LafargeHolcim Sells 2 Billion Euros of Bonds to Refinance Debtby
LafargeHolcim Ltd., the world’s largest cement maker, sold 2 billion euros ($2.2 billion) of bonds to finance a debt buyback.
The company issued 1.15 billion euros of seven-year debt and 850 million euros of 12-year notes, according to data compiled by Bloomberg. A planned 20-year issue was scrapped, according to a person familiar with the matter who asked not to be identified because they’re not authorized to speak publicly.
LafargeHolcim on Thursday also announced plans to repurchase bonds as it seeks a longer average maturity and lower financing costs. Corporate borrowing costs in the single currency have fallen to near the lowest in a year, helped by the European Central Bank’s bond-buying program.
A spokesman at the Zurich-based cement maker couldn’t be reached for comment about why the 20-year issue was withdrawn. The company earlier confirmed that it was selling bonds.
The seven-year notes will pay 115 basis points above benchmark rates, according to data compiled by Bloomberg. The 12-year bonds will have a 155 basis-point premium. Investors demand an average spread of 93 basis points to hold debt from highly rated companies like LafargeHolcim, based on Bank of America Merrill Lynch index data.
According to the buyback statement, the company will prioritize three issues, totaling 1.8 billion euros, which mature in 2019 and 2020. It may also repurchase as much as 1.25 billion euros of notes from six issues in euros and sterling.
LafargeHolcim was formed in July through a combination of Lafarge SA and Holcim Ltd. The company last week reported a 22 percent drop in first-quarter earnings, hurt by lower prices in India and a slowdown in Brazil and Russia.