AT&T Bond Sale

AT&T announced that it was issuing $5 billion in senior unsecured bonds to be used to repay maturing debt. The bonds will carry a BBB rating. AT&T plans to pay off up to $20 billion in debt this year, which has made investors happy as the company's total debt has reached $180 billion in recent years. In an interesting tidbit, the article notes that one-half of the $5 trillion corporate bond market carries a BBB rating. This is due in large part to the recent historic low interest rates and low default-risk premiums. Companies have been willing to sacrifice a high credit rating since the cost, carried in a higher YTM, has been low in recent years. Only two U.S. non-financial companies, Microsoft and Johnson & Johnson currently have a AAA credit rating.