Company Bond Sales in U.S. Reach $5.5 Billion as Spreads Decline

Baidu Inc. and British Sky Broadcasting Group Plc led companies in the U.S. selling $5.5 billion of bonds this week as relative yields narrowed amid almost record-low borrowing costs.

Baidu, owner of China’s most-popular search engine, raised $1.5 billion in its debut issue and Middlesex, U.K.-based BSkyB sold $800 million in its first offering since 2008, according to data compiled by Bloomberg. Sales dropped from $32.5 billion last week and compare with $1.1 billion in the five days ended Nov. 25, 2011.

“There seems to be an insatiable demand for new names,” Tom Murphy, a portfolio manager at Columbia Management Investment Advisers LLC in Minneapolis, who oversees about $26 billion of investment-grade credit, said in a telephone interview. “It has been a phenomenal time to be an issuer and to try to lock in these all-time lows in coupons.”

Yields rose to 3.669 percent on Nov. 21 from 3.639 percent at the end of last week, according to the Bank of America Merrill Lynch U.S. Corporate & High Yield Master index. That’s close to the unprecedented low of 3.578 percent reached on Oct. 19. The extra yield investors demand to own bonds from the riskiest to the most creditworthy borrowers rather than government debentures decreased 5 basis points this week to 243 basis points.

With the week shortened by the closure yesterday of U.S. bond markets for the Thanksgiving holiday, investment-grade bond sales reached $5.1 billion while high-yield issues totaled $450 million, Bloomberg data show.

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