Putting the Leverage in Leveraged Buyouts
Not a lot of excitement in last week's new bond issues. The most interesting issues were NBC Universal and Heinz each borrowing a few billion to help fund the buyouts by Comcast for NBC Universal and Berkshire Hathaway and private equity firm 3G Capital for Heinz.
One observation was St. Jude Medical (STJ) is using part of its borrowing to redeem a note that doesn't mature until 2019 and doesn't carry a much higher coupon than the new borrowing. Looks like someone decided to lock in rates now rather than gamble on where they'll be six years from now.
CAPS blog bonus observation - a Japanese insurance company, Sompo Japan Insurance, floated a $1.4 billion, 60-year bond. Very long maturity bonds pop up every now and then, but they're not real common. Sompo is paying a coupon of 5.325% for ten years, then they go to a floating rate. The bonds were a private issue and will be listed on the Singapore exchange - well outside my investing wheelhouse. Here's the press release for anyone interested in reading more.