Retailer Target Corp. and
razor-maker Gillette Co., two of this week’s borrowers, are among
companies taking advantage of declining debt costs to get their
lowest-ever rates on new debt.
Target yesterday sold $500 million of five-year notes with a
3.375 percent coupon, or annual interest rate, while Gillette
borrowed $300 million for five years at 2.875 percent. Both are
the lowest coupons either company has ever obtained on a bond,
according to Bloomberg data. Sales so far this week stand at $5.85
billion, compared with almost $11 billion all of last week.
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A combination of benchmark U.S. yields near four-decade lows
and investor willingness to accept a lower premium to shoulder the
risk of corporate credit has driven down yields on company debt.
The average corporate bond yield fell to a 35-year low of 6.31
percent last month, as measured by a Moody’s Investors Service
index.
Bloomberg News
