EBay Auctions Four-Part Bond Deal as Yields Break Record Lows

Date : 07/19/2012 @ 10:27AM
Source : Dow Jones News
Stock : Ebay Inc. (MM) (EBAY)
Quote : 32.05  -0.13 (-0.40%) @ 8:00PM

EBay Auctions Four-Part Bond Deal as Yields Break Record Lows

Ebay (NASDAQ:EBAY)
Historical Stock Chart

5 Years : From Apr 2012 to Apr 2017

Click Here for more Ebay Charts.
   By Patrick McGee 
 

EBay Inc. (EBAY) is auctioning at least $2 billion worth of debt in a four-part U.S. bond deal Thursday.

This marks just the second time eBay has ever issued bonds. Its first deal, for $1.5 billion, was in October 2010.

EBay should benefit from the lack of competition in this week's new-issue market. Yields are at record lows--Barclays's index of high-grade debt broke the 3% barrier for the first time in four decades of data on Wednesday when yields declined 0.07 percentage points to 2.98%--but issuance has been quiet with most companies focusing on releasing earnings.

Thursday's sale comes a day after the e-commerce and payments company posted its fourth consecutive jump in quarterly profit. EBay said Wednesday its second-quarter revenue climbed 23% to $3.4 billion and profit more than doubled to $692 million from a year earlier.

The San Jose, Calif., company intends to sell bonds across the yield curve, with bonds maturing in three, five, 10, and 30 years. The deal is "benchmark"-sized, according to an early term sheet, indicating at least $500 million per tranche.

Market sources indicate the size could be $3 billion.

The bonds carry provisional ratings of A2 from Moody's Investors Service and A from Standard & Poor's and Fitch Ratings.

Scott Kimball, portfolio manager at the $7.3 billion BMO TCH Corporate Income Fund in Miami, noted that high-quality bond issuers have been getting an extremely welcome reception recently, with some trading at yields within half a percentage point of Treasurys.

Toyota Motor Credit Corp. (TM) 0.875% coupon bonds due 2015, for instance, traded Thursday morning at a spread of just 0.47 percentage points. They were issued last week at a spread of 0.58 points.

Ebay's 3.25% coupon, 2020 bond traded on July 13 with a spread of 0.75 points to Treasurys, yielding 2.248%, according to MarketAxess.

"The bond market is expecting further economic deterioration and continued [Federal Reserve] action," Mr. Kimball said, mentioning the possibility for another round of monetary easing.

Proceeds from eBay's sale are for general corporate purposes.

Write to Patrick McGee at patrick.mcgee@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires





Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.


NYSE, AMEX, and ASX quotes are delayed by at least 20 minutes.
All other quotes are delayed by at least 15 minutes unless otherwise stated.