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November 10, 2015 at 11:30 AM
(Bloomberg) — To see just how starved are debt investors are for yield look no further than their love of money-losing corporate bonds that mature in 30 years or more.
MetLife Inc., the largest U.S. life insurer, sold bonds on Monday that don’t have to be repaid till 2046. That’s helped boost the sale of debt that have maturities of more than 30 years to over $74 billion this year, about double the amount issued in all of 2014, according to data compiled by Bloomberg.
The issuance comes as the longest-dated investment-grade securities are posting losses this year of nearly 6 percent, compared to a 0.376 percent decline in investment-grade debt of all maturities.
“There is still a lot of investor cash that needs to be put to work, and it’s in issuers’ best interest to lock in as much long-dated cheap money as possible, as long as they can,” said Jack Flaherty, a money manager in New York at GAM Holdings AG, which oversees $127 billion.
Corporate bonds maturing in 15 years or more are yielding 5.12 percent, near the most since February 2014, according to Bank of America Merrill Lynch Indexes making the long debt more attractive, especially to insurers and pension funds looking to match liabilities, according to Flaherty.
The window for corporate treasurers to issue debt at record-low borrowing costs is shrinking rapidly after a strong payroll report on Friday bolstered chances of the U.S. central bank raising interest rate as soon as next month. Microsoft Corp. issued its second 40-year bond Oct. 29 as part of a record $13 billion offering for the software maker.
