Unilever Hires Banks for Bond Sale in Pounds as Yields DeclineJohn Glover
Unilever hired banks to arrange investor meetings before a bond sale in pounds as average yields on sterling securities approach a four-month low.
The world’s second-biggest consumer-products maker hired Citigroup Inc., Deutsche Bank AG, Morgan Stanley and Banco Santander SA, according to a person familiar with the matter. Average yields on corporate bonds in pounds declined 22 basis points to 3.63 percent this year, according to Bank of America Merrill Lynch’s Euro-Sterling Index.
Issuers are attracted to the U.K., where the biggest investors are insurers or pension funds, because they can meet demand for long-dated debt. The average maturity of the notes in Bank of America’s sterling index is about 12 years, compared with five years for its Euro Corporate Index.
“Pension funds in particular are looking for longer-term paper so issuers can borrow longer in sterling,” said Bryn Jones, the London-based head of fixed income at Rathbone Brothers Plc, which manages the equivalent of about $36 billion.
Mexico yesterday issued 1 billion pounds ($1.7 billion) of 100-year bonds priced to yield 5.75 percent, while Transport for London, the city’s mass transit operator, last week sold 370 million pounds of 4 percent 50-year notes, according to data compiled by Bloomberg.
Virgin Media Secured Finance Plc, owned by Liberty Global Plc, is selling as much as 915 million pounds of bonds in dollars and sterling maturing in January 2025, according to a person familiar with the matter. Pricing of the debt is expected tomorrow, the person said.
Elsewhere in Europe’s credit markets, Pernod Ricard SA, the region’s second-biggest distiller, is marketing 850 million euros ($1.2 billion) of bonds due June 2020, while Madrid-based Actividades de Construccion y Servicios SA is selling about 400 million euros of bonds exchangeable for shares in Iberdrola SA.