What Worries? Goldman Sachs 50-Year Bond Offering (GS, GSJ)

FIFTY YEARS!  Goldman Sachs apparently sold another 50-year corporate bond in 2010 as well.  These new corporate notes are due in the year 2061, and they will trade under the ticker “GSJ” on the NYSE.  It looks as though they are callable in a sense as the prospectus noted, “We may redeem some or all of the notes on any interest payment date on or after November ___, 2016 at the redemption price described in this prospectus supplement.”

Goldman Sachs noted in the prospectus that it is leading the offering and it included investment banking firms of BofA Merrill Lynch, Citigroup, UBS, and Wells Fargo in the offering.  The notes are also senior unsecured notes, implying that there are no directly pledged assets assuring the value of these.

This is a part of a series of notes being issued.  A 7-year note due in 2018 will trade as a callable step-up note with an initial payment of 5% per year to 2014 and will then step-up to 7% per year if not called away.  A 15-year note will is also a callable step-up note which will pay 5% to 2016 and (if not called) will pay 6% to 2020, and then will pay (if not called again) to 2023, and finally will pay (if not called) 8% per year from 2023 to 2026.

The final size and spreads on the 50-year notes will released later today.

JON C. OGG