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Seven companies are floating debt in the high-grade corporate bond market Wednesday as borrowing costs remain near record lows and investor demand for yield is high.
"The risk-on trade is all across the board so the corporate market is roaring in," said Andrew Hofer, managing director of institutional fixed income at Brown Brothers Harriman.
The sizes of major deals have yet to be determined; at a minimum, the market should see $5.75 billion of volume.
The biggest deals on tap are three-part offerings from AT&T (T) and Freeport-McMoRan Copper & Gold (FCX), which are each marketing three-, five-, and 10-year bonds.
Early pricing guidance suggests AT&T will offer a spread of around 60 basis points over the Treasury rate on the three-year bonds, around 85 basis points on the five-year notes, and around 110 basis points on the 10-year bonds.
Freeport plans to offer spreads of 112.5 basis points, 137.5 basis points, and 162.5 basis points, respectively.
Among banks, Wells Fargo & Co. (WFC) and HSBC Bank USA (HBC) are placing benchmark-size three-year deals.
Wells launched its deal at 100 basis points over Treasurys; early price talk from HSBC suggests a 215 basis point spread.
Hofer said new issues are getting priced at lower yields than originally offered, indicating that plenty of buyers are vying to get a piece of the new offerings. New deals typically offer investors extra-yield than outstanding bonds, plus added liquidity.
"We get an indicated price and then, inevitably, the deals are getting done narrower than that," he said.
Aflac Inc. (AFL) is planning a $750 million issue featuring five- and 10-year bonds, while
Enterprise Products Partners (EPD) and BMC Software Inc. (BMC) are each finding investors for $500 million deals at the 30-year and 10-year marks, respectively.
February has already absorbed $31.6 billion, about half the volume in all of February 2011, according to Dealogic.
The market is showing few signs of being oversaturated, although Hofer said it is becoming more difficult to find bonds with great value, compared to the "happy hunting" days a few months ago.
Markit's CDX North America Investment-Grade Index, a measure of health in the corporate bond market, was treading water as of 10:30 a.m. EST; more recently it has deteriorated 1.1%. Still, the index is at 96.2 points, among the best levels since last July.
--By Patrick McGee, Dow Jones Newswires; 212-416-2382; email@example.com