Eli Lilly is tapping into the US investment-grade debt market by issuing 40-year bonds, a unique move in a market known for expensive borrowing.
The pharmacist is offering debt for sale in seven installments, with a 40-year term and a yield 0.73 percentage points higher than US Treasury bonds, as per a source familiar with the matter. Initial price talks had suggested a yield of approximately 1.05 percentage points above the benchmark.
The agreement should cover a 30-year period and include salaries ranging from 3 to 10 years, according to the individual who requested anonymity.
Long titles are absent.
Eli Lilly’s proposal comes at a time when there is a lack of extended job positions in companies.
Only 11% of the high-quality debt issued this year had a maturity exceeding 30 years, down from 15% in 2024, as companies have been hesitant to commit to high interest rates for extended durations.
Eli Lilly is among the nine companies that issued top-quality U.S. bonds on Monday, including McDonald’s, Marriott, and Charter Communications.
The borrowers are gathering ahead of a seasonal decrease by the end of this month.
They are taking advantage of better financing terms as August yields have dropped to below 5% for the first time this year, yet demand remains strong.
Investment-grade order portfolios have increased significantly compared to new offers, with takers paying only two base points in new emissions concessions, which is above the average for this year.
Citigroup, Goldman Sachs Group, JPMorgan Chase, Mizuho Financial Group, and Morgan Stanley are overseeing the sale of Eli Lilly’s stocks for general corporate use. Moody’s Ratings is anticipated to assign an Aa3 rating, while S&P Global Ratings is expected to give an A+ rating to the stocks.
