Kroger, the largest U.S. grocery-store chain, intends to sell benchmark debt, typically at least $500 million, to fund its acquisition of Matthews, North Carolina-based Harris Teeter. The operator of the Kroger and Ralphs supermarkets may sell three-, five- and seven-year fixed-rate notes as soon as today, according to a person with knowledge of the transaction, who asked not to be identified because terms aren’t set. It may also issue three-year, floating-rate securities.
The extra yield investors demand to hold corporate bonds rather than government securities globally has shrunk to the least since November 2007 as a fifth year of stimulus in the U.S. sends debt buyers to riskier assets.
Relative yields on the most creditworthy to the riskiest borrowers have narrowed 32 basis points this year to 190 basis points, or 1.9 percentage points, after reaching as high as 235 in June, according to the Bank of America Merrill Lynch Global Corporate & High Yield Index.
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