(Bloomberg) -- Corporate borrowers are taking advantage of one of the last opportunities to issue high-grade debt before the US presidential election next week.
Marsh & McLennan Cos Inc and Waste Management Inc were among six companies that sold US investment-grade bonds on Wednesday. Both intend to use the proceeds to help fund acquisitions, according to people familiar with the matter. It was the most borrowers in the market in more than five weeks.
The burst of issuance came as companies attempt to secure financing ahead of potential volatility following Tuesday’s election results. Businesses have been flocking to the bond market in droves all year to address debt needs while borrowing costs are relatively low. The average yield in the high-grade market is still below levels seen this summer, but has been moving higher since September.
While some companies see those higher yields as a reason to wait, others, especially those that need to fund an acquisition, might jump on tight spreads now in hopes of getting ahead of further increases after the election, said Winifred Cisar, global head of credit strategy for CreditSights Inc.
“I think there’s a fairly balanced approach right now by treasurers and CFOs,” Cisar said. “Costs are up a little, spreads are super tight, so it’s easy to go to your board of directors and say we tapped the market on a spread basis, we wanted to get ahead of volatility. That’s a super easy narrative overall.”
More companies may issue debt Thursday, though they’re likely to skip Friday as it coincides with the release of nonfarm payrolls, Cisar said. Depending on that report — and if volatility holds steady before results come in Tuesday evening — companies may even consider going to market on Monday and Tuesday, she said. Afterwards, she expects a slowdown between the election and the Fed’s Nov. 7 meeting.
Marsh & McLennan, a New-York based brokerage firm, sold $7.25 billion of debt in seven parts. The longest portion of the offering — a 30-year bond — will yield 0.95 percentage point above comparable Treasuries, down from initial talk of 1.25 percentage point. The deal will in part fund the company’s $7.8 billion purchase of McGriff Insurance Services, which was announced in September.
Trash and recycling business Waste Management, meanwhile, sold $5.2 billion of debt in five parts. The longest part of that offering — also a 30-year note — will yield 0.875 percentage point above comparable Treasuries, down from price talk of 1.15 percentage point. The sale will help fund the company’s acquisition of Stericycle, a medical waste disposal company
A representative for Marsh & McLennan declined to comment, while a representative for Waste Management did not respond to a request for comment.
(Updates with final pricing)
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