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IBM sells $1.7 bn bonds as rates hit 40-yr lows
New York, Sept 06: New York, Sept 06: International Business Machines on Thursday sold $1.7 billion of bonds, $200 million more than planned, taking advantage of interest rates falling to new 40-year lows.
New York, Sept 06: New York, Sept 06: International Business Machines on Thursday sold $1.7 billion of bonds, $200 million more than planned, taking advantage of interest rates falling to new 40-year lows.
The world's largest computer maker sold $1.1 billion of two-year floating-rate notes on Thursday morning and followed that with a $600 million sale of seven-year global notes in the afternoon. IBM is one of at least 11 companies expected to sell more than $8 billion of the US investment-grade corporate bonds this week. Gregory Staples, who helps invest $11 billion as head of MONY Capital Management's public bond department in New York, said, "IBM has traditionally been known for being opportunistic in seeking cheap money, and has a reputation for coming into the market at cyclical lows in yields."
IBM's sales came on a day that five-year US Treasury yields fell as low as 2.92 per cent and 10-year Treasury yields fell as low as 3.9 per cent on worries about US economic health and a potential US attack on Iraq.
IBM sold $600 million of 4.25 per cent seven-year global notes, $100 million more than planned, at 99.15 cents on the dollar to yield 4.392 per cent, or 0.88 per centage point more than similar-maturity Treasuries.
It also sold $1.1 billion, up from $1 billion, of two-year floating-rate notes, yielding 0.125 percentage point more than three-month Libor (London Interbank Offered Rate).
IBM Spokeswoman Carol Makovich said the company will use proceeds for general corporate purposes. She declined to comment on market conditions.
Deutsche Bank Securities arranged the floating-rate note sale; JP Morgan and Morgan Stanley arranged the seven-year note sale.
Bureau Report
The world's largest computer maker sold $1.1 billion of two-year floating-rate notes on Thursday morning and followed that with a $600 million sale of seven-year global notes in the afternoon. IBM is one of at least 11 companies expected to sell more than $8 billion of the US investment-grade corporate bonds this week. Gregory Staples, who helps invest $11 billion as head of MONY Capital Management's public bond department in New York, said, "IBM has traditionally been known for being opportunistic in seeking cheap money, and has a reputation for coming into the market at cyclical lows in yields."
IBM's sales came on a day that five-year US Treasury yields fell as low as 2.92 per cent and 10-year Treasury yields fell as low as 3.9 per cent on worries about US economic health and a potential US attack on Iraq.
IBM sold $600 million of 4.25 per cent seven-year global notes, $100 million more than planned, at 99.15 cents on the dollar to yield 4.392 per cent, or 0.88 per centage point more than similar-maturity Treasuries.
It also sold $1.1 billion, up from $1 billion, of two-year floating-rate notes, yielding 0.125 percentage point more than three-month Libor (London Interbank Offered Rate).
IBM Spokeswoman Carol Makovich said the company will use proceeds for general corporate purposes. She declined to comment on market conditions.
Deutsche Bank Securities arranged the floating-rate note sale; JP Morgan and Morgan Stanley arranged the seven-year note sale.
Bureau Report