International Business Machines Corp. obtained a record-low 1.875 percent coupon on $1 billion of 10-year bonds, the least for dollar-denominated debt of that maturity.
The world’s largest computer-services provider sold the debt at 98.398 cents on the dollar to yield 2.053 percent, or a relative yield of 65 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg.
The coupon beat the previous 2 percent record held by 3M Co.’s 10-year notes sold on June 21, Bloomberg data show. A basis point is 0.01 percentage point.
“The yield is reflective of the overall bond market environment, with Treasuries sitting at an all-time record-low yield,” said Anthony Valeri, a market strategist in San Diego at LPL Financial, in a telephone interview. “IBM picked the perfect time to come to market.”
The benchmark 10-year Treasury note’s yield dropped as low as 1.38 percent today.
IBM also shares the record low with Sysco Corp. for three-year debt with its 0.55 percent bonds due February 2015.
The new debt may be rated Aa3, the fourth-highest level of investment grade, by Moody’s Investors Service. Proceeds will go toward general corporate purposes, said Doug Shelton, an IBM spokesman, who declined to comment further.
BNP Paribas SA, Citigroup Inc., Deutsche Bank AG and UBS AG managed the sale, according to Bloomberg data.
IBM last sold 10-year bonds in October 2011, issuing $500 million of 2.9 percent debt to yield 62.5 basis points more than benchmarks, Bloomberg data show. The Armonk, New York-based company’s securities traded at 108.34 cents on the dollar to yield 1.91 percent on July 19, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
IBM is “a fresh name in the 10-year space,” Valeri said. “You give the market a liquid 10-year issue, and it kind of sells itself when you have a solid name like IBM.”