Corporate Bond Sales Reach $34 Billion in U.S. on Fund InflowsSarika Gangar
GlaxoSmithKline Plc and Nissan Motor Co. led sales of at least $34 billion this week with investors allocating money to corporate bond funds as relative yields declined.
Glaxo, the U.K.’s largest drugmaker, sold $3 billion in its first U.S. sale in more than 10 months and Yokohama, Japan-based Nissan raised $1 billion, according to data compiled by Bloomberg. Offerings increased from $31.6 billion last week and compare with a 2013 weekly average of $31.4 billion.
Investors deposited $2.3 billion into U.S. investment-grade bond funds in the week ended March 13, the strongest inflow since November, according to Bank of America Corp. research. The inflows into company debt came even as the Dow Jones Industrial Average reached an all-time high of 14,539 points yesterday, Bloomberg data show.
“Investors think the bond market still has a little room to run,” Timothy Cox, executive director of debt capital markets at Mizuho Securities USA Inc. in New York, said in a telephone interview. “Some of the names that are coming to market, especially the bonds with a little bit of spread,” are catching attention, he said.
The extra yield investors demand to own corporate bonds rather than government debentures narrowed to 212 basis points yesterday from 214 basis points on March 8, according to Bank of America Merrill Lynch index data.
Glaxo issued $1.25 billion of 0.7 percent, three-year debt yielding 35 basis points more than similar-maturity Treasuries and a $1.25 billion portion of 2.8 percent, 10-year securities paying a relative yield of 90 basis points, Bloomberg data show. The London-based company also sold a $500 million piece of 4.2 percent, 30-year debentures with a 105 basis-point spread.
Sales of investment-grade debentures reached at least $27.7 billion, compared with $22.8 billion last week and a 2013 weekly average of $23.7 billion, Bloomberg data show.
Yields on investment-grade debt fell to 2.86 percent yesterday from 2.89 percent on March 8, according to the Bank of America Merrill Lynch U.S. Corporate index. Spreads declined 1 basis point to 144 basis points.
Nissan, Japan’s second-largest automaker, sold $400 million of 1.8 percent, five-year notes with a 95 basis-point spread and $600 million of 1 percent, three-year securities with a relative yield of 65 basis points, Bloomberg data show. The transaction was doubled from $500 million in earlier discussions, according to a person familiar with the offering who asked not to be identified, citing lack of authorization to speak publicly.
Offerings of speculative-grade bonds reached at least $6.2 billion, compared with $8.9 billion last week and a 2013 weekly average of $7.7 billion, Bloomberg data show.
Yields on junk debt decreased to 6.41 percent yesterday from 6.48 percent on March 8, according to the Bank of America Merrill Lynch U.S. High Yield index. Spreads declined 5 basis points to 471 basis points.
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 H.J. Heinz Co., the ketchup maker being acquired by Warren Buffett’s Berkshire Hathaway Inc. and 3G Capital Inc., with $2.1 billion of 7.5-year bonds, Bloomberg data show.