Highly rated companies are seeking to borrow at least $2.8
billion on Wednesday, adding to the more than $14 billion in
investment-grade bonds sold earlier this week.
Leading the day so far is health-care company Baxter
International Inc. (BAX), with a two-part $750 million sale,
offering 10- and 30-year maturities. The company will use the
proceeds for general corporate purposes, including capital
expenditures to "support longer-term growth of our plasma-based
treatments," according to a bond prospectus.
Insurer MetLife Inc. (MET), soft drink maker PepsiCo Inc. (PEP)
and pipeline operator Kinder Morgan Energy Partners LP (KMP) plan
to borrow $500 million each, with maturities ranging from three to
30 years. Kinder Morgan will use the proceeds to pay a portion of a
$6.22 billion pipeline acquisition from its general partner, Kinder
Morgan Inc. (KMI).
Diversified manufacturer Leggett & Platt Inc. (LEG) plans to
borrow $300 million via 10-year notes, and real estate firm Essex
Portfolio LP (ESS) plans to issue $250 million also for 10
years.
In the first seven days of August, investment-grade companies
borrowed more than $15 billion, significantly more than the same
period last year, when they borrowed $10.2 billion, according to
data provider Dealogic.
Two years ago, however, companies with investment-grade credit
ratings borrowed nearly $34 billion over the same period. Low rates
make it enticing for companies to refinance existing debt and take
out new loans.
That has given some investors pause.
"These longer-dated bonds are probably dangerous at this stage
in the economic cycle," said William Larkin, fixed income portfolio
manager at Cabot Money Management. "We have very low coupons and
long maturities, and that can be a recipe for a disaster if we get
a stronger economic recovery."
In the high-yield market Wednesday, cable operator Charter
Communications Inc. (CHTR) is planning to sell $1 billion in
10-year notes through two subsidiaries.
Write to Mike Cherney at mike.cherney@dowjones.com
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