UPDATE: McDonald's Launches $750 Million Bond Deal >MCD

28th Jul 2010 21:32

(Adds pricing terms and chart) By Chris Dieterich Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--McDonald's Corp. (MCD) was selling a $750 million bond in two parts Wednesday, its first debt sale in more than a year and a half. The fast-food giant priced $450 million in 10-year notes at 55 basis points over comparable Treasurys, according to a syndicate banker familiar with the issue. The 3.5% notes sold at a discount to yield 3.548%. McDonald's also priced $300 million worth of 30-year notes at 85 basis points over comparable Treasurys. The 4.875% notes sold at a discount to yield 4.921%. Both tranches in the debt issue priced 5 basis points tighter then preliminary guidance. A company spokeswoman said part of the proceeds likely will be used to pay off other debt coming due this year. McDonald's is tapping debt markets now to take advantage of favorable rates, the spokeswoman said. McDonald's last sold debt on Jan. 13, 2009, also a $750 million issue. The largest McDonald's debt issue on record was a $2.25 billion issue on Feb. 26, 2008, according to data provider Dealogic. Bond inflows are creating huge demand for corporate bonds, said Byron Douglass, senior analyst at Credit Derivatives Research, in a commentary, who said the new debt is attractive. "However, the aggressiveness on today's pricing seems a bit overdone," Douglass said. The company's outstanding bonds weakened in secondary client-dealer trading Wednesday. McDonald's 6.3% notes due March 2038 last traded down 2 1/8 points to yield 5.021%, or 96 basis points over Treasurys, according to MarketAxess. McDonald's 5.0% notes due February 2019 last traded to yield 3.465%, or 47 basis points over Treasurys. Moody's Investors Service rates McDonald's debt A3, and Standard & Poor's gives an A rating to the company's debt. The issue is being led by joint managers Bank of America Merrill Lynch, J.P. Morgan and Royal Bank of Scotland. Amount: $450 million Maturity: July 15, 2020 Coupon: 3.5% Issue Price: 99.602 Yield: 3.548% Spread: 55 basis points over Treasurys Settlement: August 2, 2010 Ratings: A3 (Moody's Investors Service) A (Standard & Poor's) Amount: $300 million Maturity: July 15, 2040 Coupon: 4.875% Issue Price: 99.286 Yield: 4.921% Spread: 85 basis points over Treasurys Settlement: August 2, 2010 Ratings: A3 (Moody's Investors Service) A (Standard & Poor's) -By Chris Dieterich, Dow Jones Newswires; 212-416-2611; [email protected] (END) Dow Jones Newswires July 28, 2010 16:32 ET (20:32 GMT)