Goldman Sachs Group Inc., the U.S. bank that makes the most revenue from fixed-income trading, plans to sell $250 million of 50-year bonds this week in an offering directed toward individual investors.
The debt due November 2060 may yield 6.125 percent to 6.25 percent, according to a person familiar with the transaction, who declined to be identified because terms aren't set. The securities will be sold in $25 denominations and can't be called, or redeemed, for five years, the New York-based bank said today in a regulatory filing that didn't include the yield, size or timing of the sale.
Goldman Sachs is marketing the debt following 100-year bond sales by railroad Norfolk Southern Corp. in August and Rabobank Nederland NV in September, according to data compiled by Bloomberg. The sale size, which is “not that much for Goldman,” suggests the bank may be gauging demand for longer- dated debt, said Guy LeBas, chief fixed-income strategist and economist at Janney Montgomery Scott LLC in Philadelphia.
“This is pretty much the longest issuance we've seen out of a U.S. financial in some time,” LeBas said. “I would imagine they're trying to estimate the appetite for very long- dated debt that sits somewhere between a preferred maturity and a traditional debt maturity maximum of 30 years.”
The offering is being marketed to individual investors instead of institutional buyers, another person familiar with the transaction said, declining to be identified before the securities are priced. The issuance represents the bank's longest-dated maturity and its first 50-year bond, excluding capital securities, according to the person.
Corporate bonds maturing in 15 years or more have lost 1.61 percent this month, compared with the 0.34 percent gain on debt due in one to three years, Bank of America Merrill Lynch index data show. The longer-maturing bonds have gained 14 percent in all of 2010, beating the 4.9 percent return on the shorter- maturity debt.
