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Demand for GECC’s jumbo overwhelms doubts

Issuer: General Electric Capital CorpAmount: $11 billionLaunched: March 15 2002Lead managers: Citigroup/SSB, JPMorgan, Lehman Brothers

       

General Electric Capital Corp's record-breaking $11 billion global bond issue launched on March 15 is testimony to the market's voracious appetite for high-quality, long-dated debt. The incredible demand for the deal was also a clear vote of confidence in the AAA-rated issuer, which has endured the ignominy of comparisons with troubled Tyco and subsequently came under attack from Bill Gross, managing director of investment managers Pimco.


The $11 billion issue, led by Citigroup/SSB, JPMorgan and Lehman Brothers, was increased from the originally proposed $6 billion after attracting an order book of $17 billion. The three-tranche issue consisted of a three-year, $4 billion dollar floating-rate note with a coupon of 12.5 basis points over three-month Libor; a five-year, $2 billion dollar fixed-rate bond with a spread at launch of 80bp over US treasuries; and a 30-year, $5 billion dollar bond with a spread of 109bp over treasuries.


The $5 billion tranche is the biggest-ever 30-year corporate bond, and the size of the total issue makes it the biggest-ever solely dollar-denominated corporate bond.



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