A Few Tiptoe Back to the Capital Markets

Occidental Pete, MetLife, and utility units Ohio Edison and PPL Electric are among those venturing back in.
Stephen TaubOctober 16, 2008

A few companies this week have successfully tapped the public markets for financing. And in some cases, more was raised than initially planned — although tapping the bond markets often resulted in a heavy premium.

Occidental Petroleum Thursday launched $1 billion in five-year notes, according to Reuters, with pricing expected to take place late in the day. The size of the sale was increased from an original $750 million. The new service said that the notes are expected to yield 437.5 basis points over U.S. Treasuries, citing IFR, a Thomson Reuters publication.

The note sale, for which lead managers were Banc of America Securities and JP Morgan, came one week after International Business Machines Corp. sold $4 billion in a three-part debt sale.

Meanwhile, MetLife Inc. said late Wednesday that it raised $2.3 billion from the sale of 86.25 million shares of common stock. The insurance giant said that it expects to use the net proceeds for general corporate purposes and potential strategic initiatives. Credit Suisse Securities was the sole bookrunning manager while Merrill Lynch & Co. and UBS Investment Bank acted as joint lead managers of the offering.

Two smaller debt financings were also completed earlier this week. Ohio Edison, a subsidiary of FirstEnergy Corp., on Wednesday sold $275 million of 30-year first mortgage bonds, according to Reuters, citing market sources. This was upsized from an originally planned $250 million. The bonds were priced to yield 427.3 basis points above comparable Treasuries, and they were rated Baa1 by Moody’s and BBB-plus by Standard & Poor’s Credit Suisse, JP Morgan and Morgan Stanley were the joint bookrunning managers for the sale.

And on Tuesday, PPL Electric Utilities, a subsidiary of PPL Corp., sold $375 million of five-year senior secured notes, up from an originally planned $250 million, according to Reuters. The issue, priced at 412.5 basis points above Treasuries, was rated A3 by Moody’s and A-minus by S&P. BNP Paribas Securities, Barclays Capital Markets, Lazard and Scotia Capital were the joint bookrunning managers for the sale.