FedEx Sells 3 Billion Euros of Bonds in First Non-Dollar Issue

  • Four-part sale to help fund planned TNT Express acquisition
  • Euro borrowing costs fall to 10-month low for foreign issuers

FedEx Corp. sold 3 billion euros ($3.4 billion) of bonds in its first non-dollar sale, taking advantage of the lowest borrowing costs in 10 months for foreign issuers.

The sale comprises four notes with maturities ranging from three years to 10 years, according data compiled by Bloomberg. It will help the Memphis, Tennessee-based logistics provider finance its planned 4.4 billion-euro purchase of Dutch delivery company TNT Express NV.

The FedEx sale was the biggest by a non-euro area company in the single currency since the European Central Bank expanded its stimulus program, pushing down borrowing costs. BT Group Plc, Petroleos Mexicanos and America Movil SAB de C.V. also sold euro debt last month, helping to boost issuance of corporate bonds to 49.4 billion euros, just 400 million euros shy of the all-time high set a year earlier.

“The ECB corporate-bond buying announcement has started to open the floodgates,” said Paul Suter, a London-based fixed-income trader at ECM Asset Management, which manages 5 billion euros of assets. “People are now coming back to their desks after the Easter break so you have to think we will see a good month for issuance during April.”

ECB Announcement

A FedEx official couldn’t immediately comment on the sale when contacted by phone.

The company sold 500 million euros of 0.5 percent bonds due in April 2020 that will yield 60 basis points above benchmarks. That compares with a spread of 160 basis points for similarly rated Ford Motor Co.’s 600 million euros of 2021 debt sold about a month before the ECB announcement.

FedEx also issued 500 million euros of April 2019 floating-rate notes, 750 million euros of bonds maturing in January 2023 and 1.25 billion euros of debt due in January 2027.

The average yield demanded by investors to hold euro-denominated debt from foreign issuers fell to 1.07 percent on Friday from 1.23 percent on March 9, according to a Bank of America Merrill Lynch index that tracks bonds maturing between one year and 10 years. The ECB announced it would include corporate debt in its asset-purchase program on March 10.

Dutch fleet-management company LeasePlan Corp. separately sold 750 million euros of four-year notes, according to data compiled by Bloomberg. The sale comes within a month of a 1.25 billion-euro issue of sub-investment grade notes via Lincoln Finance to help fund the company’s 3.7 billion-euro acquisition last year by a group of investors including TDR Capital LLP, Abu Dhabi Investment Authority, Dutch and Danish pension funds and a unit of Goldman Sachs Group Inc.

A spokesman at LeasePlan declined to comment on the sale.

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