Last Week's Bond Issues
A couple of interesting new issues in the corporate bond markets last week. The total issued for the week was about $22 billion with one company, United Technologies, making up nearly half the bonds sold.
UTX is raising the money to pay for its acquisition of Goodrich. For those who follow arbitrage plays, there isn't much of a spread in GR. The offer is $127.50 and todays close was in the high $125's. About a buck and half per share for a couple months IF the deal closes; if something fouls it up, GR probably heads back to sub-100 territory where it was before the deal was announced.
One other company borrowing to buy was BlackRock. BLK is using most of the proceeds from its bond sale to buy part of Barclay's sale of none other than BlackRock. The borrowed money is cheap enough that the bond coupon will be less than BlackRock was paying in dividends on the shares, so cash flow improves. Between that, the company's confidence in itself and reasonable valuation, I decided to give BLK a green thumb.
Disclosure: No position in UTX or BLK.