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JPMorgan Gets Record-Low Coupon in $2.85 Billion Bond Offering

Oct. 15 (Bloomberg) -- JPMorgan Chase & Co., the biggest U.S. bank, sold $2.85 billion of three-year bonds in two parts, including fixed-rate notes with its record-low coupon for a benchmark offering, typically at least $500 million.

The lender issued $2.25 billion of fixed-rate securities due October 2015, with an unprecedented low rate of 1.1 percent for three-year debt, that yield 77 basis points more than similar-maturity Treasuries and $600 million of three-year, floating-rate securities to yield 66 basis points more than the three-month London interbank offered rate, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.

The coupon undercuts the 1.65 percent interest rate for three-year, fixed-rate debt the bank obtained issuing $550 million of senior unsecured notes at a spread of 100 basis points more than Treasuries in September 2010, Bloomberg data show. Those securities traded at 101.3 cents on the dollar to yield 0.33 percent Oct. 11, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

The new notes may be rated A2 by Moody’s Investors Service, considered subject to low credit risk, Bloomberg data show.

JPMorgan has $194.9 billion of bonds outstanding with an average maturity of 5.8 years, Bloomberg data show. Average yields of 2.22 percent on the lender’s bonds compare with 3.84 percent at the end of last year, and with borrowing costs for banks of 2.61 percent, down from 4.8 percent at year-end, Bank of America Merrill Lynch index data show.

To contact the reporter on this story: Matt Robinson in New York at Mrobinson55@bloomberg.net.

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

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