Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Refinancing Rules the Week: ACE Limited (ACE), McKesson Corporation (MCK), American Tower Corp (AMT)

New issues in U.S. corporate bond markets topped $29 billion last week, with refinancing making up a significant portion of the mix.

American Tower Corp (NYSE:AMT) issued $1.8 billion in a private placement spread over five- and 10-year tranches. The company is using the money to repay debt.

Avon Products, Inc. (NYSE:AVP) showed up at the market’s door with four issues with maturities ranging from three to 30 years totaling $1.5 billion. The money is being used to repay a number of different notes.

McKesson Corporation (NYSE:MCK)Canadian insurance-provider ACE Limited (NYSE:ACE) wrote $950 million between 10- and 30-year notes through its ACE INA Holdings subsidiary. ACE Limited (NYSE:ACE) is using the money to redeem paper that’s maturing in 2014 and 2015. Today’s low rates will save ACE Limited (NYSE:ACE) about $20 million per year in debt service costs. It’s curious that ACE Limited (NYSE:ACE) decided to lock in the rates now, rather than wait a year or two for the existing paper to mature.

Medical supplies and health care technology company McKesson Corporation (NYSE:MCK) delivered $900 million in new debt split between five- and 10-year notes. The company is using the money to pay off a bridge loan used in its PSS World Medical acquisition.

Mattel, Inc. (NASDAQ:MAT) wasn’t playing around with five- and 10-year notes totally $500 million. The money will go toward repaying $450 million of maturing notes. Today’s lower rates will cut Mattel’s debt service expenses by about $10 million per year. Any money left after the payoffs will go toward general corporate purposes.

Specialty insurer Markel Corporation (NYSE:MKL) issued 10- and 30-year paper totaling $500 million. The “use of proceeds” section of the SEC filing cited the ever-uninformative “general corporate purposes.” There is an interesting kicker, however. Markel says “the offering is not condition upon the completion of the acquisition of Alterra.” But if the Alterra acquisition isn’t completed by Nov. 1, Markel must redeem the bonds at 101% of face value. Fortunately for Markel, Alterra’s shareholders recently approved the acquisition.

Historically low rates continue to save companies money when they roll over maturing debt, lower the cost of financing acquisitions, and lower the cost of capital for growth, research and developing, marketing, and other “general corporate purposes.”

The article Refinancing Rules the Week originally appeared on and is written by Russ Krull.

Russ Krull has no position in any stocks mentioned. The Motley Fool recommends American Tower, Markel, Mattel, and McKesson. The Motley Fool owns shares of Markel.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.