Wednesday, May 11, 2016

Company borrow without needing to pay interest

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.

Poland, Belgium, Latvia, Spain ...etc all with 50 year bonds.

Why doesn't Singapore companies issue bonds with 5.15%?

Oxley announced yesterday that it is offering up to $150 million in four-year bonds with a coupon rate - or annual return - of 5.15 per cent. The offer comprises $125 million in the public offer and $25 million for institutional investors.