Corporate bond sales in the U.S. declined from the highest level since September this week as relative yields tightened.
Intel Corp., the world’s largest semiconductor maker, issued $6 billion of debt in the largest dollar-denominated sale in about a month and Dallas-based AT&T Inc. raised $4 billion, according to data compiled by Bloomberg. Issuance fell almost 25 percent to $36.6 billion from $48.5 billion in the period ended Nov. 30, the most since the five days ended Sept. 21.
While sales stayed above the 2012 average of $28.8 billion as borrowers took advantage of record-low interest rates, investors remain cautious as lawmakers seek an accord to avoid the so-called fiscal cliff of $600 billion of spending cuts and tax increases set to begin in January. The economy may slip into recession if an agreement isn’t reached, the Congressional Budget Office has said.
“Everybody’s executing now because 2013 is so uncertain,” Jody Lurie, a corporate credit analyst at Janney Montgomery Scott LLC in Philadelphia, said in a telephone interview. “Companies see this time as a good opportunity to enter the market.”
Yields fell to an unprecedented 3.569 percent yesterday from 3.613 percent at the end of last week, surpassing the previous record of 3.578 on Oct. 19, according to the Bank of America Merrill Lynch U.S. Corporate & High Yield Master index.
The extra yield investors demand to own bonds from the riskiest to the most creditworthy borrowers rather than government debentures decreased 4 basis points this week to 237 basis points.
Investment-grade bond sales reached $27.7 billion in the U.S., while high-yield offerings totaled $8.9 billion, Bloomberg data show.
Intel Corp., the world’s largest semiconductor maker based in Santa Clara, California, sold $6 billion of bonds in the largest dollar-denominated sale since Abbott Laboratories raised $14.7 billion on Nov. 5, Bloomberg data show.
AT&T Inc., the second-largest U.S. telephone company after Verizon Communications Inc., issued $4 billion of bonds in a three-part offering to help add long-term evolution technology, a network that promises to offer connections three times as fast as the previous standard.
Six Flags Entertainment Corp., a theme-park operator, is planning a $600 million bond sale next week as it prepares to lower the interest rate on one of its term loans.
Ancestry.com Inc., the world’s largest family-history website being purchased by Permira Advisers LLP, is planning to issue $300 million of bonds to help fund the buyout.