Unilever Joins Zero-Coupon Bond Club as ECB Bolsters Stimulus

Unilever sold euro-denominated bonds with a zero-percent coupon, the latest company to do so since the European Central Bank said it would expand its bond-purchase stimulus program.

The Anglo-Dutch maker of consumer products including Dove soap and Hellmann’s mayonnaise sold 1.5 billion euros ($1.7 billion) of securities in a three-part deal, according to data compiled by Bloomberg. The offering included 300 million euros of securities priced to yield 12 basis points more than benchmark rates and paying no coupon, the data show.

The ECB’s announcement in March that it will add corporate bonds to its quantitative-easing program has sent borrowing costs in the region toward record lows. Central bank President Mario Draghi said last week the expanded program will begin in June and it will include bonds from overseas companies with units based in the euro area.

“The ECB’s QE program has reduced interest rates to eye-wateringly low levels and its decision to buy corporate bonds has lead to extremely tight spreads,” said Conor Hennebry, managing director and co-head of northern European bond origination at Deutsche Bank AG, a bookrunner on the deal. “When you put together low interest rates, tight credit spreads and a great company, you get very cheap corporate bond deals.” 

Unilever will use the proceeds from the sale for general corporate purposes, a spokesman for the company said by e-mail.  

Benchmark Rates

Unilever’s sale included 500 million euros of eight-year securities to yield 0.7 percent and 700 million euros of 12-year bonds priced to yield 1.21 percent, according to Deutsche Bank. 

The 300 million euros of four-year notes yield 0.08 percent, the bank said. Sanofi, France’s biggest drugmaker, last month sold 500 million euros of April 2019 notes that won’t pay a coupon, and which were priced to yield 0.05 percent.

Nasdaq Inc. is also seeking a sale in the single currency and has appointed banks for investor meetings this month, according to a person familiar with the matter who isn’t authorized to speak about it and asked not to be identified.

“We expect a very busy May for corporate bonds with a lot of issuers looking to take advantage, for the first time they can, of the improved market,” Hennebry said.

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