Bond Sales of $32.7 Billion in U.S. Reach Highest in Six Weeks

Sales of company bonds in the U.S. rose to the highest level in six weeks as relative yields on the debt widened.

Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, and Purchase, New York-based PepsiCo Inc. led offerings of at least $32.7 billion this week, up from $26.4 billion last week and the most since $53.3 billion in the five days ended Jan. 18, according to data compiled by Bloomberg.

The offerings broke a five-week streak in which issuance failed to reach the $28.3 billion weekly average from the past 12 months, Bloomberg data show. Sales in February totaled $109.5 billion compared with $148.3 billion in the period last year.

The extra yield investors demand to own corporate bonds rather than government debentures increased 2 basis points this week to 221 basis points, or 2.21 percentage points, as of yesterday, according to the Bank of America Merrill Lynch U.S. Corporate & High Yield index. Yields decreased 2 basis points to 3.58 percent this week.

Freeport, which is purchasing Plains Exploration & Production Co. and McMoRan Exploration Co. for about $9 billion, sold $6.5 billion of debt in four parts to help fund the acquisition, Bloomberg data show. The Phoenix-based company’s sale included $1.5 billion of 2.375 percent, five-year securities to yield 162.5 basis points more than similar-maturity Treasuries and $1 billion of 3.1 percent, seven-year debt at a relative yield of 187.5 basis points, the data show.

PepsiCo, Coca-Cola

The mining company also issued $2 billion each of 3.875 percent, 10-year notes at a 200 basis-point spread and 5.45 percent, 30-year bonds at 237.5.

PepsiCo, the world’s largest snack-food maker, issued $2.5 billion including $625 million each of three-year floating-rate notes to yield 21 basis points more than the three-month London interbank offered rate and 0.7 percent, three-year bonds to yield 35 basis points more than benchmarks, Bloomberg data show. It also sold $1.25 billion of 2.75 percent, 10-year debt at a spread of 87 basis points.

Coca-Cola Co. sold $2.5 billion of bonds in three parts yesterday in its first offering in almost a year. The issue from the world’s largest soft-drink manufacturer included $750 million of 2.5 percent, 10-year bonds at a relative yield of 67 basis points, Bloomberg data show.

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