Jan. 11 (Bloomberg) -- Daimler AG and Intesa Sanpaolo SpA led companies in the busiest week for dollar-denominated bond sales in 10 months as relative yields narrowed amid a rush of foreign borrowers looking to secure rates that reached record lows.
Daimler, the world’s third-largest maker of luxury vehicles, raised $3 billion and Torino, Italy-based Intesa issued $3.5 billion of debt as they headed sales of at least $52.4 billion, the most since $60.4 billion in the five days ended March 9, according to data compiled by Bloomberg. Sales increased from $13.6 billion last week and are about double the 2012 weekly average of $28.2 billion.
Sales rose as companies began reporting earnings, with profit at Standard & Poor’s 500 Index members expected to increase 2.5 percent, according to analyst estimates compiled by Bloomberg. Yields touched an unprecedented 3.543 percent on Jan. 9. Investors are showing a stronger appetite for risk, luring more foreign banks into selling dollar debt, Mizuho Securities USA Inc.’s Timothy Cox said.
“Year-end is behind us so people can take a little bit more risk; you don’t have the window dressing that you have at the end of the year, when people keep their portfolios fairly clean,” Cox, the New York-based executive director of debt capital markets, said in a telephone interview. “Yankee banks have a big demand to raise capital and globally they’re looking to come into the States.”
The extra yield investors demand to own U.S. corporate bonds rather than government debentures decreased to 217 basis points yesterday from 220 basis points on Jan. 4, according to the Bank of America Merrill Lynch U.S. Corporate & High Yield index. A basis point is 0.01 percentage point.
Yields fell to 3.55 percent as of yesterday from 3.6 percent on Jan 4, index data show.
Sales of investment-grade debentures reached at least $45.6 billion, compared with $12.1 billion last week and a 2012 weekly average of $21.4 billion, Bloomberg data show.
Daimler, the maker of Mercedes-Benz cars, sold $750 million of two-year, floating-rate notes to yield 60 basis points more than the London interbank offered rate, $1.25 billion of 1.25 percent, three-year debt to yield 90 basis points more than similar-maturity Treasuries and $1 billion of 1.875 percent, five-year securities at a spread of 115 basis points, Bloomberg data show.
Intesa, Italy’s second-largest lender, offered its first benchmark sale in the U.S. in almost two years. The bank sold $2 billion of 3.125 percent, three-year securities at a relative yield of 275 basis points and $1.5 billion of 3.875 percent, five-year debentures at a 310 basis-point spread, Bloomberg data show. Benchmark offerings are typically more than $500 million.
“Europe looks calm and the world banking system has strengthened,” James Kochan, chief fixed-income strategist at Wells Fargo Funds Management LLC in Menomonee Falls, Wisconsin, said in an interview. “Yields are near record lows in investment grade and appetite remains strong.”
Yields on high-grade debt decreased to 2.78 percent yesterday from 2.82 percent on Jan. 4, and compare with a record low 2.732 percent on Nov. 8, according to the Bank of America Merrill Lynch U.S. Corporate index. Spreads decreased 1 basis point to 145 basis points.
Of the 27 companies that have reported earnings from the S&P 500 index, 22 posted earnings that beat analyst estimates while 19 reported sales that exceeded estimates, Bloomberg data show.
Offerings of speculative-grade bonds reached at least $6.8 billion, compared with $1.6 billion last week and matching a 2012 weekly average of $6.8 billion, Bloomberg data show.
Bombardier Inc., the third-largest commercial aircraft maker, sold $2 billion of bonds in its first sale in about 10 months. The Montreal-based company issued $750 million of 4.25 percent, three-year securities at a spread of 389 basis points and $1.25 billion of 6.125 percent, 10-year debt at 427 basis points, Bloomberg data show.
The company postponed an issue of $1 billion of eight- and 10-year notes on Nov. 15, pointing to unsatisfactory market conditions.
High-risk, high-yield bonds are rated below Baa3 by Moody’s Investors Service and lower than BBB- at Standard & Poor’s.
Yields on junk debt fell to a record-low 6.53 percent yesterday from 6.62 percent on Jan. 4, according to the Bank of America Merrill Lynch U.S. High Yield index. Spreads decreased 10 basis points to 494 basis points.
Issuers planning sales include energy company Atlas Resource Partners LP with $250 million of eight-year notes and Interface Security Systems LLC with $225 million of five-year debt, Bloomberg data show.
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