July 25 (IFR) - IBM Corp on Wednesday priced the first 10-year coupon inside of 2.00% - grabbing the all-time low-coupon record for that maturity with an impressively low 1.875%.
Big Blue has become a virtual master at breaking low coupons over the last two years, with eight out of 12 tranches priced during the period resetting the bar for low-coupon issuance.
3M Co had set a tough level to beat in 10-years when it priced its 2-part deal comprising five-year and 10-year debt on June 21 with a couple of landmark tranches of its own. The 10-year came in at 2.00%, and the five-year at 1.00%.
IBM was clearly a contender to beat that level but the company’s quarterly earnings came and went last Wednesday with no appearance. Instead, IBM made its move today, and was able to knock 3M Co from the top of the 10-year table.
A look back at IBM’s trades over the past couple of years shows that today’s deal is one of many low coupon records the company has managed to wipe out during that period.
IBM’s last visit to the market was on May 8 with a USD1.5bn 2-part offering of three-year and seven-year notes. In that transaction, IBM printed the lowest seven-year coupon on record - the 1.875s due May 2019.
The three-year tranche in the May 8 deal priced with a coupon of 0.75%, which was above the 0.55% the company achieved on notes due February 2015.
That record three-year was part of a USD2.5bn two-part offering of three-year and five-year notes that priced on February 1.
Both parts of that deal set records -- the five-year priced with a coupon of 1.25%, although the record was short-lived.
Walt Disney swept in on February 9 with notes due February 2017 that achieved a coupon of 1.125%.
That record, in turn, was taken out by 3M Co on June 21 with a five-year tranche that had a coupon of 1.00%.
Back on Aug 2, 2010, IBM achieved the first-ever three-year deal to print with a 1.00% coupon, creating quite a talking point at the time with many wondering why anyone would want to buy a corporate bond with a 1.00% coupon.
Today, a 1.00% coupon does not even make the top 20 three-year bucket which currently cuts off at 0.875%.
Prior to that, low-coupon record breaking was really not much of a sport.
The game really kicked off when Wal-Mart broke low coupon records in five-year, 10-year and 30-year maturities with a USD3bn deal that priced on June 30, 2010.
Wal-Mart’s records were a 2.25% five-year (record now 1.00%), a 3.625% 10-year (record now 1.875%) and a 4.875% 30-year (record now 3.375%).
US Treasury yields remained close to record lows on Wednesday amid worry about global growth and concerns that Spain will need a huge financial bailout on top of a bank rescue package already in place.
Andrea Johnson is a senior IFR analyst based in Florida; Editing by Ciara Linnane