Monsanto Raises $4.5 Billion in Its Biggest Bond Offering

Monsanto Co. (MON), the world’s largest seed company, sold $4.5 billion of notes in its biggest bond sale ever to help fund share repurchases.

The seven-part offering included $1 billion of 4.4 percent, 30-year bonds that yielded 110 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg.

The seed producer plans to use the proceeds of the bond issue along with as much as $1.2 billion of commercial paper and available cash to finance accelerated stock repurchases, according to a regulatory filing today. Monsanto announced a $10 billion stock buyback plan and an intention to repurchase $6 billion of shares on an accelerated basis after ending preliminary talks about a takeover of Syngenta AG that would have cut its tax bill.

Monsanto also issued $750 million of 4.7 percent, 50-year debentures that yielded 140 basis points more than benchmarks, Bloomberg data show. That’s the largest dollar-denominated corporate bond of this maturity sold since May 2008, when Liberty Mutual Group Inc. sold $1.25 billion of 50-year securities, the data show.

The offering was Monsanto’s first since a three-part, $1 billion bond issue in November, Bloomberg data show. That sale was the company’s largest at the time.

Standard & Poor’s cut the St. Louis-based company’s rating yesterday to BBB+ from A+. Moody’s Investors Service lowered Monsanto’s grade to A3 from A1.

“Monsanto’s new financial targets represent a substantial departure from its past practice and will significantly weaken credit metrics by the end of fiscal 2015,” John Rogers, senior vice president at Moody’s, said in a statement.

The offering included $750 million of 3.4 percent, 10-year notes with a spread of 85 basis points, Bloomberg data show. The company also issued $500 million each of three-, five-, seven-, and 20-year notes. A basis point is 0.01 percentage point.

To contact the reporter on this story: Adam Janofsky in New York at ajanofsky4@bloomberg.net

To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net John Parry, Mitchell Martin

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