Microsoft Debuts Euro Bond as Record-Low Yields Spur IssuanceKatie Linsell
Microsoft Corp., the world’s largest software maker, sold bonds in euros for the first time, joining LVMH Moet Hennessy Louis Vuitton SA and Nestle SA in taking advantage of record-low borrowing costs.
Microsoft raised 550 million euros ($719 million) from 20-year notes, according to a person familiar with the transaction. French luxury goods maker LVMH is marketing its first euro bonds in two years, while Nestle, the world’s biggest food company, sold its first securities in the currency since October.
It’s the busiest day in six weeks for issuance in Europe, as non-financial companies sell 3.9 billion euros of bonds, according to data compiled by Bloomberg. The average yield investors demand to hold investment-grade corporate bonds in the single currency has fallen to a record 1.84 percent, Bank of America Merrill Lynch data show.
“People are desperate for yield and there is not much to find in the government market so they will jump into corporate bonds,” said Thomas Kristiansson, head of credit fixed income at SEB AB in Stockholm. “These deals are coming tight.”
Microsoft’s deal was priced to yield 55 basis points more than swaps. The Redmond, Washington-based company is also selling five-, 10- and 30-year bonds denominated in dollars, according to the person, who asked not to be identified because the details are private. Its the company’s first dollar sale since November.
LVMH is selling 500 million euros of notes due November 2019 that will be priced to yield 32 basis points more than the mid-swap rate. The Paris-based company last sold euro-denominated bonds in March 2011, Bloomberg data show.
Vevey, Switzerland-based Nestle is raising 500 million euros with bonds maturing May 2020 that will be priced to yield 17 basis points more than mid-swaps. The notes may be rated Aa2 by Moody’s Investors Service.
General Electric Co., the largest maker of jet engines, sold 750 million euros of floating-rate notes due May 2016 and 1.25 billion euros of fixed notes maturing May 2017. The Fairfield, Connecticut-based company’s three-year notes will yield 45 basis points more than three-month Euribor and its four-year securities will yield 50 basis points more than swaps.
Medi-Partenaires SAS is marketing a debut bond in the high-yield market. The French private hospital operator is selling 385 million euros of senior secured bonds due 2020 that may be called by the company after three years, according to a person familiar with the matter.
The notes may be rated B3 by Moody’s, six steps below investment grade, according to the person who asked not to be identified because they’re not authorized to speak about it. The Paris-based company will use the proceeds to refinance a portion of its senior and subordinated shareholder funding and to pursue acquisitions, it said in a statement.