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.

Bank

Headquarters

Amount Borrowed (millions)

BNG Bank

The Netherlands

$600

Bank of Montreal

Canada

$2,000

Bank of Nova Scotia

Canada

$2,000

International Bank for Reconstruction and Development

World Bank, Washington, DC

$1,000

Sumitomo Mitsui Banking

Japan

$2,000

Russian Standard Bank

Russia

$200

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 Fool.com 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 - $6 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.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Subscribe

Enter your email:

Delivered by FeedBurner

X

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!