J.P. Morgan Chase & Co. and American Express Company (AmEx/Amex) sold some long-term debt on 14 May to full fill a condition to back government funds. Amex said the company sold 5-year notes and 10-year notes with yielding 7.25 percent and 8.125 percent respectively. Currently, the interest on proposed 10 year Treasury bond is 3.11 percent.

AmEx also said it could use the borrowed cash to assist it repurchase nearly $3.4 billion of supreme shares issued to the Treasury during 2008 under the Troubled Asset Relief Program (TARP). It noted this buy back could be topic to a regulatory approval. On the other hand J.P. Morgan told it sold around $2.5 billion in 5-year debt. Additionally, the debt can carry a token of 2.75% points over Treasuries, or around 4.65%.

To exit the Program, the administrations require a company to confirm that they could issue 5-year unsecured debt and the debt is not supported by the Federal Deposit Insurance Corp. guarantees. The administration’s stress tests previous week for both of the companies determined they need not raise new capital. Co-head of structured products and emerging markets at MF Global, Andrew Brenner said “We’re going to see companies willing to pay more on debt by not getting a government guarantee.” Bond trader Brenner added “They’re coming to the realization that being in bed with the government is not a good idea.”

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