General Motors Ups Bond Sale to $17 Billion

Strong investor demand prompted General Motors Corp. on Thursday to increase the size of a jumbo bond sale by about $4 billion, to $17 billion, making it the largest financing ever in the corporate market.

GM will used the cash raised in the bond sale to plug a hole in its pension fund.

Investor bids for the offering topped $30 billion, analysts and investors said, which allowed the company to pay about a quarter-point less in yield on each security in the deal.

The demand illustrated investors’ hunger for higher-yielding bonds as rates on Treasuries and other high-quality bonds have fallen to generational lows recently.

GM’s 10-year note in the deal had a yield of 7.13%, compared with 3.54% on 10-year T-notes. The 30-year bond in the GM deal had a yield of 8.38%, compared with 4.56% on 30-year T-bonds.

GM’s U.S. pension plan was underfunded by $19.3 billion at the end of 2002, the largest deficit of any U.S. company. The firm said it decided to use bonds to help plug the deficit because of the relative attractiveness of borrowing at current rates.

GM shares fell 67 cents to $35.94 on the New York Stock Exchange.