McDonald’s Selling Pound Bonds as Part of Global Fundraising

McDonald’s Corp. (MCD) is selling bonds in pounds for the first time since 2002 as the world’s largest restaurant chain seeks to boost returns to shareholders.

The company is marketing 300 million pounds ($503 million) of 40-year notes as well as 400 million euros ($545 million) of 15-year bonds and $500 million of 10-year securities, according to people familiar with the sales.

McDonald’s plans to return as much as $20 billion to shareholders by 2016 through dividends and share buybacks, as much as 20 percent more than in the previous two years, the Illinois-based company said in a May 28 statement. Chief Financial Officer Pete Bensen said in March the company can “probably get more aggressive,” with its borrowing and still retain its credit rating.

McDonald’s bonds in pounds will be priced to yield 73 basis points more than U.K. government debt and the euro securities will yield 63 basis points more than the mid-swap rate, said the people, who asked not to be identified because they’re not authorized to speak about it.

“This is a standard business transaction for a global corporation such as McDonald’s,” Becca Hary, a company spokeswoman, wrote in an e-mail. “We’re taking advantage of favorable conditions and rates.”

The company joins AT&T Inc. among U.S. companies crossing the Atlantic to raise money. The wireless carrier is selling a total 2.1 billion euros of 10- and 20-year bonds as it seeks to finance its $48.5 billion acquisition of DirecTV.

The cost of borrowing in euros instead of dollars approached the biggest discount in more than five years, with the spread widening to 1.42 percentage points, according to Bank of America Merrill Lynch index data.

(An earlier version of this story was corrected to show McDonald’s sold bonds in pounds in 2002.)

To contact the reporter on this story: Jennifer Joan Lee in London at jlee176@bloomberg.net

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

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