Diverse Menu of Bonds Is Served Up to Investors
With corporate-debt issuance racing toward a record, some large companies are rolling out unusual offerings in a bid to serve the bond market's every nook and cranny.</br></br>Recent weeks have brought a $500 million "green bond" from Bank of America Corp., which has pledged to use the proceeds to finance renewable-energy and energy-efficiency projects, and a $1 billion Goldman Sachs Group Inc. bond that offers variable interest rates for 10 years, much longer than normal.</br></br>The sales underscore the robust appetite for debt issued by well-known, highly rated issuers and come at a time when low interest rates have put a premium on income-generating assets and a roaring stock-market rally has prompted some more-conservative investors to diversify.</br></br>Bonds continue to fly off the shelves even amid worries that interest rates may rise in the near future, as the Federal Reserve considers paring back monthly bond purchases. Companies have sold $1.052 trillion of highly rated bonds this year in the U.S., about $1.5 billion shy of last year's record, according to Dealogic figures dating to 1995.</br></br>Recent months have seen "gangbuster business" for bond issuers, said Ron Quigley, head of fixed-income syndicate at brokerage and investment bank Mischler Financial Group. He pointed to "diverse structures, voracious investor appetite and a wide variety of maturities."