By Patrick McGee
Deere & Co. (DE) appears to have inspired a host of companies to sell long bonds in the U.S. debt markets.
After Deere sold $2.25 billion of 10-year and 30-year bonds at the some of the lowest rates on record Tuesday, six companies have opted to lock-in rates for the long haul Wednesday.
Each of the deals is relatively small, with a $600 million issue from Union Pacific Corp. (UNP) leading the way. It is selling bonds in 10.5 and 30-year maturities.
The Ohio National Life Insurance Co. is selling $250 million of 30-year bonds, Liberty Property LP (LRY) is issuing $300 million of 10-year notes, and Duke Realty LP (DRE) is floating $250 million of 10-year paper.
Sysco Corp. (SYY) and Tyson Foods Inc. (TSN) are each selling "benchmark" size deals, which typically means at least $500 million per tranche. Sysco is issuing three and 10-year notes, and Tyson is selling 10-year notes.
"Deere certainly provided comfort because the deal performed well," said a syndicate source in New York, adding that the $2.25 billion deal received $8.5 billion of orders.
He said new deals this week are seeing lots of demand, with initial pricing falling throughout the day as demand for the deals builds, allowing issuers to reduce their borrowing costs.
"That's become the modus operandi," he said. "It's giving issuers the comfort to move forward."
It doesn't hurt that broader market conditions improved markedly from Tuesday. The CDX North America Investment Grade Index, a proxy for risk-sentiment, improved 3.2% in early afternoon trading, according to Markit. And the S&P 500 is up 1.8% on hopes that European officials are getting serious about rescuing Spain.
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