- Revival in company debt issuance follows 13-day drought
- Canadian Pacific, Goldman Sachs and Deere also sell debt
Automatic Data Processing Inc. and Home Depot Inc. were among companies that led a reopening of the U.S. corporate-bond market Tuesday after a 13-day drought in issuance.
ADP, a payroll processor, sold $2 billion of debt in a two-part inaugural offering to finance a previously announced share-buyback program, according to data compiled by Bloomberg. Home Depot, the home-improvement retailer, issued $1.5 billion of notes in two-parts to pay for its acquisition of Interline Brands Inc. and to repurchase stock.
Bond sales by U.S. investment-grade companies are cranking up after global growth concerns stemming from news of an economic slowdown in China kept issuance at bay in the worst late-summer drought since 2005. Issuance may accelerate as borrowers seek to lock in financing for $420 billion of takeovers that are expected to be completed by the end of the year and investors look to reinvest cash.
“There was a lot in the pipeline -- the market seems in a better tone to place some of those,” said Dorian Garay, a New York-based money manager for an investment-grade debt fund at NN Investment Partners. The firm oversees $206 billion.
Other companies that tapped the debt markets include Canadian Pacific Railway Ltd., which sold a bond offering in two parts, with the longest-dated portion maturing in 100 years. Goldman Sachs Group Inc. sold $1.25 billion of debt.
As companies pay off debt, Bank of America Corp.’s Hans Mikkelsen forecasts investors will have as much as $75 billion of cash to reinvest in the coming months.
ADP issued bonds due in five years and a note maturing in 2025, according to data compiled by Bloomberg. The 10-year bond sold to yield 1.20 percentage points more than U.S. Treasuries, 0.20 percentage points less than where the deal was initially marketed. The company issued $805 million in convertible securities in 1992, according to data compiled by Bloomberg.
The longest portion of Home Depot’s debt offering was $1 billion in 10-year notes that sold to yield around 1.17 percentage points more than similar maturity Treasuries, Bloomberg data show.