Corporate bond offerings surged to the highest level in four weeks as borrowers from General Electric Co.’s finance unit to Time Warner Inc. took advantage of growing confidence that Europe’s debt crisis will be contained.
Kohl’s Corp., the fourth-largest U.S. department store chain, and Montreal-based National Bank of Canada are also among companies selling $9.03 billion of debt in the U.S. yesterday, according to data compiled by Bloomberg. Laredo Petroleum Inc. is marketing $150 million of high-yield, high-risk bonds in the first offering of the debt since Sept. 27, according to a person familiar with the transaction.
Issuance is showing signs of life after failing to exceed the 2011 weekly average of $24.4 billion for three straight periods, Bloomberg data show. Political leaders in Slovakia, the only country in the 17-member euro area yet to sign off on the European Financial Stability Facility, agreed today to approve the region’s enhanced bailout fund, spurring investor optimism that the global economy may avoid recession.
“If we keep seeing positive developments out of Europe, the new-issue calendar will continue to open up, maybe even to the extent that we start to see some activity from high-yield issuers again,” Adrian Miller, a New York-based fixed income strategist at Miller Tabak Roberts Securities LLC, said in a telephone interview.
GE Capital sold $1.25 billion of five-year notes that yield 222 basis points, or 2.22 percentage points, more than similar maturity Treasuries and $1.75 billion of 10-year debt that pays a 247 basis-point spread, said the person, who was not authorized to discuss the transaction publicly and declined to be identified.
Time Warner’s 10.25-year securities may yield about 200 basis points more than the benchmark and its 30-year bonds may pay a spread of about 225 basis points, the person with knowledge of the sale said.
National Bank of Canada sold $1.4 billion of five-year covered bonds and Toronto-Dominion Bank is marketing $1.5 billion of five-year notes, said people with knowledge of the transactions.
Kohl’s, based in Menomonee Falls, Wisconsin, issued $650 million of debt due in 2021 in its first offering since September 2007, another person said. Petroleos Mexicanos plans to sell an additional $1.25 billion of 6.5 percent bonds due in June 2041, doubling the amount outstanding, according to a person familiar with its plans.
Companies have issued $1.55 billion of debt this week through yesterday after selling $8.63 billion during the period ended Oct. 7, Bloomberg data show. Issuance reached $12.2 billion on Sept. 14.
Laredo Petroleum’s offering of 9.5 percent notes due in February 2019, which are rated Caa2 by Moody’s Investors Service and CCC+ by Standard & Poor’s, adds on to $350 million of the debt it issued in January, according to a person with knowledge of the offering.
Speculative, or high-yield, high-risk corporate bonds, are ranked below Baa3 by Moody’s and BBB- by S&P.