General Electric Company (GE), Oracle Corporation (ORCL): 7 Soft Weeks for Bonds

Last week’s $24 billion in new corporate bond issues marked the first time in seven weeks that new issues have topped $20 billion. But even $24 billion is a pretty soft number. I don’t think it’s a coincidence that the drop-off in new issues matches up with the increase in bond rates that started in May. Here’s a summary of the borrowing.

Banks operating outside the U.S. accounted for $7.8 billion of the total. As is typical for banks, there wasn’t much detail on uses for the money.



Amount Borrowed (millions)

BNG Bank

The Netherlands


Bank of Montreal



Bank of Nova Scotia



International Bank for Reconstruction and Development

World Bank, Washington, DC


Sumitomo Mitsui Banking



Russian Standard Bank



Source: Reuters.

General Electric Company (NYSE:GE)‘s capital Corporation threw the switch on $3.5 billion spread over two- and three-year issues. The SEC filings didn’t have any details on the use of proceeds.

Oracle CorporationOracle Corporation (NASDAQ:ORCL) sold 5.5- and 10-year notes totaling $3 billion. According to the SEC filing, the money will be going toward “general corporate purposes, which may include stock repurchases, payment of cash dividends on our common stock and future acquisitions.” An interesting point here is that Oracle Corporation (NASDAQ:ORCL)’s latest quarterly report shows more than $10 billion in net cash, so it didn’t need to borrow.

Realty Income Corp (NYSE:O) leased $750 million for 10 years. The money will be used repay the company’s acquisition credit facility. Realty Income Corp (NYSE:O) is a Real Estate Investment Trust that pays monthly dividends.

Specialty metals producer Allegheny Technologies Incorporated (NYSE:ATI) rolled out $500 million in 10-year paper. The money will be used for “general corporate purposes, which may include repurchases, repayment or refinancing of debt, capital expenditures, additions to working capital, the financing of future acquisitions or strategic combinations.” It’s good to see that’s nailed down.

Best Buy Co., Inc. (NYSE:BBY) liked the number five last week, issuing $500 million in five-year, 5% notes. The new money will be used to redeem $500 million of 6.75% paper maturing this month. The new, lower-rate paper will save the electronics retailer about $8.75 million per year in debt service.

It’s impossible to know whether the slowdown in corporate bond issues owes to the rise in rates or just noise. These are still historically low rates, and if company managements thought the climb were set to continue, I’d expect a scramble to borrow money now, rather than later when it’s more expensive. That clearly isn’t happening.

The article 7 Soft Weeks for Bonds originally appeared on and is written by Russ Krull.

Russ Krull owns shares of General Electric Company. The Motley Fool owns shares of General Electric Company and Oracle.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Insider Alert - $5 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!