Abbott, Chevron Among High-Grade Cos. Issuing New Bonds
February 26 2009 - 1:04PM
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 be
more than $2 billion.
These companies don't issue bonds frequently, and so are
particularly interest to investors looking to diversify their
holdings, said two portfolio managers. High-quality companies
considered resistant to the recession are also attractive to
investors who still have cash to put to work after sitting out the
latter end of 2008.
In addition, Oneok Inc. (OKE), Alabama Power, Williams Cos.
(WMB), Nevada Power and Arizona Public are also offering smaller
deals.
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. 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.)