Companies Selling $4.6 Bln in Debt

Blackstone, Shell lead issuance amid record-low yields.

Corporate issuers from Blackstone Group LP to Royal Dutch Shell Plc are leading offerings of at least $4.6 billion by selling their first bonds in two years with yields at about record lows.

Shell, Europe’s largest oil producer, is planning a three-part offering that includes 30-year debt through its international finance unit, and New York-based Blackstone is borrowing for the first time since September 2010 and issuing its first 30-year obligations. Dollar-denominated offerings have averaged $6.7 billion a day this month through last week, 8 percent higher than in July, according to data compiled by Bloomberg.

Companies including Philip Morris International Inc. and American Express Co. are exploiting investment-grade borrowing costs that dropped to an unprecedented 3.03 percent this month, according to Bank of America Merrill Lynch index data. Investors are giving companies the opportunity to issue low-cost debt by plowing money into the securities that yield more than U.S. government bonds, according to James Lee of Calvert Investments.

“The capital markets window is wide open,” Lee, an analyst at Bethesda, Maryland-based Calvert, which manages about $12.5 billion, said in a telephone interview. “Pension funds and insurance companies are looking for yield. There’s just very, very strong demand out there, particularly for high-grade names.”


Blackstone Offering

Blackstone, the world’s largest private-equity firm, plans to sell 10.5- and 30-year bonds that may be rated A by Standard & Poor’s, its sixth-highest grade, according to a person familiar with the offering who asked not to be identified because terms aren’t set. Proceeds will be used for general corporate purposes, Blackstone said today in a release.

The firm’s $400 million of 5.875 percent senior unsecured notes maturing March 2021 traded at a high of 109.9 cents on the dollar on July 23 to yield 4.48 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Shell plans to raise funds with its first bond offering in two years by selling debt of five-, 10- and 30-year maturities, according to another person familiar with the sale. The company’s Shell International Finance unit, which last issued dollar obligations due in three decades in March 2010, will use proceeds for general corporate purposes, The Hague-based company said today in a regulatory filing.

Shell’s longest outstanding maturity, its $1 billion of 5.5 percent bonds due March 2040, traded at 132 cents on the dollar to yield 3.65 percent at 8:08 a.m. in New York, Trace data show.

Other borrowers include Philip Morris, the world’s largest publicly traded tobacco company, which plans to sell five-, 10- and 30-year debt, and New York-based American Express, which is offering an additional $500 million of its 1.75 percent bonds due in 2015 first sold June 7, said people familiar with the sales.


Bloomberg News


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