Pharmaceutical company Eli Lilly & Co. (LLY) has priced its biggest-ever sale of U.S. investment-grade corporate bonds.
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The debt issuance includes a 40-year bond, which is extremely rare among U.S. corporations today given elevated interest rates and high borrowing costs. The Indiana-based drug maker sold a total of $6.75 billion worth of debt in seven parts, with the 40-year tranche yielding 0.73 percentage points above current U.S. Treasuries.
The deal also includes a 30-year portion, as well as maturities ranging from three to 10 years, according to the company. Eli Lilly plans to use proceeds from the bond sale for general corporate purposes, which may include paying down some of the company’s debt, which currently stands at about $35 billion.
Long-Dated Bonds
Eli Lilly’s latest bond offering comes amid a limited supply of long-dated corporate bonds. Just 11% of high-grade debt sold this year had a maturity of 30 years or more, down from 15% in 2024, as companies are increasingly hesitant to lock in elevated borrowing costs for long periods of time in the current market.
Eli Lilly was one of several well-known American companies to tap the bond market on Aug. 18. Other borrowers included McDonald’s (MCD), Marriott International (MAR), and Charter Communications (CHTR). Companies in the U.S. are issuing debt now ahead of a seasonal slowdown in early September, and with spreads at their lowest level since 1998.
Is LLY Stock a Buy?
The stock of Eli Lilly has a consensus Strong Buy rating among 22 Wall Street analysts. That rating is based on 17 Buy and five Hold recommendations issued in the last three months. The average LLY price target of $924.42 implies 30.22% upside from current levels.
