Corporate bond sales in the U.S. dropped 42 percent this week to about $22 billion, with issuance falling below this year’s average.
Halliburton Co., the world’s largest provider of hydraulic-fracturing services, raised $3 billion to fund share buybacks and Houston-based Kinder Morgan Energy Partners LP issued $1.75 billion of debt, leading the slowest week since the period ended July 5, according to data compiled by Bloomberg. Sales compare with $37.9 billion last week and a 2013 weekly average of $29.7 billion.
Offerings declined even as the extra yield investors demand to own corporate bonds rather than government debentures fell to 218 basis points yesterday from 220 basis points on July 26, according to the Bank of America Merrill Lynch U.S. Corporate & High Yield Index. Yields increased to 4.108 percent from 3.996 percent, and compare with a record low 3.35 percent on May 2.
The largest portion of Halliburton’s four-part bond sale was for $1.1 billion of 3.5 percent, 10-year notes that priced to yield 93 basis points more than similar-maturity Treasuries, Bloomberg data show. Those securities traded yesterday at 98.8 cents on the dollar to yield 3.64 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Proceeds will be used to repurchase shares of common stock under a tender offer and for general corporate purposes, according to a company filing.
The largest portion from Kinder Morgan’s three-part issue was for $800 million of 2.65 percent securities due February 2019 with a 130 basis-point spread, Bloomberg data show. The debt traded yesterday at 99.9 cents on the dollar to yield 2.68 percent, according to Trace.
Sales of investment-grade debentures fell to about $15.1 billion from $31.4 billion last week, and offerings of speculative-grade bonds rose to $7.1 billion from $6.5 billion, Bloomberg data show.
High-yield, high-risk bonds are rated below Baa3 by Moody’s Investors Service and lower than BBB- at Standard & Poor’s.
Issuers planning sales include BMC Software Inc. with $1.38 billion of eight-year notes denominated in dollars and euros to help fund its purchase by a group led by Bain Capital LLC and Golden Gate Capital, Bloomberg data show.