June 19 (Bloomberg) -- Occidental Petroleum Corp. and BT Group Plc are leading companies selling at least $8 billion of debt in the U.S., marking the busiest day this month.
Occidental, the largest onshore crude producer in the continental U.S., sold $1.75 billion of bonds at its lowest coupons and London-based BT Group issued $1.25 billion in its first dollar-denominated sale in more than four years, according to data compiled by Bloomberg. Today’s issuance is more than double the average daily volume in June, Bloomberg data show.
Companies have sold $655 billion of debt in the U.S. this year, less than the $684 billion for the same period last year, Bloomberg data show. Investment grade borrowers are making up a larger share of issuers, increasing to 78.6 percent from 74.3 percent, as the European debt crisis curbs demand for riskier assets.
The extra yield investors demand to own bonds from the most creditworthy to the riskiest has dropped 7 basis points since the end of last month to 313 basis points, according to the Bank of America Merrill Lynch U.S. Corporate & High Yield Master index. While spreads have narrowed, they are above this year’s low of 269 basis points reached on March 20.
Investment-grade notes yielded 3.4 percent yesterday, compared with 3.44 percent at the end of May, according to the Bank of America Merrill Lynch U.S. Corporate Master index. High-grade borrowers have sold $515 billion of debt this year, compared with $508 billion during a similar period in 2011, as yields fell to a record low 3.33 percent May 8, Bloomberg data show.
High-grade issuance in the U.S. has increased amid turmoil in Europe, with borrowing costs on Spain’s 10-year bonds rising above 7 percent this week for the first time since the creation of the euro. Yields rose even after Spain accepted a 100 billion euro ($127 billion) bailout from the European Union to defend the country’s banks and after Greek election winner Antonis Samaras raced to forge a government that keeps bailout aid flowing.
Occidental, based in Los Angeles, sold $500 million of 1.5 percent, 5.5-year debt that yielded 80 basis points more than similar-maturity Treasuries and $1.25 billion of 2.7 percent, 10.5-year securities at a spread of 110 basis points, Bloomberg data show. The coupons were the lowest on record for similar-maturity debt issued by the company, and compare with previous records set in August 2011 of 1.75 percent for 5.5-year bonds and 3.125 percent for 10.5-year securities.
The bonds may be rated A1 by Moody’s Investors Service, according to a person familiar with the transaction who asked not to be identified because the terms are private.
Other oil and gas companies in the market include state-owned Petroleos Mexicanos with $1.75 billion of 32-year debentures and The Woodlands, Texas-based Newfield Exploration Co. with a $1 billion offering of 12-year bonds, according to people familiar with the transaction.
BT Group, the U.K.’s largest fixed-line telephone company, sold $500 million of 18-month floating securities to yield 112.5 basis points more than the three-month London interbank offered rate and $750 million of three-year, 2 percent debt at about 162.5 basis points more than similar-maturity Treasuries, Bloomberg data show. The bonds may be rated Baa2 by Moody’s, two levels above junk, the data show.
BT last sold debt denominated in dollars in December 2007, when the London-based company issued $1.1 billion of 5.95 percent notes due in 2018 and $850 million of 5.15 percent bonds maturing in January, Bloomberg data show.
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