BP, Verizon Lead $17 Billion of Bonds as Confidence Recovers




Oct. 27 (Bloomberg) — BP Plc (BP), Verizon Communications Inc. (VZ)
and Morgan Stanley (MS) are leading borrowers selling at least $17
billion of debt today as Europe’s leaders instill confidence
into credit markets that drained in August and September.

BP, operator of the Macondo well in the Gulf of Mexico that
caused the worst ever U.S. oil spill last year, sold $2 billion
of bonds, according to data compiled by Bloomberg. Morgan
Stanley raised $1 billion of 5.5 percent bonds maturing in July
2021, adding to an existing offering. New York-based Verizon may
issue $4.6 billion, said a person with knowledge of the
transaction, who declined to be identified because terms aren’t
set.

A benchmark gauge of U.S. corporate credit risk decreased
the most in more than a year after European leaders boosted
their rescue fund’s capacity to 1 trillion euros ($1.4 trillion)
in a bid to curb the region’s fiscal crisis and prevent it from
infecting bank balance sheets worldwide. The bond sales planned
for today in the U.S. would be the most since May 24.

“Everything’s gone away, everything’s good, lots of
Neosporin, the market’s all better,” said Timothy Cox,
executive director of debt capital markets at Mizuho Securities
USA Inc. in New York, referring to an antibiotic. “We’ve got
low Treasury rates, a mending situation in Europe, corporate
earnings have been pretty solid. People realize the balance
sheets of corporations are extremely pristine and very
healthy.”

Sales Rising

Bond sales have climbed from $7.6 billion last week as
relative yields on investment-grade corporate debt fall to 231
basis points, or 2.31 percentage points, the lowest since Sept.
9, according to Bank of America Merrill Lynch index data. Yields
on benchmark 10-year Treasuries rose to 2.38 percent today.

BP Capital Markets Plc issued $1 billion of five-year notes
that paid 107 basis points more than comparable-maturity
Treasuries, along with $1 billion of 10-year bonds that paid a
117 basis-point spread, Bloomberg data show.

The London-based oil company last issued dollar-denominated
bonds in March, when it sold $3.7 billion of debt, Bloomberg
data show.

International business Machines Corp., the biggest
computer-services provider, sold $1.35 billion of 0.875 percent,
three-year notes and $500 million of 2.9 percent, 10-year debt.
Verizon, the second-largest U.S. phone company after ATT Inc.,
is marketing a four-part bond sale to retire outstanding
securities and pay back commercial paper.

‘It’s About Time’

Railroad CSX Corp. sold $600 million of senior unsecured
30-year bonds and U.S. Bancorp, the nation’s biggest regional
lender, issued $1.25 billion of 2.2 percent, five-year debt.
SunTrust Banks Inc. issued $750 million of debt today.

“It’s about time,” Cox said. “My gut tells me people are
really going to want to get their hands on high-quality names.
There is a lot of cash in the market.”

The Markit CDX North America Investment Grade Index, which
investors use to hedge against losses on corporate debt or to
speculate on creditworthiness, plunged 12.2 basis points to a
mid-price of 113.6 basis points at 4:27 p.m. in New York,
according to index administrator Markit Group Ltd. That’s the
lowest level since Aug. 17 and the biggest daily decline since
May 2010.

To contact the reporters on this story:
Sapna Maheshwari in New York at
sapnam@bloomberg.net;
Zeke Faux in New York at
zfaux@bloomberg.net

To contact the editor responsible for this story:
Alan Goldstein at
agoldstein5@bloomberg.net

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Article source: http://www.bloomberg.com/news/2011-10-27/bp-plans-benchmark-bond-sale-as-credit-swaps-show-risk-falling.html

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