30-Year Bond Issuance Rises

Companies are issuing 30-year bonds at a frenetic pace. So far in 2012, about $92 billion worth of 30-year bonds have been issued, more than in any full year since 1995. Companies are issuing long-term bonds because investors are willing to buy because of the almost non-existent short-term yields, and companies are locking in the low long-term yield. The investment grade YTM for 30-year bonds is at 2.77 percent, down from over 7 percent four years ago. Comcast recently sold $1 billion in 30-year bonds at 4.45 percent, compared to the 6.5 to 7 percent range the company had paid a couple of years ago. This resulted in a $20 million annual savings on interest payments. Even General Electric, which hadn't sold 30-year bonds for five years, issued $2 billion in 30-year bonds.