Daimler AG, the maker of Mercedes-Benz cars, raised 1 billion euros ($1.3 billion) from its first benchmark-sized bonds in euros this year as borrowing costs for European carmakers fall to the lowest in three months.
The bonds due 2015 were priced to yield 63 basis points more than the benchmark swap rate, according to data compiled by Bloomberg. That compares with 106 basis points for Bank of America Merrill Lynch’s Euro Automotive index, which tracks carmakers’ securities with an average maturity of three years. The index spread was 138 at the start of the year.
“The spread premium is very low and reflects the pricing power prime issuers with solid fundamentals like Daimler currently have,” said Felix Freund, a portfolio manager at Union Investment GmbH in Frankfurt, which oversees 170 billion euros of securities.
Daimler, also Europe’s biggest truck producer, has forecast higher 2012 profit than analysts predicted, propelled by record demand for Mercedes cars. The Stuttgart-based company said it aims to retake the luxury-car lead from Bayerische Motoren Werke AG after slipping to third behind Volkswagen AG’s Audi in 2011.
“We decided to place this offer due to the currently very favorable overall market conditions,” Daimler spokesman Florian Martens said in an e-mail. The proceeds will be used for general corporate purposes, he said.
Daimler has 25 billion euros of bonds outstanding with 3 billion euros coming due this year, according to data compiled by Bloomberg. The carmaker is ranked A3 by Moody’s Investors Service and an equivalent A- at Fitch Ratings. Standard & Poor’s grades it one level lower at BBB+.
Deutsche Bank AG, LBBW and Banco Santander SA managed the sale of the new bonds. The offering is the company’s first benchmark deal in euros since Oct. 17, when it raised 750 million euros from floating-rate notes due 2013.