Tuesday has turned into a good day for issuing bonds in the U.S.
Companies continue to take advantage of the low interest rate environment to raise more cheap debt.
IBM Corp. is issuing a two-part bond deal in the U.S., comprised of $900-million (U.S.) in three-year notes and $600-million of seven-year debt. The respective yields are 0.45 and 0.65 percentage points above three and seven-year Treasury notes, according to Bloomberg news.
IBM has an Aa3 rating from Moody‘s Investors Service’s and its timing couldn’t be much better, with yields on U.S. Treasuries falling this week in response to investors’ growing aversion to risk.
As recently as February, IBM issued a $2.5-billion offering. Part of the amount involved a record-low coupon of 0.55 per cent.
Berkshire Hathaway and the London-based beverage company Diageo PLC also announced debt issues on Tuesday. Combined with four smaller deals, the U.S. bond market saw more than $6-billion worth of deals priced today, Dow Jones reported.
Companies brought a near-record amount of debt to market in the first quarter, with $24.6-billion in high-rated bond issuance being issued last week alone, the news agency said.
U.S. Treasury prices rose slightly on Tuesday in response to uncertainty in Europe, sending the yield on the 10-year note down 3 basis points to 1.84 per cent, close to a three-month low.