American Express Co. sold $1.2 billion of bonds backed by credit card payments at record yields over benchmark rates, according to people familiar with the transactions.
The company sold $568 million of bonds maturing in five years, the sources said last week; the triple-A portion was priced to yield 160 basis points more than the one-month London interbank offered rate. The sources asked not to be identified, because the terms have not been announced.
In a separate offering of $650 million of bonds maturing in two years, the triple-A portion was priced to yield 110 basis points over Libor.
Investors have shunned credit card securities as consumer spending has slowed and unemployment has grown. Personal spending, the biggest part of the economy, has stalled from July to this month, according to a Bloomberg survey released last week. The unemployment rate reached a five-year high of 6.1% last month.
"The consumer is stressed and under severe duress," said Pete Hastings, a fixed-income analyst in Memphis for Regions Financial Corp.'s Morgan Keegan & Co. "Consumers don't have a lot of discretionary income, and it's painful."
Amex paid 130 basis points over Libor in its last sale of five-year triple-A asset-backed debt Aug. 8. In October the New York company paid 30 basis points more than the benchmark on triple-A asset-backed bonds with a similar maturity.
