Sales of longer-term bonds are accelerating at a record pace in the U.S., with corporate borrowers from Morgan Stanley to FedEx Corp. each selling 30- year debt for the first time in at least a decade.
Issuance of investment-grade bonds maturing in 30 years or more totals $83.6 billion since year-end, already exceeding the annual total in 2010 and 2011, according to data compiled by Bloomberg. Offerings are growing about six times faster than the overall high-grade market.
Relative yields on company bonds from the U.S. to Europe and Asia tightened 7 basis points last week to 191 basis points, or 1.91 percentage points, the lowest since Aug. 8, 2011, according to Bank of America Merrill Lynch’s Global Broad Market Corporate index. Spreads have declined from 236 on June 1, the highest since January. Yields fell to 2.97 percent from 3.03 percent on Aug. 3.
The 30-year maturity from the Hartford, Connecticut-based maker of Pratt & Whitney jet engines and Sikorsky helicopters accounted for the largest portion of its $9.8 billion transaction to help finance its acquisition of Goodrich Corp. The bonds have climbed 14.5 cents from the issue price to 113.2 cents on the dollar to yield 3.8 percent as of Aug. 10, Trace data show.
Prices of longer-maturity bonds are more sensitive to changes in current market yields than shorter-dated debt. An equal rise in borrowing costs cuts more value from longer-dated notes that pay a larger number of coupons.