Bank of America Corp. and Goldman Sachs Group Inc. led at least $30 billion of corporate bond sales in the U.S. this week, the busiest period in almost two months, as relative yields narrowed.
Bank of America, the second-biggest U.S. lender, sold $2 billion of 10-year securities and New York-based Goldman Sachs issued $2.5 billion at its lowest relative yield for five-year debt since the financial crisis, according to data compiled by Bloomberg. Offerings increased from $24.6 billion last week and were the most since $36.8 billion in the five days ended May 24.
The extra yield investors demand to own company bonds rather than government debentures narrowed to 219 basis points yesterday from 227 basis points on July 12, according to the Bank of America Merrill Lynch US Corporate & High Yield index. Yields decreased to 3.99 percent from 4.13 percent, and compare with a record low 3.35 percent on May 2, index data show.
Bank of America sold $2 billion of 4.1 percent debt due July 2023 at a relative yield of 157 basis points, Bloomberg data show. The Charlotte, North Carolina-based lender will use proceeds from the offering for general corporate purposes, according to a person with knowledge of the transaction, who asked not to be identified citing lack of authorization to speak publicly. The debt is rated A- by Standard & Poor’s, Bloomberg data show.
The bonds rose 0.9 cent today from the issue price to 100.8 cents on the dollar to yield 4 percent, or a spread of 148.9 basis points, at 9:09 a.m. New York time, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Goldman Sachs sold 2.9 percent debentures due July 2018 at a relative yield of 155 basis points, its lowest spread on five-year securities since it sold $2 billion of 5.45 percent notes at a 110 basis-point spread in October 2007, Bloomberg data show.
The securities climbed 0.9 cent since the July 16 sale to 100.8 cents on the dollar to yield 2.72 percent, or a 139.9 basis-point spread at 9:18 a.m. in New York, Trace data show.
Sales of investment-grade debentures rose to at least $25 billion from $23.1 billion last week and above a 2013 weekly average of $21.9 billion, the data show. Offerings of speculative-grade bonds reached at least $5.3 billion, compared with $1.5 billion last week and a 2013 weekly average of $7.3 billion.
High-yield, high-risk bonds are rated below Baa3 by Moody’s Investors Service and lower than BBB- at S&P.
Issuers planning sales include tobacco processor Alliance One International Inc. with a $790 million sale of eight-year notes, Bloomberg data show.