Campari Sells Bonds as Investors Seek Peripheral Corporate Debt
Davide Campari-Milano SpA (CPR), the Milan-based distiller, sold its first bonds in three years amid renewed investor demand for debt from Europe’s most indebted countries.
Campari raised 400 million euros ($525 million) from the unrated seven-year notes after investors bid for 12 times that amount, the company said in a statement. The maker of the eponymous red liquor priced the debt to yield 325 basis points more than the swap rate, which compares with a spread of 63 for Bank of America Merrill Lynch’s Consumer Non-Cyclical Index of debt issued by firms including Pernod Ricard SA and Diageo Plc. (DGE)
Investors are snapping up securities from the euro-region’s periphery at the fastest rate since the euro was created, encouraged by the European Central Bank’s pledge to buy sovereign debt. German Chancellor Angela Merkel, speaking before today’s European Union summit, said it would be “fatal” for leaders to ease efforts to solve the debt crisis.
“Many investors were under-allocated in peripherals for risk reasons and buying new issues is an easy way to catch up,” said Peter Higgins, a London-based senior portfolio manager at BlueBay Asset Management Ltd., which manages $42 billion. “Campari’s got a good reputation as a brand and it sounds like the deal is going very well.”
Companies from peripheral countries have stepped up bond sales, raising 6.8 billion euros this month compared with a monthly average of 4.9 billion euros for 2012, according to data compiled by Bloomberg. Borrowers led by Italy’s Snam SpA (SRG) and Telefonica SA (TEF) in Spain raised 13.1 billion euros in September, the most since at least 1999.
The proceeds from Campari’s bond sale will be used for the acquisition of Lascelles deMercado & Co., the Jamaican maker of Appleton rum, the company said in the e-mailed statement. The offering, Campari’s first since 2009, means the bridge loan for the takeover will be canceled, according to the statement.
“The transaction has been very successful both in Italy and the international markets,” Chief Executive OfficerBob Kunze-Concewitz said in the statement.
Gecina SA (GFC)’s 4.75 percent bonds due 2019 rose 1 percent to 105 cents on the euro, the biggest climber in Bank of America Merrill Lynch’s EMU Corporates index, after the French property company was upgraded one level to BBB by Standard & Poor’s. Paris’s largest publicly traded office landlord said the new rating will allow it to save 7 million euros in 2013.
Twice as many European companies were downgraded than had their ratings increased since the start of April, the highest rate since the first quarter of 2010, S&P analyst Paul Watters in London wrote in a report. The New York-based firm has a negative outlook on 26 percent of European companies compared with a five-year average of 23 percent.
The cost to insure Spanish and Italian government debt rose from yesterday’s 14-month lows. Credit-default swaps on Italy rose 18 basis points to 250.5 while contracts on Spain climbed 21 to 289.
The Markit iTraxx SovX Western Europe Index of contracts on 14 governments rose two basis points to 109 basis points.
The Markit iTraxx Crossover Index of swaps linked to the debt of 50 companies with mostly high-yield credit ratings rose eight basis points to 482. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings climbed three to 118 basis points.
The Markit iTraxx Financial Index of swaps on the senior debt of 25 banks and insurers added five basis points to 159 and the subordinated index increased seven to 284.
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