After a flurry of deals with 100-year tenors in the 1990s following their introduction, the century bond, it seems, is back. At the end of August, US railroad Norfolk Southern reopened its 100-year 2105 bond, raising $250 million, and in the middle of September Rabobank debuted with $350 million of 100-year bonds.
With just weeks between the two issues, rumours that more borrowers might look to go beyond the traditional 30-year maturity have been spurred.
The century bond was first introduced in the 1990s, when there were more than 60 US issues. Since 2005, however, when Norfolk Southern launched its $300 million 2015 bond, appetite for 100-year debt from issuers and investors has been subdued.
Desperate for yield
Not anymore, say syndicate officials. Investors are desperate for yield. "Treasury yields are near all-time lows, and investment-grade credit is trading very tight compared with one or two years ago," says David DiNanno, managing director in debt capital markets for Credit Suisse. "Most investment-grade names were offering about 8% for 10-year bonds back at the end of 2008/beginning of 2009. Spreads over treasuries were around 500 basis points at the peak of the crisis.
