Financials Take the Largest Slice of the Financing Pie

Corporate bond markets came back from the holidays with a roar. There were over $50 billion in new U.S. dollar issues last week. The biggest players by far were banks, automaker credit arms, and other financials with over $30 billion of the total.

Leading the charge was Bank of America with $6 billion spread over new three-, five-, and 10-year paper. Typical for banks, there wasn't anything beyond "general corporate purposes" for use of proceeds in the SEC filing.

Berkshire Hathaway's finance corporation sold $500 million split between five- and 10-year notes. Mr. Buffett and Co. are using the money to redeem some maturing paper.


The table below lists the financial borrowers, their home countries, and how much they put on their credit cards.

Company

Amount Borrowed

Headquarters Country

Bank of America

$6 billion

United States

Berkshire Hathaway Finance

$500 million

United States

BTG Pactual

$1 billion

Brazil

Commonwealth Bank of Australia

$2 billion

Australia

Corpbanca

$800 million

Chile

Daimler Finance

$3 billion

Germany

General Electric Capital

$1.25 billion

United States

Intesa Sanpaolo

$3.5 billion

Italy

Kommunalbanken

$2 billion

Norway

Royal Bank of Canada

$1.25 billion

Canada

Sumitomo Mitsui Banking

$2 billion

Japan

Standard Chartered

$2.5 billion

United Kingdom

Toyota Motor Credit

$1.5 billion

Japan

Westpac Banking

$2.25 billion

Australia

Ford Motor Credit

$1.25 billion

United States

Sources: Reuter's, SEC filings and corporate press releases.

Not all the borrowers were financials. Here are profiles for a few more of the deals.

MarkWest Energy piped in $1 billion with a 10.5-year note sale. A little over half the money will go toward a tender offer for higher rate paper. The rest will go to "fund our capital expenditure program, for general working capital and for other partnership purposes." 

Windstream dialed up $700 million in 10-year notes at 6.375%. The money will finance a tender offer for $650 million of 8.875% notes. The company should save about $13 million per year in debt service. 

Sticking with a refinance theme, Staples hit the easy button for a total of $1 billion in five- and 10-year notes to cover a tender offer for higher rate notes . The deal should cut its debt service expense by about $35 million per year.

Companies with good credit, and some with not-so-good credit, continue to have little trouble borrowing at very low rates and are able to reduce debt service costs when existing paper matures or by buying back existing higher coupon debt.

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The article Financials Take the Largest Slice of the Financing Pie originally appeared on Fool.com.

Russ Krull has no position in any stocks mentioned. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Bank of America, Berkshire Hathaway, and Staples. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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