Another week for big bond issues
Corporate credit markets were busy last week with more than $23 billion of new debt issued. There were quite a few multi-billion $ credit card swipes in the mix and credit markets are still offering cheap money for companies with decent credit ratings.
The biggest borrowers were Ecolab (ECL), Gilead Sciences (GILD) and Hewlett-Packard (HPQ) with $3 billion or more apiece. Ecolab and Gilead are both borrowing to pay for acquisitions and Ecolab is throwing a share buyback in the mix. For $3 billion, you'd think Hewlett-Packard could have provided just a little more detail than, "for general corporate purposes, which may include the repayment of our currently outstanding commercial paper."
Recent weeks have had several examples of companies isssuing bonds to pay of lower interest commercial paper and this week was no exception. Hewlett-Packard, Noble (NBL), and Viacom (VIA) are all using new debt to pay off lower rate commercial paper. Looks to me like CFOs are protecting against rising rate risk and locking in low, long-term rates while they can.
Questions and comments welcome here or at the article.
No position in any companies mentioned in this blog entry.