Coca-Cola Co. sold $2.75 billion of bonds, including short-term notes that pay less interest than an interbank lending benchmark, taking advantage of corporate borrowing costs that are near the lowest on record.
The world’s largest soft-drink maker issued $1 billion each of two- and three-year notes today, as well as $750 million of six-year notes, according to data compiled by Bloomberg. The two-year notes pay a floating rate that’s five basis points less than the three-month London interbank offered rate, the first time a U.S. company paid less than the measure in over a month.
Coca-Cola’s three-year notes have a 0.75 percent coupon, while the six-year notes pay 1.65 percent a year, Bloomberg data show. Libor was set at 0.474 percent today.
Coca-Cola, based in Atlanta, is taking advantage of increasing investor demand for highly rated debt to reduce its borrowing costs. The average yield on investment-grade bonds was 3.45 percent yesterday, near the record low of 3.4 percent reached on March 2, according to Bank of America Merrill Lynch index data.
The soft-drink producer is following competitor PepsiCo Inc. to the bond market. Last month, Purchase, New York-based PepsiCo paid the least interest it ever had on a three-part bond sale, issuing $750 million of 0.75 percent notes due in March 2015, $1.25 billion of 2.75 percent securities maturing in March 2022 and $750 million of 4 percent, 30-year bonds, according to data compiled by Bloomberg.
On Feb. 1, Procter & Gamble Co. issued $1 billion of floating rate notes that pay 8 basis points less than Libor, which is the rate banks say they charge to lend to each other. It was the first to pay less than Libor since 2006.