Bayer AG, the inventor of Aspirin, marketed its biggest bond deal in Europe since 2006 after borrowing costs fell to the lowest in more than seven months.
The German drugmaker raised a total 2 billion euros ($2.7 billion) from four- and seven-year bonds and two-year floating-rate notes, according to data compiled by Bloomberg. The average yield on investment-grade debt in euros dropped 16 basis points this month to 1.97 percent, the lowest since June 5, Bank of America Merrill Lynch index data show.
“There’s a lot of bullish rhetoric about a recovery in the euro zone that provides a fillip for risk appetite,” said Simon Ballard, head of credit strategy at National Australia Bank in London. “Bayer is addressing a whole series of investor needs. The two-year floater is aimed at people wanting to hedge against an increase in government yields later this year, while four to seven years is the sweet spot.”
The company will use the proceeds of the sale for general corporate purposes, which may include financing mergers and acquisitions, said the person with knowledge of the deal. Bayer is in the process of buying Norwegian drugmaker Algeta ASA for $2.9 billion, according to a statement from the Oslo-based company yesterday.
Officials at Leverkusen, Germany-based Bayer were not immediately available for comment on the bond sale.
Bayer issued 500 million euros of floating-rate notes to yield 22 basis points more than the three-month euro interbank offered rate. It also sold 750 million euros of four-year bonds yielding 32 basis points more than the mid-swap rate and 750 million euros of seven-year securities offering a spread of 50 basis points.
Elsewhere in credit markets, SP AusNet, an Australian electricity grid operator, hired banks to arrange investor meetings in Europe starting Jan. 28, a person with familiar with the matter said. The Victoria-based utility sold its first bond in Europe last year, issuing 500 million euros of 2.375 percent notes due July 2020, according to data compiled by Bloomberg.