Boom in Corporate Debt Issuance

This month, companies are expected to raise $50 billion through investment-grade bonds and perhaps another $20 billion through high-yield debt.

For 2006, it seems that Corporate America has made a resolution to borrow.

Last Thursday alone, about $13 billion of investment-grade debt was brought to market, according to The Wall Street Journal. Altogether, in January companies are expected to raise $50 billion through investment-grade bonds, reported the paper, which noted that another $20 billion of high-yield debt could price this month.

New issuance is traditionally strong after the New Year. This time, the paper pointed out, it is being fueled by the desire among many companies to raise money to fund future acquisitions or stock buybacks.

Among the companies that have reportedly issued debt so far this year are HSBC Holdings, Wells Fargo, Fortune Brands, and Avon Products. The paper observed that Avon is using the proceeds of its $500 million offering to help fund its $1 billion share-buyback plan.

Oracle announced on Friday that it will sell $5 billion of fixed-rate and floating-rate notes to finance its purchase of Siebel Systems, for acquisition-related transaction costs, and for general corporate purposes, including stock repurchases and other acquisitions.

Among junk debt in the pipeline, R.H. Donnelly disclosed plans to sell $2.142 billion of paper in three parts, largely to fund its buyout of Dex Media, which publishes the telephone directories for Qwest Communications International, according to the Journal.

Also last week, Companhia Vale do Rio Doce, the world’s largest iron-ore miner, announced that it issued $1 billion of 10-year notes, the largest global debt issuance by a Brazilian corporation, according to the Associated Press.

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