Retail giant Wal-Mart Stores Inc. (ticker symbol: WMT) is the latest company to tap a friendly market for high-quality corporate debt issuers, selling $3 billion of global notes Thursday that carried some of the lowest yields of the year by any U.S. corporate issuer.
Companies have sold well over $13 billion of high-quality bonds this week to investors eager for an alternative to slumping stocks and low yields on U.S. Treasuries. Investment-grade corporate bonds have been this year's best-performing U.S. fixed-income class.
"Market conditions are very good now for a large sale of this kind," said Wal-Mart spokesman Tom Williams, who said the Bentonville, Ark.-based retailer, the largest in the United States, will use sale proceeds to refinance debt.
This year's six Federal Reserve interest rate cuts, totaling 2.75 percentage points, have cut short-term borrowing costs, enticing corporate treasurers to issue debt, and pushing year-to-date issuance near last year's all-time record.
This week's investment-grade corporate bond sales have included nearly $12 billion with maturities of five years or fewer. The largest sale, at $3.75 billion, came Wednesday from a unit of long-distance phone company Qwest Communications International Inc. (Q).
Through Wednesday, companies have sold $420.5 billion of investment-grade bonds this year, just $8 billion below the $428.6 billion record set last year. The bonds have returned 7.3% this year, according to Merrill Lynch & Co. That's better than major U.S. stock indexes, which are all in the red, and double the return on safer U.S. Treasuries.