Molson Coors Brewing Co. issued $1.9 billion of bonds in a three-part sale to help pay for its intended acquisition of StarBev LP of Prague.
Molson Coors sold $300 million of five-year, 2 percent notes that yield 125 basis points more than Treasuries, $500 million of 10-year, 3.5 percent securities at a 160-basis point spread and $1.1 billion of 5 percent, 30-year notes at a 190-basis point premium, according to data compiled by Bloomberg. Standard & Poor’s rated the debt BBB-, one level above junk.
The beer producer is turning to the dollar-denominated bond market for the first time since 2007 to help fund the $3.5 billion StarBev purchase, Bloomberg data show. Montreal- and Denver-based Molson Coors may lose its investment-grade ratings unless it improves its financial profile after the deal, S&P said in a note on April 3.
The acquisition will help Molson Coors expand outside its main regions of North America and the U.K., where high unemployment and aggressive competition are weighing on growth. StarBev operates nine breweries in Central and Eastern European countries including the Czech Republic, Hungary, Romania and Bulgaria.
Credit-default swaps tied to Molson Coors have risen to 109 basis points today from 79 basis points on April 2, the day before it agreed to buy the maker of Staropramen, Bloomberg data show. Buying StarBev may boost its debt to about 3.5 times its earnings before interest, taxes, depreciation and amortization, according to an April 3 note from Fitch Ratings.
Molson Coors last issued U.S. dollar debt five years ago, when it sold convertible notes, Bloomberg data show. It sold bonds denominated in Canadian dollars in 2010.