Eli Lilly Just Did What Almost No One Dares in 2025

Eli Lilly (NYSE:LLY) is stepping into rare air. In a bond market where most borrowers are skittish about locking in long-term rates, Lilly is launching a multi-tranche debt deal that includes a 40-year notesomething we've barely seen this year. Initial price talk for the ultra-long bond starts at 105 basis points above Treasuries, and the offering could span maturities from three to 40 years. In 2025, only 11% of investment-grade corporate bonds carried maturities of 30 years or more, down from 15% in 2024, making Lilly's move stand out as a long-dated outlier.

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Why now? Yields have slipped below 5% this month for the first time in 2025, offering a rare window of relief for borrowers. Demand is running hotrecent order books have swelled to five times the deal size, while new-issue concessions have dropped to just two basis points, both stronger than the year-to-date average. Lilly is part of a wider Monday rush alongside McDonald's (NYSE:MCD), Marriott (NASDAQ:MAR), and Charter, as blue-chip names crowd in before the August issuance calendar goes quiet. The demand-supply dynamic appears to be favoring issuersfor now.

The deal is being managed by a heavyweight syndicate including Citi (NYSE:C), Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), Mizuho, and Morgan Stanley. Moody's (NYSE:MCO) and S&P are expected to assign high-grade ratings of Aa3 and A+, respectively. Proceeds will go toward general corporate purposes, but the signal here is bigger than balance sheet housekeeping: this is a rare move in a high-rate environment. Lilly could be making a strategic bet that funding conditions are peakingor at least peaking enough to justify stretching the maturity curve while the window remains open.

This article first appeared on GuruFocus.

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