Coca-Cola Considers Following Apple With Australian Bond Debutby
Drinks company to hold debt investor meetings from March 7
Roadshow comes as global turmoil weighs on bond issuance
Coca-Cola Co. is considering its first-ever bond offering in Australia, potentially following in the footsteps of Apple Inc. and Intel Corp. which last year made their inaugural debt forays Down Under.
The world’s biggest soft-drink company has hired Deutsche Bank AG to arrange meetings with fixed-income investors and may proceed with a deal denominated in Australian dollars, subject to market conditions. The meetings are scheduled to start March 7, according to an e-mailed statement from the sale manager.
While a swathe of new foreign borrowers has tapped the Australian market in recent years, the approach from Coca-Cola comes amid an issuance slump as global turmoil weighs on investors’ risk appetite. Sales of Kangaroo bonds, notes sold by foreign issuers in Australia, are down 55 percent in 2016 compared with the same period last year, and Korea National Oil Corp. is the only non-financial seller so far this year, data compiled by Bloomberg show.
Atlanta-based Coca-Cola, which has been stripping out costs in a bid to improve margins, last week announced fourth-quarter profit that exceeded analyst estimates. And while the cost of insuring its debt against non-payment has risen 3 basis points in 2016 to 28 basis points, it’s little changed from a year ago. Over the same period, the Markit CDX North America Investment Grade Index has almost doubled.
The beverage firm carries a Standard & Poor’s credit rating of AA, the third highest score, albeit with a negative outlook. It’s rated the equivalent of one step lower at Moody’s Investors Service.
A possible transaction in Australia would follow a record offering last August from Apple, whose A$2.25 billion ($1.6 billion) three-part deal was the largest-ever in Australia by a non-financial company. Chipmaker Intel raised A$800 million in a November deal.