These Banks Dip Into Bonds
U.S. dollar corporate bond issues topped $30 billion last week, with nearly half going to international export-import or development banks and companies headquartered outside the U.S.
A trio of banks made up a sizable slice of the total: Morgan Stanley, JPMorgan Chase and Mitsubishi UFJ subsidiary Bank of Tokyo-Mitsubishi tapping the bond market for $4.5 billion, $2.5 billion, and $2.25 billion, respectively. None of the three detailed what the money would be used for, which is typical for banks.
Specialty chemicals producer Ashland mixed up a formula of notes with three- to 30-year maturities to borrow $2.3 billion. The money is being used to pay down existing loans.
Cardinal Health prescribed a mix of five-, 10-, and 30-year paper to raise $1.3 billion. According to the SEC filing, the money will go toward Cardinal's acquisition of AssuraMed. In this video, my Foolish colleague Brenton Flynn explains how this acquisition helps Cardinal expand its business.
Kinder Morgan Energy Partners made the billion-dollar borrowers' club with $1 billion split between 10.5- and thirty-year paper. Kinder Morgan is using the money to pay down its commercial paper. Unrelated to the debt offering, Kinder Morgan also announced its involvement in a crude-oil rail transportation project. I'm just speculating, but freeing up some room on a credit line could be helpful in managing the cash flow for a new project.
Goodyear Tire rolled out $900 million of eight-year notes. The high-yield -- if you can call 6.5% high -- issue was upsized from $750 million and will be used "to fund discretionary contributions to its frozen U.S. pension plans and, to the extent not used for such purposes, for general corporate purposes."
Wyndham Worldwide wasn't playing games with an issue of $850 million of new debt. The money will be used to repurchase or redeem higher-rate paper. Replacing high-rate notes with lower-rate paper seems a sure way to cut costs.
Bonds aren't as exciting or widely covered as stocks, but keeping tabs on company borrowing and use of that money should be a part of investment research.
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- Add Wyndham Worldwide Corp Common to My Watchlist.
- Add Mitsubishi UFJ Financial Group to My Watchlist.
- Add Morgan Stanley to My Watchlist.
- Add Kinder Morgan Energy Partners to My Watchlist.
- Add JP Morgan Chase & . Common St to My Watchlist.
- Add The Goodyear Tire & Rubber Comp to My Watchlist.
- Add Cardinal Health to My Watchlist.
- Add Ashland to My Watchlist.
The article These Banks Dip Into Bonds originally appeared on Fool.com.Russ Krull has no position in any stocks mentioned. The Motley Fool owns shares of JPMorgan Chase & Co. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.