberg data show.

High-risk, high-yield bonds are rated below Baa3 by Moody’s Investors Service and lower than BBB- at Standard & Poor’s.

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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