Peugeot Sells 1 Billion-Euro Bond to Boost FinancesMathieu Rosemain
PSA Peugeot Citroen sold a 1 billion-euro ($1.31 billion) bond to boost the financing of Europe’s second-largest automaker.
The bond, which has a five-year maturity, had an order book of 4.3 billion euros, the Paris-based carmaker said in a statement today.
“We want to maintain a high level of financial security,” Chief Financial Officer Jean-Baptiste de Chatillon said in the statement. “We are delighted with the success of this operation.”
Peugeot reported a 576 million-euro operating loss for 2012 as a recession caused industrywide sales in the region to shrink for a fifth consecutive year. Chief Executive Officer Philippe Varin vowed on Feb. 13 to put Peugeot on a break-even level by end of 2014 through spending reductions and a new strategy that includes moving its Peugeot brand upscale.
Peugeot’s credit rating was cut one step this week to four levels below investment grade by Fitch Ratings, which said a contraction in Europe’s car market will put the auto manufacturer’s plans to restore cash flow at risk.
Peugeot’s long-term debt was lowered to B+ from BB- with a negative outlook, indicating the credit-rating company may downgrade it again, Fitch said.
Car-industry executives are forecasting another decline in Europe in 2013, with Peugeot predicting a drop of 3 percent to 5 percent in the market.
France’s government offered guarantees last year for as much as 7 billion euros of new bond sales by the Banque PSA Finance unit. Peugeot has won temporary European Union approval to sell 1.2 billion euros in government-backed bonds and must present more details on the plan to win full approval.
“This has nothing to do with the bonds issuances that will benefit from the French state guarantee,” Pierre-Olivier Salmon, a spokesman for Peugeot, said in a phone interview regarding today’s sale.
Peugeot is striving to maintain the division’s investment grade at Moody’s Investors Service, with measures that include refinancing the division’s debt. Standard & Poor’s Ratings Services earlier this month cut Peugeot’s debt by one level and downgraded debt at its banking unit to junk.
BNP Paribas SA, CA CIB, Deutsche Bank AG, HSBC Holdings Plc, Natixis SA and Societe Generale SA managed the sale, Peugeot said.