As I mentioned in "7 Newly Issued Bonds You Might Have Missed," there were numerous corporate notes newly issued over the past few weeks. Several of these notes, which can now be found trading in the secondary market, are listed below. Each of the following seven corporate notes has investment grade ratings from Moody's and S&P, maturities ranging from five to thirty years, yields ranging from 1.683% to 5.293%, and the spread to Treasuries ranging from 95.1 to 345.1 basis points.
HCP Inc.'s (HCP) senior unsecured note (CUSIP: 40414LAF6) maturing 2/1/2019 has a coupon of 3.75% and is asking 100.769 cents on the dollar (3.622% yield-to-call before commissions). It pays interest semi-annually, has a make whole call until 12/1/2018, and is thereafter callable at par. Moody's currently rates the note Baa2; S&P rates it BBB. It was originally offered at a price of 99.523, and the offer size was $450 million. The offer date was January 18, 2012. Currently, the 1/31/2019 U.S. Treasury note (CUSIP: 912828SD3) is yielding 1.273%, which means HCP's note is asking 234.9 basis points more than a corresponding Treasury note.
Goldman Sachs' (GS) senior unsecured note (CUSIP: 38141GGS7) maturing 1/24/2022 has a coupon of 5.75% and is asking 103.504 cents on the dollar (5.293% yield-to-maturity before commissions). It has conditional calls for tax law changes (see indenture) and pays interest semi-annually. Moody's currently has an expected rating on the note of A1; S&P rates it A-. It was originally offered at a price of 99.865, and the offer size was $4.25 billion. The offer date was January 19, 2012. Currently, the 11/15/2021 U.S. Treasury note (CUSIP: 912828RR3) is yielding 1.842%, which means Goldman Sachs' note is asking 345.1 basis points more than a corresponding Treasury note.
Kroger's (KR) senior unsecured note (CUSIP: 501044CP4) maturing 1/15/2017 has a coupon of 2.20% and is asking 101.975 cents on the dollar (1.782% yield-to-maturity before commissions). It has a make whole call and pays interest semi-annually. Moody's currently rates the note Baa2; S&P rates it BBB. It was originally offered at a price of 100, and the offer size was $450 million. The offer date was January 12, 2012. Currently, the 1/31/2017 U.S. Treasury note (CUSIP: 912828SC5) is yielding 0.732%, which means Kroger's note is asking 105 basis points more than a corresponding Treasury note.
JPMorgan Chase's (JPM) senior unsecured note (CUSIP: 48126BAA1) maturing 1/6/2042 has a coupon of 5.40% and is asking 103.919 cents on the dollar (5.141% yield-to-maturity before commissions). It is non-callable and pays interest semi-annually. Moody's currently rates the note Aa3; S&P rates it A. It was originally offered at a price of 99.835, and the offer size was $1.25 billion. The offer date was December 15, 2011. Currently, the 11/15/2041 U.S. Treasury bond (CUSIP: 912810QT8) is yielding 2.992%, which means JPMorgan Chase's note is asking 214.9 basis points more than a corresponding Treasury bond.
Toyota Motor Credit Corp.'s (TM) senior unsecured note (CUSIP: 89233P5S1) maturing 1/12/2017 has a coupon of 2.05% and is asking 101.733 cents on the dollar (1.683% yield-to-maturity before commissions). It has a make whole call and pays interest semi-annually. Moody's currently rates the note Aa3; S&P rates it AA-. It was originally offered at a price of 100, and the offer size was $1 billion. The offer date was January 9, 2012. Currently, the 1/31/2017 U.S. Treasury note (CUSIP: 912828SC5) is yielding 0.732%, which means Toyota Motor Credit Corp.'s note is asking 95.1 basis points more than a corresponding Treasury note.
Valspar's (VAL) senior unsecured note (CUSIP: 920355AG9) maturing 1/15/2022 has a coupon of 4.20% and is asking 103.909 cents on the dollar (3.717% yield-to-call before commissions). It pays interest semi-annually and has conditional puts for a change of control. It also has a make whole call and is continuously callable at par beginning 10/15/2021. Moody's currently rates the note Baa2; S&P rates it BBB. It was originally offered at a price of 99.854, and the offer size was $400 million. The offer date was January 10, 2012. Currently, the 11/15/2021 U.S. Treasury note (CUSIP: 912828RR3) is yielding 1.842%, which means Valspar's note is asking 187.5 basis points more than a corresponding Treasury note.
Amphenol's (APH) senior unsecured note (CUSIP: 032095AB7) maturing 2/1/2022 has a coupon of 4.00% and is asking 103.034 cents on the dollar (3.628% yield-to-call before commissions). It pays interest semi-annually and has conditional puts for a change of control. It also has a make whole call and is continuously callable at par beginning 11/1/2021. Moody's currently rates the note Baa2; S&P rates it BBB. It was originally offered at a price of 99.746, and the offer size was $500 million. The offer date was January 19, 2012. Currently, the 11/15/2021 U.S. Treasury note (CUSIP: 912828RR3) is yielding 1.842%, which means Amphenol's note is asking 178.6 basis points more than a corresponding Treasury note.
If you are interested in purchasing any of these securities but are nervous about counterparty risk wreaking havoc on your portfolio, learn how to hedge individual bonds in, "Protect Your Income Portfolio With Cross-Asset Hedging."
Please be aware that prices in the over-the-counter U.S. bond market may vary depending on the broker you use. I discuss this in my article, "Are You Paying Too Much For Your Bonds?" The current prices may also differ greatly from those listed at the time this article was written. For additional information on any of these notes, please contact your broker or read the indenture.
Also, please do your own due diligence on the financial profiles of the companies mentioned in this article. Only you can determine if taking the counterparty risk of purchasing individual bonds is suitable for you.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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