“B” Is for Bond Issues

With five new offerings, it's developed into one of the busiest weeks in a long while for new corporate debt. But most is rated below the "A" range.

At least five more companies tapped the bond market since Tuesday, extending what is shaping up to be one of the strongest weeks for new issues in a long time. Four were rated in the “B” range, while one was offered by a highly-rated firm guaranteed by the government.

That was Morgan Stanley, which sold $4.5 billion of FDIC-guaranteed global notes in three parts under the Temporary Liquidity Guarantee Program, according to Reuters. As a result, the investment bank was not required to pay a hefty premium to the yield on comparable Treasuries to complete the offering. It sold $3 billion of 3-1/2-year notes, priced to yield 1.963 percent, which is just 97.6 points over the benchmark.

Morgan Stanley sold another $1.25 billion in 3-1/2 year floating rate notes priced to yield 35 basis points over the three-month London Interbank Offered Rate, along with a separate $250 million of 3-1/2-year floating-rate notes priced to yield 47 basis points over the one-month LIBOR. The issues were rated Aaa by Moody’s, and Triple-A by both S&P and Fitch.

Of the lesser-rated issues, Metro PCS Wireless Inc., a unit of Metro PCS Communications Inc., sold $550 million of senior notes in the private placement market, according to Reuters. The notes, rated B3 by Moody’s and Single-B by S&P, were priced to yield 11.816 percent, a whopping 1057 points over comparable Treasuries, underscoring the fact that most companies can raise money if they are willing to pay a hefty price.

CSX Corp., which is rated Baa3 by Moody’s and BBB-minus by S&P, sold $500 million of 10-year notes. They were priced at 525 points over Treasuries, to yield 7.466 percent. The railroad said in a regulatory filing it expects to use about $200 million of the net proceeds to repay its 4.875 percent Notes due November 1, 2009. The balance of the proceeds will be used for general corporate purposes.

Metropolitan Edison Co., a unit of FirstEnergy Corp., sold $300 million in 10-year senior notes. Rated Baa2 by Moody’s and Triple-B by S&P, the notes were priced at 7.70 percent, or 440.2 points over Treasuries, according to Reuters. It said in a regulatory filing it will use the proceeds to repay short-term borrowings.

And R.R. Donnelley sold $400 million of 11.25 percent 10-year notes, rated Baa2 by Moody’s, BBB-plus by S&P ,and Triple-B by Fitch. The printing services company said it intends to use the net proceeds to pay down short-term debt.

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