Procter & Gamble Co. obtained a 2.3 percent interest rate on its $1 billion of 10-year notes issued yesterday, a record low for the maturity, as corporate bond sales climbed to the most in almost three months.
P&G, the world’s largest consumer-products company, also sold $1 billion of two-year, floating-rate notes, according to data compiled by Bloomberg. Offerings in the U.S. reached $17.6 billion, the most since $21.2 billion was sold Nov. 7, as International Business Machines Corp. issued $2.5 billion of debt and Petroleos Brasileiro SA raised $7 billion.
Issuers are seeking to lock in falling yields on investment-grade corporate bonds as Europe’s debt crisis fuels demand for the relative safety of dollar-denominated securities and confidence builds that the region’s struggles won’t disrupt a recovery in the world’s largest economy. January sales fell 19 percent from a year earlier to $102.6 billion, leaving investors eager to spend cash on offerings, said Adrian Miller, fixed- income strategist at GMP Securities LLC.
The market for new issues “will remain quite active barring a disruption with the capital markets from Europe,” Miller, who’s based in New York, wrote in an e-mail. “Issuers are actively seeking very attractive financing terms.”
Yields have fallen to 3.55 percent, the lowest level since touching 3.53 percent on Aug. 10, and within 10 basis points of a record low 3.45 on Aug. 4, according to the Bank of America Merrill Lynch U.S. Corporate Master Index. The extra yield investors demand to own the debt instead of Treasuries is hovering at about the narrowest since November.
Cincinnati-based P&G’s $2 billion offering was split evenly between the 2.3 percent notes that yield 55 basis points more than similar-maturity Treasuries and floating-rate securities due in February 2014 that pay 8 basis points less than the three-month London interbank offered rate, Bloomberg data show. Libor, the rate at which banks say they can borrow from each other, was set at 0.54 percent today.
IBM, based in Armonk, New York, issued $1.5 billion of three-year, 0.55 percent notes that yield 42 basis points more than similar-maturity Treasuries and $1 billion of five-year, 1.25 percent debt that pays a 62 basis-point spread, Bloomberg data show. A basis point is 0.01 percentage point.
Petrobras sold $1.25 billion of three-year notes, $1.75 billion of five-year debt, $2.75 billion of securities due in 2021 and $1.25 billion of bonds maturing in 2041, Bloomberg data show. The sale is the biggest ever by a Brazilian company and matches the largest corporate bond offering in the U.S. this year.
Rabobank Nederland NV, Praxair Inc., Ventas Inc., and KB Home were also among companies marketing debt in the U.S. today.