U.S. Blue Chips Want You to Buy Their Debt
American blue chips are marketing floating-rate notes to individuals
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“Looking for CD or Money Market Rates? You can do better.” That’s the pitch that greets visitors to General Electric’s Interest Plus website. GE, Duke Energy, Ford Motor, and Caterpillar, are among companies enticing a growing number of individuals to buy their debt through investments sometimes billed as higher-yield alternatives to checking accounts and money market funds.
Corporations that sell what are known as floating-rate demand notes are tapping into consumers’ frustration with the puny interest rates on money market funds, which averaged 0.03 percent as of May 29, and bank savings accounts, which averaged 0.13 percent. The notes, which usually require a minimum deposit of $500 or $1,000, are paying 1 percent to 1.6 percent.