The white-hot bond market continues to get hotter. Need evidence? Look no further than the San Francisco Bay area.
Kaiser Permanente raised $4.4 billion through a series of three bond offerings this month. That's a record for the Oakland, Calif.-based health plan and hospital giant, which plans to use the proceeds to fuel expansion, said Chief Financial Officer Kathy Lancaster. The aggregate interest rate on the A+ bonds was a stellar 3.8%.
Kaiser Permanente investors ordered four to five times as many of the A+ bonds as were available, according to Kaiser Treasurer Tom Meier.
It's not only Kaiser that's taking advantage of the robust bond market. Just this month, Community Health Systems grew a $700 million debt offering to $900 million. Competition for MetroHealth's $945.7 million offering dropped the rate to under 5%.
MetroHealth, located just west of Cleveland, raised the money to finance the transformation of its main campus, including a new replacement hospital. Struggling CHS is refinancing debt that was expiring.
Corporate bond activity is expected to remain robust even if the Federal Reserve raises interest rates a couple of quarter-point notches this year, according to an April debt report by Fitch Ratings.
Even with a quarter-point increase in March, federal borrowing rates are still near a historic low at 1%. The government will only continue to raise interest rates if the economy is strong, said Fitch Managing Director Megan Neuburger.