IBM gets warm reception for $1.8 billion issue, but loss of top rating forces higher yields
Article Abstract:
On Jun 8, 1993, investors bought up $1.8 billion of noncallable notes and bonds issued by IBM. The company offered $1.25 billion of noncallable seven-year notes with a coupon of 6.375 percent at a price of 99.963 to yield 6.43 percent, which is 0.70 of a percentage point above the Treasury seven-year note. The company also offered $550 million of noncallable 20-year debentures with a coupon of 7.50 percent at 99.284 to yield 7,57 percent, which is 0.65 of a percentage point above the Treasury 30-year bond. An industry observer says demand for the issue shows that the public has confidence in IBM, but to stimulate demand, IBM had to offer higher yields than previously. In January, Standard & Poor's Corp lowered IBM's triple-A credit rating to double-A-minus. In March, Moody's Investors Service Inc dropped IBM's rating from double-A-2 to single-A-1.
Publication Name: The Wall Street Journal Western Edition
Subject: Business, general
ISSN: 0193-2241
Year: 1993
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Red-faced analysts stuck with Big Blue
Article Abstract:
A number of financial analysts have kept 'buy' recommendations for IBM stock for much of 1992, despite the stock's precipitous decline from $100.375 per share in July. Twelve of 31 analysts had a 'buy' on IBM on Sep 1, when the company's stock had fallen to $87.625. Despite IBM's stunning announcement on Dec 15 that it would take a $6 billion 4th qtr charge to cover cost reductions and may slash its once-sacred dividend, an announcement that has sent IBM's stock plunging by $11 over two days to $51.875, some analysts are still recommending purchase of the stock. One analyst says it is hard for members of his profession to downgrade a once-cherished blue chip stock. Some analysts may have been deceived by IBM's history of fantastic profitability until the late 1980s.
Publication Name: The Wall Street Journal Western Edition
Subject: Business, general
ISSN: 0193-2241
Year: 1992
User Contributions:
Comment about this article or add new information about this topic:
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