Credit Investors Ready for 20-Year Bond Hedge Led by New Issues

Investors are ready to embrace the 20-year Treasury as a pricing point for similarly-dated corporate bonds in secondary trading, taking a lead from companies who have already issued new debt against the emerging benchmark rate.

Eight out of 11 new investment-grade deals maturing in 20 years have priced to the 20-year U.S. Treasury instead of 30-year government paper so far this year, including Apple Inc. and Altria Group Inc., according to Bloomberg data. That compares with only two 20-year bonds that priced off similar Treasury notes in the primary market the whole of last year.

The discussion is gaining traction ...