By Katy Burne
Colgate-Palmolive Co. (CL) began marketing $500 million of bonds
Friday, seeking to line its coffers as interest rates on company
debt keep tumbling amid unceasing investor appetite for
high-quality debt yielding more than Treasurys.
The offering comes as other household names--from computer
manufacturer International Business Machines Corp. (IBM) to
biopharmaceutical company Bristol-Myers Squibb Co. (BMY)--have been
able to borrow at record-low rates in recent days. That is because
rates to Treasurys, to which corporate debt is benchmarked, have
fallen to all-time lows.
On Thursday, Bristol-Myers scored a record low rate on five- and
30-year debt, with coupons of 0.875% and 3.25%, respectively, while
tying the second-lowest for 10-year debt with a 2% coupon. A day
earlier, IBM broke a record for 10-year debt with a 1.875%
coupon.
The Colgate debt sale follows the company's announcement
Thursday of net sales for the second quarter of $4.3 billion, up 2%
from the year-earlier period.
The bonds are expected to price with a risk premium of around
0.60 percentage point over Treasurys, according to one person
familiar with the transaction. Existing Colgate bonds due in 2021
with a 2.45% coupon are trading in the secondary market with a
spread of 0.47 point over Treasurys, according to MarketAxess
data.
It was too early to tell if Colgate was on track to beat IBM's
record.
Proceeds from the new bonds, which fall due for repayment in
2023, will be used for general corporate purposes, the company said
in a regulatory filing.
Leading the sale are HSBC Holdings PLC (HBC), J.P. Morgan Chase
& Co. (JPM) and Morgan Stanley (MS).
Write to Katy Burne at katy.burne@dowjones.com
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