Goldman Sachs Group Inc., Wells Fargo & Co. and Colgate-Palmolive Co. sold bonds as yields on highly rated corporate debt fell to record lows.
Goldman Sachs, the fifth-biggest U.S. bank by assets, issued $2 billion of 3.3 percent, three-year notes, while San Francisco-based Wells Fargo issued $1.5 billion of 2.1 percent, five-year securities, according to data compiled by Bloomberg. Colgate, the world's largest toothpaste maker, sold $500 million of 2.3 percent, 10-year notes.
The companies are raising money in the bond market after yields on U.S. investment-grade debt fell to 3.37 percent on April 27, the lowest ever and down from 3.9 percent at the beginning of the year, according to Bank of America Merrill Lynch index data.
Bank bonds have returned 6.1 percent this year through April 27, beating the 3.6 percent average gain for all investment-grade debt, as Europe's sovereign debt crisis eased, Bank of America Merrill Lynch index data show. While spreads on the financial debt fell to 268 basis points on April 27, that's almost 1 percentage point above last year's low of 173 in April.
Credit-default swaps on Goldman Sachs have fallen to 269 basis points as of 3:48 p.m. today from 327 basis points at the beginning of the year, Bloomberg data show. Contracts on Wells Fargo cost 88, down from 144 on Jan. 2.
The contracts, which typically fall as investor confidence improves and rise as it deteriorates, pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt.
The Goldman Sachs bonds priced to yield 295 basis points more than similar-maturity Treasuries, and the Wells Fargo notes were issued at a 130 basis-point premium, Bloomberg data show. Colgate issued its debt at a spread of 58. A basis point is 0.01 percentage point.
Bloomberg News
Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.
Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
- Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
