Caterpillar Said to Plan 50-Year Debt as Part of $2 Billion Sale

Caterpillar Inc. (CAT), the largest maker of mining and construction equipment, is planning to sell $2 billion of notes including the first 50-year bonds offered in the U.S. in 11 months.

The $500 million of debt due 2064 may price to yield 137.5 basis points more than Treasuries as soon as today, according to a person with knowledge of the transaction. The bonds were added to the offering, which includes $1 billion of 10-year notes and $500 million of 30-year securities, after it was marketed earlier today, said the person, who asked not to be identified citing lack of authorization to speak publicly.

The deal follows a sale in January of 100-year bonds by Electricite de France SA, as issuers across the globe seek to lock in borrowing costs that are within about 44 basis points of record lows. The 50-year term on the new notes compares with a 6.9-year weighted average maturity on Caterpillar’s existing fixed-rate debt, according to data compiled by Bloomberg.

The 2024 bonds may price to yield 80 basis points more than similar-maturity government debt and the 2044 securities may pay a 95 basis-point spread, the person said. The offering is expected to be graded A2 by Moody’s Investors Service and A by Fitch Ratings, with proceeds used to repay debt and for general corporate purposes.

Average yields on U.S. investment-grade bonds reached 3.09 percent on May 2, up from an unprecedented 2.65 percent a year ago, according to the Bank of America Merrill Lynch U.S. Corporate Index.

The last sale of dollar-denominated 50-year notes came from William Marsh Rice University, which raised $114 million in June 2013, Bloomberg data show.

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

To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net John Parry, Chapin Wright

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