UPDATE:Abbott, Chevron Among High-Grade Cos Issuing New Bonds
26 Février 2009 - 8:25PM
Dow Jones News
Abbott Laboratories (ABT) and Chevron Corp. (CVX) are among U.S.
investment-grade companies marketing new bonds Thursday as they
take advantage of investor appetite to fund their operations.
Abbott launched $3 billion of bonds maturing in 10 and 30 years.
The health-care company said it would use the proceeds to repay
about $1 billion in commercial paper and for other corporate
purposes.
The $2 billion 10-year piece was launched at a risk premium, or
spread, of 220 basis points over Treasurys, and the $1 billion
30-year issue was launched at a spread of 235 basis points over
Treasurys.
An existing 10-year note from Abbott due 2017 is trading at a
spread of 202 basis points over Treasurys, according to
MarketAxess.
Chevron is marketing three, five- and 10-year noncallable bonds
in part to refinance a portion of the company's existing commercial
paper borrowings and other Chevron debt. The deal is expected to
total $5 billion.
These companies don't issue bonds as often as others, and so are
of particular interest to investors looking to diversify their
holdings.
"New or less frequent high-quality issuers have generally been
met with strong demand as investors seek to add new issuers to
their portfolios," said Jon Duensing, principal at Smith Breeden
Associates.
He expects issuance from high-quality issuers to continue given
large refinancing needs, and that it will see good reception from
investors.
"The companies that have accessed the market have been
predominately stronger, better-capitalized businesses, with the
wherewithal to handle an economic downturn," said Tim Compan,
corporate bond portfolio manager at Cleveland-based Allegiant Asset
Management. "There has, and will be indigestion as spreads tighten,
but for the most part, new issues have been well-received."
February already ranks as the ninth-largest on record in
issuance of U.S. dollar-denominated high-grade debt, according to
data provider Dealogic. The month's tally stands at $67 billion and
for this week alone, $9 billion, in bonds not backed by the Federal
Deposit Insurance Corp.
Energy and utility companies made up a majority of bonds sold
this week, and more are on tap. Oneok Inc. (OKE), Alabama Power,
Williams Cos. (WMB), Nevada Power and Arizona Public are also
offering smaller deals. Investors consider such companies as faring
better than others, such as retailers, in the weakening
economy.
Noble Energy Inc. (NBL) sold $1 billion of 10-year bonds that
offered a risk premium of 550 basis points over Treasurys on
Tuesday. The spread has since decreased to 500 basis points,
indicating investor demand.
The corporate supply Thursday comes amid a glut of other debt.
Fannie Mae (FNM) sold a record $15 billion in two-year notes, which
went on to trade well in the so-called secondary market. Meanwhile,
there will be an auction of seven-year Treasury notes Thursday
afternoon.
-By Romy Varghese, Dow Jones Newswires; 215-656-8263;
romy.varghese@dowjones.com
(Kate Haywood contributed to this report.)