Colgate Selling $500 Million Bonds, Talked At Treasurys +60 BPs

   By Katy Burne 
 

Colgate-Palmolive Co. (CL) began marketing $500 million of bonds Friday, seeking to line its coffers as interest rates on company debt keep tumbling amid unceasing investor appetite for high-quality debt yielding more than Treasurys.

The offering comes as other household names--from computer manufacturer International Business Machines Corp. (IBM) to biopharmaceutical company Bristol-Myers Squibb Co. (BMY)--have been able to borrow at record-low rates in recent days. That is because rates to Treasurys, to which corporate debt is benchmarked, have fallen to all-time lows.

On Thursday, Bristol-Myers scored a record low rate on five- and 30-year debt, with coupons of 0.875% and 3.25%, respectively, while tying the second-lowest for 10-year debt with a 2% coupon. A day earlier, IBM broke a record for 10-year debt with a 1.875% coupon.

The Colgate debt sale follows the company's announcement Thursday of net sales for the second quarter of $4.3 billion, up 2% from the year-earlier period.

The bonds are expected to price with a risk premium of around 0.60 percentage point over Treasurys, according to one person familiar with the transaction. Existing Colgate bonds due in 2021 with a 2.45% coupon are trading in the secondary market with a spread of 0.47 point over Treasurys, according to MarketAxess data.

It was too early to tell if Colgate was on track to beat IBM's record.

Proceeds from the new bonds, which fall due for repayment in 2023, will be used for general corporate purposes, the company said in a regulatory filing.

Leading the sale are HSBC Holdings PLC (HBC), J.P. Morgan Chase & Co. (JPM) and Morgan Stanley (MS).

Write to Katy Burne at [e-mail]

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