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Bubbles in the Bond Market



March 04, 2013 – Comments (1)

Looking for fizzy bond bubbles?  How about Coca-Cola and Pepsi in for $2.5 billion each last week?

Coke got a little better deal on rates, but both were able to borrow cheap.  Coke is redeeming higher rate paper and will end up with lower debt service costs plus it should have quite a bit of extra cash to work with when all's done.  Pepsi's paying down some commercial paper.

Freeport-McMoRan digging in for $6.5 billion to finance some acquisitions.  Philip Morris Int and UnitedHealth each borrowed well over a billion and didn't really say what the money would be used for.  PM and UNH mentioned in one article - how's that for an ironic pairing?

Freeport McMoRan, Coca-Cola, Pepsi, and Philip Morris International all issued 10-year paper with coupon rates below their respective dividend yields.  Not sure that means much, but I think income investors might want to at least consider the stocks as an alternative to the bonds in those four cases.

Fool on!


1 Comments – Post Your Own

#1) On March 05, 2013 at 12:10 AM, awallejr (52.59) wrote:

I like all four as a stock purchase with FCX being the most speculative in light of their expansion into energy.

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