Company bond sales in the U.S. rose this week to about $34 billion, the busiest in two months, as relative yields widened.
Wells Fargo & Co., the largest U.S. home lender, raised $5 billion in four parts and Purchase, New York-based PepsiCo Inc. issued $1.7 billion as they led offerings that were the most since $36.8 billion in the five days ended May 24, according to data compiled by Bloomberg. Sales rose from $31.3 billion last week and compare with a 2013 weekly average of $29.3 billion.
The extra yield investors demand to own corporate bonds rather than government debentures increased to 219 basis points yesterday from 218 basis points on July 19, according to Bank of America Merrill Lynch index data. Yields rose to 4.03 percent from 3.96 percent, and compare with a record-low 3.35 percent on May 2, the index data show.
Wells Fargo issued $2 billion of floating-rate debt maturing in two years that yields 28 basis points more than the three-month London interbank offered rate and $500 million of similar-maturity, 0.75 percent, fixed-rate notes that yield 47 basis points more than Treasuries through its Wells Fargo Bank subsidiary, Bloomberg data show.
The lender also sold $800 million of three-year floaters at a relative yield of 53 basis points and $1.7 billion of similar-maturity, 1.25 percent, fixed-rate bonds, the data show.
The fixed-rate bonds due July 2016 traded yesterday at 99.93 cents on the dollar to yield 1.27 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
PepsiCo, the world’s second-largest soft-drink maker, sold $850 million each of two-year, floating-rate notes that yield 20 basis points more than three-month Libor, and 2.25 percent, 5.5-year debt at 90 basis points more than similar-maturity Treasuries, Bloomberg data show. Coca-Cola Co. is the world’s biggest soft-drink producer.
Sales of investment-grade debentures reached at least $23.2 billion, compared with $25 billion last week and a 2013 weekly average of $22.1 billion, Bloomberg data show. Offerings of speculative-grade bonds reached at least $11 billion, compared with $6.3 billion last week and a 2013 weekly average of $7.2 billion.
High-risk, high-yield bonds are rated below Baa3 by Moody’s Investors Service and lower than BBB- at Standard & Poor’s.
Issuers planning sales include Stearns Lending Inc., a real estate lender, offering $200 million of debt and transportation company U.S. Xpress Enterprises Inc. planning a $250 million issue, with both offering seven-year notes, according to people with knowledge of the transactions who asked not to be identified because the terms are private.