Goldman Sachs Sells $1.75 Billion of Fixed-, Floating-Rate Bonds

Goldman Sachs Group Inc. raised $1.75 billion in a sale of fixed- and floating-rate notes after relative yields on bank bonds declined by more than half this year.

The lender issued $1.25 billion of 1.6 percent debt maturing in November 2015 that yields 130 basis points more than similar-maturity Treasuries and $500 million of two-year floating-rate securities that pay 100 basis points more than the three-month London interbank offered rate, according to data compiled by Bloomberg. The bonds are expected to be rated A3 by Moody’s Investors Service, Bloomberg data show.

Yields on Goldman Sachs’s $2.25 billion of 3.3 percent securities maturing in May 2015 have declined about 178 basis points to 1.41 percent yesterday since the New York-based lender issued the notes six months ago, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The yields of those debentures traded yesterday at 107.9 basis points more than Treasuries. A basis point is 0.01 percentage point.

The extra yield investors demand to hold debt of Goldman Sachs instead of government securities has dropped by about half this year to 213 basis points yesterday, from 421 at year-end, according to Bank of America Merrill Lynch index data. The average spread on bank debt in the U.S. has tightened 207 basis points to 177 in the same period. The measure reached 164 basis points on Oct. 17, the tightest since 2007, the index data show.

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