IBM Shows Credit Markets Aren't Entirely Closed (IBM)

MarketWatch ^ | Oct. 10, 2008 7:37 a.m. EDT | 24/7 Wall St.

[Ernest_at_the_Beach]

IBM (NYSE: IBM) is showing that some companies can still raise cash in these troubled times. Big Blue is selling $4 billion in debt in a multiple maturity offering. The company is showing that the credit market terms may not be ideal but the credit markets are at least somewhat available for strong companies.

It appears that the company is selling 5-year noted at a spread of 387.5 basis points over treasuries. The deal spread for a 10-year issuance was also at a spread of 387.5 basis points over treasuries, and its 30-year component has a spread of 400 basis points over treasuries. Underwriters are B of A, Barclays, Credit Suisse, and Deutsche Bank.

[Nervous Tick]

There is credit available for sound companies with clean balance sheets.

There is credit available for *individuals* with sound finances and good credit rating.

There are companies that have debt “issues” but are still healthy enough to obtain capital through equity offerings (e.g. BAC, GE).

There are quite a few companies with NO debt and sitting on a pile of cash (MSFT)

There are a lot of households with cash and home equity ‘cause they haven’t squandered it all.

We’re still doomed... aren’t we?

[Ernest_at_the_Beach]

We’re still doomed... aren’t we?

That is a common theme on the Forum for sure!

The latest Market Watch headline:

Into—and out of—the abyss

[petercooper]

Doomed——Corporations have the lowest debt-to-capital ratios in roughly 30 years, U.S. families paid off consumer debts at the fastest pace in more than 10 years in August.....

Doomed

[Nervous Tick]

I wonder if “the abyss” will turn out to have a vee bottom, or a you bottom, or an ell bottom.

Today’s “micro-abyss” seems to have been a sharp vee bottom.

Inquiring buyers would love to know that, wouldn’t we?

[DManA]

We are in trouble if we don’t have enough capitalists amongst us that understand what you just said.

[NVDave]

IBM meets the definition of a company with good credit and a good balance sheet. IBM is A1/A+.

[bmwcyle]

ping

[NVDave]

I should also add that 2+ years ago, the spread for 5 year A1/A+ paper was 65.

[Rick.Donaldson]

The only “doom” is clearly coming from those who are scared. Personally, I don’t know “enough” about the market.

I invested in mutuals funds, IRAs and the like for the LONG TERM.

This is a short term blip as far as I am concerned. I seem to recall that there was a mass crap in the market about 1987 or so wasn’t there? Things got better.

Now they are worse.

Things will get better again.