High-Grade Primary Market Reopens with Five Bond Offerings

Strategic Insights -

The high-grade primary market in New York reopened on Monday, May 18, 2009, with five companies announcing bond offerings, including ConocoPhillips, Kellogg Co., EOG Resources, AFLAC, and Beckman Coulter. Market participants expect additional deals to surface as investors continue to take advantage of a favorable issuing environment, driven by cheap financing and strong investor demand. These bond offerings, with benchmark-sized deals and risk premiums ranging from 180 to 250 basis points over Treasurys, aim to raise a total of over $2.6 billion.

Key Takeaways:

  • Five companies, including ConocoPhillips and Kellogg Co., announced bond offerings on Monday, May 18, 2009, marking the reopening of the high-grade primary market in New York.
  • ConocoPhillips is selling a benchmark-sized deal, including five- and 10-year securities, with joint bookrunners Citigroup, Deutsche Bank Securities, and RBS.
  • Kellogg Co. is marketing its $750 million seven-year issue in the 180 to 185 basis points over Treasurys range, with proceeds used to repay outstanding commercial paper.
  • EOG Resources set to price its $900 million 10-year offering at a risk premium of 250 basis points over Treasurys.
  • AFLAC and Beckman Coulter are also selling debt on Monday, while insurance companies and financial institutions, such as State Street Corporation, plan to issue debt in the near future.
  • The bond offerings are part of the larger market trend, with billions of dollars in bonds issued by banks to demonstrate their ability to raise funds without federal backing.

Statistics:

  • Total bond offerings announced on Monday, May 18, 2009: 5
  • Aggregate amount of bond offerings: $2.65 billion ($750 M + $900 M + $1.015 billion for AFLAC + $100 million for Beckman Coulter)
  • Basis points over Treasurys for various offerings:

+ Kellogg Co.: 180-185

+ EOG Resources: 250

  • Companies announcing bond offerings: ConocoPhillips, Kellogg Co., EOG Resources, AFLAC, Beckman Coulter
  • Joint bookrunners for various offerings: Citigroup, Deutsche Bank Securities, RBS, Detusche Bank, HSBC, JP Morgan
  • Companies planning to issue debt in the near future: State Street Corporation, other banks

Sources:

  • Dow Jones Commodities News via Comtex
  • Kellie Geressy; Dow Jones Newswires; (201) 938-2050; kellie.geressy@dowjones.com