Coca-Cola HBC Joins Poste Italiane Selling Bonds as Yields Rise

Coca-Cola HBC AG (CCH) is issuing its first bonds since the world’s second-biggest bottler of the soft drink switched its stock listing to London from Athens as European borrowing costs climb to a three-month high.

Air Liquide SA (AI), the French maker of industrial gases, and Poste Italiane SpA, the state-owned postal service, are also raising debt as the average yield investors demand to hold investment-grade company bonds in euros rose to 1.90 percent from a record low of 1.64 percent reached May 17, according to Bank of America Merrill Lynch index data.

Coca-Cola HBC moved its listing to London to access a wider pool of investors, Chief Financial Officer Michalis Imellos said in April. Borrowing costs are climbing after Federal Reserve Chairman Ben S. Bernanke said the central bank could taper asset purchases if the employment outlook shows sustainable improvement.

“There’s an element of some of these companies looking to get into the market before nervousness spreads further,” said Duncan Warwick-Champion, the London-based head of corporate research at ECM Asset Management Ltd. which oversees $9.5 billion. “There’s a lot of discussion about the potential for yields rising further so some of the companies that haven’t locked in their refinancing for 2013 and 2014 are looking to do so now.”

Coca-Cola

Coca-Cola HBC wants to sell 800 million euros ($1.1 billion) of seven-year notes that will be priced to yield 105 basis points more than the benchmark midswap rate, according to a person familiar with the deal.

The bottler is also offering to buy back any or all of the 500 million euros of 7.875 percent notes due 2014 to lower its interest costs and improve its debt profile, the company said today in a statement. Philip Walters, an external spokesman for Coca-Cola HBC, declined to comment on the new bond sale, which needs to be completed before the buyback can begin.

Air Liquide is raising 700 million euros from notes in three tranches, according to a person familiar with the transaction. The Paris-based company is selling 250 million euros of six-year fixed-rate bonds, 250 million euros of two-year floating-rate notes and 200 million euros of three-year floating-rate notes.

Poste Italiane is raising 750 million euros of bonds from its first sale since 2002. The company is offering five-year securities to yield 225 basis points, according to a person familiar with the transaction.

Anna Maria Morsucci, a spokeswoman for the Rome-based company, didn’t immediately respond to an e-mail seeking comment on the transaction.

Rolls-Royce

SSE Plc (SSE), the U.K.’s second-biggest energy supplier, is selling its first bonds this year. The Perth, Scotland-based company is raising 600 million euros from seven-year bonds that will be priced to yield 70 basis points more than swaps, according to a person familiar with the offer.

Rolls-Royce Holdings Plc (RR/), Europe’s largest maker of aircraft engines, has mandated banks to organize a call with investors today before a possible sale of securities in euros and pounds. It would be the London-based company’s first bond issue since 2009, according to data compiled by Bloomberg.

In the high-yield market, Groupe SMCP, a French distributor of women’s apparel, is selling 290 million euros of seven-year securities through its subsidiary, SMCP SAS, to yield about 8.75 percent, according to a person familiar with the deal. The proceeds will be used to repay existing debt and finance part of its acquisition by KKR & Co., Moody’s Investors Service reported on June 4 when it provisionally rated the notes B3, six levels below investment grade.

To contact the reporter on this story: Katie Linsell in London at klinsell@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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