Sysco Corp., the largest North American food-service distributor, issued its first euro-denominated bonds to help fund the purchase of Brakes Group.
The U.S. company sold 500 million euros ($560 million) of seven-year securities yielding about 1.31 percent, according to a person familiar with the matter who asked not to be identified because they’re not authorized to speak publicly. Proceeds will go toward the $3.1 billion takeover of London-based Brakes, the person said.
Sysco joins a wave of U.S. borrowers taking advantage of euro borrowing costs that have fallen near record lows because of expanded European Central Bank stimulus. The company also sold $2.5 billion of bonds in March to help finance the acquisition of Brakes from private equity firm Bain Capital.
Houston-based Sysco couldn’t immediately be reached for comment on the sale.
The new 1.25 percent-coupon euro bonds have an issue spread of 115 basis points above benchmark rates, according to data compiled Bloomberg. The average yield premium for euro-denominated debt from highly rated companies maturing in five years to seven years is 94 basis points, according to Bank of America Merrill Lynch index data. Sysco has a BBB+ rating from S&P Global Ratings, the third-lowest investment grade.
Brakes has more than 50,000 customers including pubs, restaurants, hotels and contract catering groups, according to its website. Sysco’s takeover included repayment of about $2.3 billion of the target’s debt, according to the February statement outlining the acquisition.
Sysco expects to complete the acquisition of Brakes early next month, it said June 9. The European Commission has already cleared the deal.