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JPMorgan Leads $15 Billion of Bond Sales After Dividend Rise

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March 14 (Bloomberg) -- JPMorgan Chase & Co., the biggest U.S. bank, is leading more than $15 billion of bond sales by companies in the U.S. market today after announcing a 20 percent dividend increase and an equity buyback program.

The bank issued $1.5 billion of 1.875 percent three-year notes that yield 130 basis points more than similar-maturity Treasuries and $500 million of floating-rate notes, according to data compiled by Bloomberg. International Lease Finance Corp., the plane-leasing unit of American International Group Inc., sold $1.5 billion of three- and seven-year senior notes, Bloomberg data show.

JPMorgan, which the Federal Reserve said yesterday had passed its stress test for capital adequacy under an “extremely adverse” economic scenario, announced a $15 billion equity buyback as yields at about record lows offer attractive borrowing rates for companies. Investment-grade bonds yield 3.58 percent, within 20 basis points of the all-time low of 3.4 percent reached on March 2, according to the Bank of America Merrill Lynch U.S. Corporate Master index.

“When a credit has wind at its back, it can do whatever it wants in the market,” Timothy Cox, executive director of debt capital markets at Mizuho Securities USA Inc. in New York, said of the JPMorgan bond sale in a telephone interview.

‘Very Anxious’

The debt sales today follow issuance of $60.1 billion last week, the most in records going back to 1999, according to data compiled by Bloomberg.

“Treasurers have been very anxious to tap the market,” Cox said. “Some people think ‘if I don’t get in here now, I may miss the boat.’”

Mizuho Corporate Bank Ltd. issued $1.5 billion of five-year, 2.55 percent notes yesterday, Bloomberg data show. Cox, who helped manage the sale, said that investors placed orders for almost $7 billion of bonds. “The new-issue market still is green for go,” he said.

JPMorgan announced a five-cent increase in its quarterly dividend to 30 cents a share. It authorized $12 billion of stock buybacks for 2012. The firm was among 15 major banks that passed the Fed’s stress test.

“The timing of the stress tests was certainly a surprise, but we thought the rest of the announcement was mostly as expected,” JPMorgan analysts Kabir Caprihan and Matthew Hughart wrote in a report today. The “stress test was a bigger story for equity than credit,” they wrote.

ILFC’s three-year notes yield 4.875 percent and the seven-year debt pays 5.875 percent, Bloomberg data show.

To contact the reporters on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net; Zeke Faux at zfaux@bloomberg.net;

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

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