Altria Leads U.S. Bond Sales in Busiest Weekly Start Since March

Altria Planning $2.8 Billion Bond Issue to Buy Back Debt
Altria Group Inc., the largest U.S. seller of tobacco, plans to issue $2.8 billion of bonds. Photographer: Chris Goodney/Bloomberg

Altria Group Inc. sold $2.8 billion of debt to lead the busiest weekly start for U.S. corporate bond sales in more than four months as company borrowing costs hold at about record lows.

Altria, the largest U.S. seller of tobacco, and Summit, New Jersey-based biopharmaceutical company Celgene Corp. led borrowers issuing $12.6 billion of bonds in the most active start to the week since March 19, according to data compiled by Bloomberg. That follows $10.7 billion of offerings on July 30, marking the first time this year that sales opened at more than $10 billion for two straight weeks.

Companies from the most creditworthy to the riskiest are tapping debt markets after yields on dollar-denominated bonds reached a record low 3.9 percent on Aug. 2, down from 4.8 percent at the end of 2011, Bank of America Merrill Lynch index data show. Corporate issuers have sold $813 billion of debt in the U.S. this year, up 3.4 percent from last year, data compiled by Bloomberg show.

As investors seek higher-yielding assets while the Federal Reserve holds its benchmark interest rate near zero for a fourth year, the extra yield borrowers demand to own U.S. corporate debt instead of government securities narrowed to 272 basis points Aug. 3, from 299 basis points at the end of June, the index data show.

Altria Bonds

Altria sold $1.9 billion of 2.85 percent, 10-year bonds yielding 130 basis points more than similar-maturity Treasuries and $900 million of 4.25 percent, 30-year debt with a 168 basis-point spread, Bloomberg data show. The securities may be rated Baa1 by Moody’s Investors Service, three levels above speculative grade, according to a person familiar with the transaction.

Altria may use proceeds from the sale to repay debt and repurchase obligations linked to its $2 billion tender offer for four bond issues including the 2039 securities, the Richmond, Virginia-based company said today in a regulatory filing. Citigroup Inc., JPMorgan Chase & Co. and Deutsche Bank AG managed the offering.

Celgene, the maker of cancer-fighting drugs Istodax and Abraxane, sold $1.5 billion of bonds in its first offering since October 2010. The company issued $500 million of 1.9 percent, five-year notes to yield 130 basis points more than Treasuries and $1 billion of 3.25 percent, 10-year debt at a relative yield of 170 basis points, Bloomberg data show.

Westpac Banking Corp., the Australian lender that ranks among the 20 most-active debt issuers globally this year, sold $1.25 billion of five-year U.S. dollar-denominated notes. The 2 percent bonds yield 137.5 basis points more than Treasuries, Bloomberg data show. The bank is the 17th most-active issuer of bonds globally in 2012, the data show.

Other issuers include Constellation Brands Inc., the wine producer behind Robert Mondavi and Clos du Bois, with a $650 million sale to help fund its acquisition of a stake in Crown Imports LLC and Enterprise Products Partners LP, the second-biggest U.S. pipeline operator, with $1.75 billion of bonds in a two-part offering, Bloomberg data show.

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