General Motors Sells $2.5 Billion of Dollar Bonds

General Motors Co. sold $2.5 billion of bonds today in three parts, the automaker’s first dollar-denominated debt offering since Standard & Poor’s raised the company to investment grade.

The largest portion of the notes issued by the biggest U.S. auto maker was $1.25 billion of 5.2 percent debentures due April 2045 that yielded 220 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg. GM sold 500 million euros ($627.3 million) of notes on Oct. 8, two weeks after S&P boosted its ratings.

S&P lifted GM’s ranking to BBB- from BB+ on Sept. 25, citing the company’s “favorable automotive cash flow and profitability.” Detroit-based General Motors posted third-quarter earnings last month that topped analysts’ estimates, boosted by North American customers flocking to pickups and sport-utility vehicles.

The new offering included $750 million of 5 percent securities maturing April 2035 that sold at a spread of 205 basis points, and $500 million of 4 percent bonds due April 2025 at a relative yield of 175 basis points, Bloomberg data show.

The spread on the debentures maturing April 2025 was 72 basis points less than the company’s $750 million of 4.25 percent, 10-year securities that were issued in May 2013. A basis point is 0.01 percentage point. Proceeds from the sale may be used to help redeem about 156 million outstanding shares of preferred stock, GM said today in a regulatory filing.

GM’s $1.5 billion of 6.25 percent bonds maturing in October 2043 fell 3.25 cents to 115.5 cents on the dollar at 4:10 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Moody’s Investors Service still rates the company Ba1 and Fitch Ratings maintains a BB+ ranking, both one level below investment-grade.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE