In the high-yield space, Constellation Brands, Inc. (NYSE:STZ) popped the cork on eight- and 10-year paper totaling $1.55 billion. In this case, “high yield” is only 3.75% and 4.25%, respectively. The money will be used to help fund the company’s acquisition of the 50% of Crown Imports it doesn’t own, along with Grupo Modelo’s brands. The company will also be tapping credit facilities for about $3 billion in addition to this note issue to finance the deal.
Even with the big offerings from Apple Inc. (NASDAQ:AAPL) and CNOOC Limited (ADR) (NYSE:CEO), I think the low rates for high-yield deals are the most interesting part of recent new bond issues. Investors are bidding up the prices — which lowers rates — on these deals to the point where there isn’t much risk premium for the lower credit quality. The rates on the Constellation Brands, Inc. (NYSE:STZ) paper don’t leave much for either credit-rate or interest-rate risk.
The article Apple’s Record Bond Issue originally appeared on Fool.com is written by Russ Krull.
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