AB InBev Sets Euro-Bond Sale Record to Fund SABMiller Takeover

  • Brewer sells 13.25 billion euros of notes to aid acquisition
  • Six-part issue follows $46 billion debt sale in January

Anheuser-Busch InBev NV sold a record amount of corporate bonds in euros to raise funds for the takeover of SABMiller Plc.

The world’s biggest brewer issued 13.25 billion euros ($15 billion) of notes in six parts, according to data compiled by Bloomberg. The deal follows a $46 billion bond sale in January, which was also to back the $110 billion SABMiller purchase.

The Budweiser maker is taking advantage of increased demand for investment-grade debt in euros after the European Central Bank announced plans to start buying non-bank corporate bonds last week. The ECB move has spurred a flurry of sales and helped drive down borrowing costs for highly rated borrowers to the lowest since June.

“They’re getting their timing bang on,” said Luke Hickmore, an Edinburgh-based senior investment manager at Aberdeen Asset Management, which manages about 291 billion pounds ($410 billion). “Books have been very large for these kind of deals all week, and they’ve priced it at a very sensible level to make sure they get the size done.”

Officials at Leuven, Belgium-based AB InBev declined to comment on the sale. 

Roche, Verizon

The offer surpassed Roche Holding AG’s 9.75 billion euro sale in 2009, the record for a corporate issue in the single currency. The brewer’s issuance of dollar bonds in January trailed Verizon Communications Inc.’s record $49 billion sale in 2014.

The company arranged a record $75 billion loan in November to help fund the SABMiller acquisition, including $30 billion of bridge loans and $25 billion of three-year term loans. It’s buying SABMiller to gain greater access to emerging markets, including Latin America and Africa. The companies have agreed to sell stakes in ventures in the U.S. and China to help secure regulatory approval for the combination.

AB InBev’s euro sale included 1.25 billion euros of four-year floating-rate notes, and 1.75 billion euros of fixed-rate notes with the same maturity. There were also 2 billion euros of six-year notes, 2.5 billion euros of nine-year bonds, 3 billion euros of 12-year securities and 2.75 billion euros of 20-year notes, according to the data.

‘Clear Value’

The 20-year bonds pay 170 basis points above benchmark rates, narrower than the initial terms. That still surpasses yield premiums of about 130 basis points for similar maturity investment-grade euro bonds issued by foodmaker Mondelez International Inc. and phone company AT&T Inc.

There’s “clear value” in the 20-year AB InBev securities, Aberdeen’s Hickmore said. Still, the tenor may be too long for some European investors, he said.

Including the AB InBev deal, investment-grade non-financial companies have issued about 21 billion euros of debt this week, including sales by Deutsche Telekom AG, U.S. engineering company Fluor Corp., and information-services provider Relx Group Plc.

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