Disney Sells $7 Billion as U.S. Enters Peak Season for New Debt




(Bloomberg) -- Walt Disney Co. sold $7 billion of bonds, leading one of the busiest days ever for investment-grade debt issuance in the U.S.

Disney offered the unsecured notes in six parts, the largest deal Tuesday, when a total of about $27 billion priced. The longest portion of the offering, a 30-year security, will yield 0.95 percentage points more than Treasuries, down from initial talk of around 1.15 percentage points, according to a person with knowledge of the matter, asking not to be identified as the details are private.

The entertainment company sold notes in a post-holiday week expected to see as much as $45 billion of investment-grade debt issuance. Dealers are forecasting around $125 billion of supply for this month, which is usually the busiest of the year for sales.

"It's always well telegraphed, so the market tends to be set up reasonably well for it," said Travis King, head of investment-grade credit at Voya Investment Management. "The market backdrop doesn't help, but the broader technicals are pretty strong and may give investors confidence to participate in these new issues."

Read more: Here Comes the Investment-Grade Debt Issuers. Investors Too.

Given weak U.S. factory data this morning, stocks ended the day lower and Treasury yields fell -- typically a formula for a risk-off tone. That didn't deter investment-grade issuers though, with more than 20 other companies in the market Tuesday, including Caterpillar Inc.'s Caterpillar Financial and Capital One Financial Corp.

That would make it one of the busiest days for the U.S. market in terms of deal count. Dealers have said they recall 15 to 17 deals being the previous daily high.

Seeing as the equity market is weak, new deals will probably need to come with a spread concession to existing debt, said Nicholas Elfner, co-head of research at Breckinridge Capital Advisors. However, each issuer is different, and use of proceeds as well as credit ratings could play a factor in a deal's demand, he said earlier Tuesday.

"It's a tricky day for so many IG issues to come to the market," Elfner said. "It will be a test of demand to see where deals clear and how they trade on the break."

Coming off a brutal August for risk sentiment, marred by escalating trade tensions, U.S. investment-grade bonds have enjoyed four consecutive weeks of retail inflows, according to Refinitiv's Lipper U.S. Fund Flows data. While spreads widened 12 basis points last month, the rally in Treasuries pushed all-in yields much lower and fueled the best August returns in nearly 40 years.

For a full list of today's deals, click here for the new issue monitor.

(Adds details on total U.S. issuance.)

To contact the reporter on this story: Molly Smith in New York at msmith604@bloomberg.net

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Dan Wilchins, Adam Cataldo

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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