Philip Morris Leads $13 Billion of Corporate Bond Sales Today

Source from:  By Bryan Keogh and Gabrielle Coppola May 13 (Bloomberg) 05/16/2008

Philip Morris International Inc. leads at least $13 billion of U.S. corporate bonds sales today as investors snap up investment-grade debt on speculation the Federal Reserve has contained the worst of the credit crisis. The tobacco company spun off in March by Altria Group Inc. plans to raise $6 billion through the sale of $2 billion of 5- year notes; $2.5 billion of 10-year notes; and $1.5 billion of 30 year bonds, according to a person familiar with the offering. Philip Morris, based in New York, is the eighth company this year to market a bond offering of at least $6 billion, compared with one in all of last year, according to data compiled by Bloomberg, as borrowers take advantage of the demand for high- quality debt. ``The moves that the Fed made are starting to bring confidence back to investors,'' said Mirko Mikelic, a portfolio manager at Fifth Third Asset Management in Grand Rapids, Michigan, which oversees $22 billion in assets. ``It's starting to loosen up the market.'' Investors placed more than $9 billion of orders for the offering from the maker of Marlboro, Parliament and Virginia Slims cigarettes, Mikelic said. Philip Morris's bonds may yield 177 basis points more than U.S. Treasuries of similar maturity, said the person, who declined to be identified because terms aren't set. A basis point is 0.01 percentage point. Moody's Investors Service gave the securities its sixth- highest investment-grade rating of A2, and Standard & Poor's ranked them an equivalent A, the person said. Credit Suisse Group, Deutsche Bank AG and Lehman Brothers Holdings Inc. are managing the offering for Philip Morris, the largest tobacco company outside of China. American International Group American International Group Inc., the world's largest insurer by assets, is marketing $4 billion of 50-year hybrid bonds at a yield of 8.175 percent, according to a person familiar with the transaction. The offering is part of the New York-based company's plans to raise $16 billion in stock and debt to bolster its balance sheet after two record quarterly losses. Five other borrowers have issued $6 billion offerings this year. GlaxoSmithKline Plc, Europe's biggest drugmaker, raised $9 billion last week in this year's largest corporate bond offering. General Electric Co. comes second with its $8.5 billion sale in April, and securities firm Merrill Lynch & Co. sold $7 billion of notes in the third-biggest offering. U.S. and European securities firms may be two-thirds of the way through asset writedowns, Morgan Stanley credit analysts said in a report today. To contact the reporters on this story: Bryan Keogh in New York at bkeogh4@bloomberg.net; Gabrielle Coppola in New York at gcoppola@bloomberg.net Enditem