GE to sell record $11 billion in debt
By Rachel Koning, CBS.MarketWatch.com Last Update: 12:43 PM ET March 13, 2002
NEW YORK (CBS.MW) - General Electric will offer $11 billion in debt in a sale expected Wednesday that will reign as the largest U.S.-based corporate bond auction ever, traders said.
"Triple A" -rated General Electric Co.'s (GE: news, chart, profile) finance arm, GE Capital, will issue the debt on behalf of its parent. The sale was pegged at an already sizable $6 billion earlier this week.
The deal will include: $4 billion of 3-year floating-rate notes expected to yield about 0.125 percentage points over the floating-rate benchmark, a three-month London Interbank Offered Rate or Libor, now at 1.95 percent; $2 billion of 5-year notes yielding 0.8 percentage point more than a 5-year U.S. Treasury that now yields 4.61 percent; and $5 billion of 30-year bonds yielding about 1.1 percentage points more than the 5.75 percent yield currently carried on a 30-year Treasury.
Already, hearty investor interest in better-rated corporate paper -- given projections for an improved economy and healthier corporate profits -- was luring would-be issuers into the marketplace where investors are warm to the typically moderate risks of higher credit ratings.
Companies are anticipating rising interest rates later in the year, prompting them to issue securities at modest interest rates now.
The previous record-sized sale of U.S. dollar-denominated corporate bonds is claimed by long-distance provider WorldCom Inc. (WCOM: news, chart, profile), which sold $10.1 billion in debt in a single offering last May.