Feb 5 (IFR) - IBM Corp on Tuesday made the most of a surge
in demand for floating-rate notes in the corporate bond market
by issuing a $1 billion two-year deal at a negative spread to
The deal, which was part of a $2 billion offering of
two-year floaters and five-year fixed-rate notes, was priced at
three-month Libor minus 2 basis points, making it one of the
very few corporates to have issued a floater inside of Libor
since the credit crisis.
The aggressive pricing was possible because of a scramble
for floating-rate debt securities in the corporate bond market
in recent weeks as Treasury yields rise.
So far this year more than $14 billion of floating-rate
notes have been priced, already equal to almost a third of the
$42 billion of floaters issued in all of 2012.
"We have seen a resurgence of demand for floating-rate
product in 2013," said Anne Daley, managing director and senior
syndicate banker at Barclays in New York.
"While supply has not been massive yet, the fact that we
have already seen more than $14 billion year-to-date versus $42
billion for all of last year clearly shows there is very strong
demand growing for the product."
Corporates have also been more willing to issue
floating-rate notes, to balance out a debt mix which has been
dominated by fixed-rate bond issuance in recent years as issuers
sought to lock in record low fixed-rate coupons.
Usually money managers and securities lenders tend to buy
floaters inside of 18 months, but the strength of demand has
enabled names like IBM and General Mills to issue out to
two and three years respectively.
JP Morgan was able to raise $2.4 billion of five
year floaters in January.
IBM is only the third industrial issuer since the crisis to
print at a negative spread to Libor, along with Procter & Gamble
and Coca-Cola Company, which did deals last year.