McDonald's Sells Bonds in Biggest Euro Offering as Costs Decline

McDonald’s Corp. completed its largest sale of euro-denominated bonds, taking advantage of borrowing costs that have fallen to the lowest in a year amid the European Central Bank’s expanded stimulus program.

The fast-food chain sold 2.5 billion euros ($2.8 billion) of securities maturing in January 2021, November 2023 and May 2028, according to data compiled by Bloomberg. That surpassed the 2 billion euros of notes it sold in May.

The ECB’s announcement last month that it will add corporate bonds to its quantitative-easing program has driven borrowing costs in the region toward record lows. Investors demand an average yield of 1 percent to hold euro bonds sold by highly rated companies, compared with 3.16 percent for similarly rated dollar debt, according to Bank of America Merrill Lynch Index data.

“At the prices they can issue at today, they’d be mad not to,” said Paul Suter, a London-based fixed income trader at ECM Asset Management, an investment team within Wells Fargo Asset Management, which oversees about $496 billion. “If you look at where credit spreads are, everything is tight right now.”

The issuance comes amid favorable conditions and rates, an official at Oak Brook, Illinois-based McDonald’s said by e-mail before the sale’s completion. The maker of Big Mac hamburgers and Chicken McNuggets earns about two-thirds of sales outside the U.S.

Investment Grade

The company, which is investment-grade rated, sold 750 million euros of 2021 notes that pay a yield premium of 50 basis points above benchmarks, 1 billion euros of 2023 bonds paying 70 basis points and 750 million euros of 12-year securities at a 95 basis point premium, the data show. Investors demand 87 basis points above benchmarks to hold the euro debt of highly rated companies, according to Bank of America Merrill Lynch index data. 

Unilever sold bonds in the single currency on Monday, including some with a zero percent coupon.

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