The cheapest long-term borrowing costs on record are enticingcompanies into the bond market and allowing them to lock in ratesfor up to 100 years.

“My treasurer tells me, 'Always borrow when you can, not whenyou have to,'” said Simon Henry, chief financial officer at RoyalDutch Shell Plc.

Global borrowers from Shell in The Hague to Peoria,Illinois-based Caterpillar Inc. raised a record $368 billion thisyear from bonds maturing in 10 years or more, according to datacompiled by Bloomberg. The average yield companies pay to raiselong-dated debt worldwide fell 59 basis points this year to 4.4percent, approaching the low of 4.1 percent reached in 2013, Bankof America Merrill Lynch data show.

The benefit to companies of selling long-term debt is thatit reduces their risk of rolling over borrowings anytime soon.Treasurers are keen to beat increases in benchmark rates even asthere are mixed signals as to when that will happen, with inflationremaining below central bank targets and many economies smallerthan they were in 2007.

From a lender's perspective, insurers and pension funds want thehigher coupons offered by longer-dated bonds and like theguaranteed income to meet their far-reaching commitments. Theaverage maturity of global company notes has climbed to 8.5 years,compared with 8.1 years over the past decade, Bank of AmericaMerrill Lynch data show.

'Liquid Pools'

“There are huge liquid pools at whatever tenor we need,” Shell'sHenry said at The Economist's Bellwether Europe conference inLondon on May 15. “There's more capital out there than we canconsume, a huge wall of money, a lot of it coming fromemerging-market sovereign wealth funds and pension funds that'slooking for a home.”

Europe's biggest oil company, which has $11.9 billion of cash onits balance sheet, priced 1 billion euros (US$1.37 billion) of12-year notes to yield 2.5 percent in March, following a 30-yeardeal in August when it paid 4.59 percent to sell $1.25 billion ofsecurities, Bloomberg data show.

Caterpillar, the largest maker of mining and constructionequipment, sold its first 50-year notes this month, when it paid4.8 percent to raise $500 million. Hasbro Inc., the Pawtucket,Rhode Island-based toymaker behind My Little Pony and Transformers,sold 30-year notes paying a 5.1 percent coupon, down from 6.35percent when the company issued debt with the same maturity in2010.

“In light of the very favorable interest-rate environment, wedeemed it in the best interests of the company to lock in capitalat attractive rates,” said Hasbro Treasurer Martin Trueb. “Inaddition to securing a lower interest rate, the issuance helped usstagger debt maturities at regular intervals.”

In the U.S., companies pay 4.7 percent on average to sell bondsof 10 years and more, approaching the all-time low 4.3 percentreached in November 2012, Bank of America Merrill Lynch data show.Average yields are at a record-low of 2.8 percent in Europe, downfrom a peak of 7.3 percent in 2008.

The likelihood of borrowing costs climbing in Europe isdiminishing, with policy makers considering monetary easing nextmonth to spur slow growth in the 18-nation euro area whereinflation is at less than half their goal. In the U.K., astrengthening economy is leading some economists to predict a rateincrease this year.

Market Is Hot

Transport for London, which oversees the capital city's publictransport system, sold its first 50-year notes this year with acoupon of 4 percent, the same amount it offered to raise 20-yeardebt in 2013.

“We're in an environment where the economy is starting toimprove and we believe interest rates will rise,” said SimonKilonback, group treasurer at TfL. “It seems to be an attractivetime to do long-dated deals.”

Notes maturing in 10 years and more returned 9.4 percent thisyear, more than double the returns from global corporate bonds onaverage, according to Bank of America Merrill Lynch data.

Among issuers this year, Electricite de France SA, the world'sbiggest operator of nuclear reactors, debuted 1.35 billion poundsand US$700 million of 100-year notes in January. Their sterlingnotes gained 19 pence to trade at 117 pence on the pound.Massachusetts Institute of Technology raised $550 million from100-year notes last month that are trading at 106 cents.

“The market is pretty hot,” said George Dessing, treasurer ofDutch business-to-business publisher Wolters Kluwer NV which raised10-year debt this month. “We have a preference for longer maturity,and especially right now, at these low costs, it was ano-brainer.”

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.