OAO Lukoil and Softbank Corp. led sales of at least $24.6 billion this week in the U.S. as relative yields widened.
Lukoil, Russia’s second-largest oil producer, raised $3 billion in its first sale in more than two years and Tokyo-based Softbank issued $2.49 billion in dollars, according to data compiled by Bloomberg. Offerings, which were in line with $24.7 billion last week, held below the $27.9 billion weekly average from the past 12 months for a fourth straight period.
The extra yield investors demand to own corporate bonds rather than government debentures widened to 217 basis points yesterday from 215 basis points on April 12, according to Bank of America Merrill Lynch index data. Yields decreased to 3.44 percent yesterday, near a record-low 3.4398 percent on April 15, from 3.45 percent at the end of last week.
Lukoil issued debt after Standard & Poor’s lifted the oil producer one step on April 15 to BBB, the second-lowest investment-grade level. The sale included $1.5 billion each of 3.416 percent, five-year securities yielding 255 basis points more than the mid-swap rate and 4.563 percent, 10-year debt paying a relative yield of 270 basis points, Bloomberg data show.
Sales of investment-grade debentures reached at least $19.8 billion, compared with $15 billion last week and a 2013 weekly average of $22.8 billion, Bloomberg data show.
Yields on investment-grade debt fell to 2.7 percent yesterday from 2.71 percent on April 12, after touching a record low of 2.698 percent on April 15, according to the Bank of America Merrill Lynch U.S. Corporate index. Spreads widened 1 basis point to 149 basis points.
Softbank, the Japanese telecommunications company vying with Dish Network Corp. to acquire Sprint Nextel Corp., issued seven-year debt split between $2.49 billion of 4.5 percent notes yielding 339 basis points more than similar-maturity Treasuries and a 625 million-euro ($816 million) portion of 4.625 percent securities yielding 395 basis points more than similar-maturity German government bonds, Bloomberg data show.
Offerings of speculative-grade bonds reached at least $4.8 billion, compared with $9.7 billion last week and a 2013 weekly average of $8.3 billion, Bloomberg data show.
Yields on junk debt fell to an unprecedented 6.303 percent yesterday, down from 6.304 percent on April 12, according to the Bank of America Merrill Lynch U.S. High Yield index. Spreads widened 5 basis points to 480 basis points.
High-risk, high-yield bonds are rated below Baa3 by Moody’s Investors Service and lower than BBB- at Standard & Poor’s.
The week opened with gold dropping 13 percent in a two- session plunge through April 15, its biggest decline in 33 years, and a bombing at the Boston Marathon.
“The tone on Monday created some anxiety through the week,” Jody Lurie, a corporate credit analyst at Janney Montgomery Scott LLC in Philadelphia, said in a telephone interview. “It gave reasons to check our mood and our mindset.”
Issuers planning sales include Buena Vista Gaming Authority with a $220 million issue and Erickson Air-Crane Inc. with $400 million of seven-year notes, Bloomberg data show.