Saturday 4 April 2020
Home      All news      Contact us      Chinese
todayonline - 15 days ago

U.S. conglomerates see borrowing costs spike

NEW YORK - Walt Disney Co lt;DIS.N gt;, JPMorgan Chase Co lt;JPM.N gt; and United Parcel Service Inc lt;UPS.N gt; were among seven major U.S. companies that accepted a big rise in their borrowing costs to issue bonds on Thursday, as the coronavirus outbreak roiled credit markets. The companies, that also included Citigroup Inc lt;C.N gt;, Morgan Stanley lt;MS.N gt;, Northrop Grumman Corp lt;NOC.N gt; and MetLife Inc lt;MET.N gt;, raised a combined $18.6 billion through the issuance of investment-grade bonds, according to Refinitiv IFR data. Disney issued five new bonds, including a $1.25 billion 10-year loan which priced at a 270 basis point premium to U.S. Treasuries at a 3.8% yield. By comparison, Disney raised $2 billion in September with a premium of only 70 basis points and a yield of around 2.2%. The higher borrowing costs indicate that strain persists in the credit markets, despite the efforts of governments and central banks to support the financial system. The U.S. Federal Reserve has taken a series of steps over the last two weeks to boost liquidity, including cutting borrowing costs to near zero and embarking on large-scale asset purchases. The novel coronavirus has infected more than 200,000 people globally but may be in its early stages in the United States. It has prompted many countries to order businesses to close and restrict movements of entire populations to limit its spread. JPMorgan raised $2.5 billion at a 340 basis point premium, compared to 100 basis points in November on debt with a similar duration, albeit worth only $750 million. United Parcel Service saw the premium of its debt to U.S. Treasuries spike to 335 basis points from 85 basis points in August. Citigroup issued debt with a maturity of 21 years, longer than anything it has issued in at least 12 months, according to Refinitiv IFR records. The 2041 debt was at a 350 basis point premium to U.S. Treasuries, compared to 90 basis points on debt maturing in 2031 done in January. Morgan Stanley raised $2 billion in debt which matures in 2051, also a longer duration that anything the bank has issued in the last 12 months. The debt was issued at a premium of 375 basis points compared to 92 basis points for a 5-year debt deal in July. The other two issuers, Northrop Grumman and MetLife, tapped the investment-grade debt market for cash for the first time in over a year to raise $2.25 billion and $1 billion respectively, according to Refinitiv IFR. REUTERS

Latest News








Most Popular (6 hours)

Most Popular (24 hours)

Most Popular (a week)