Heineken poised to set low-coupon records with $3.25bn deal

By Shankar Ramakrishnan and Andrea Johnson

Oct 2 (IFR) - Dutch brewer Heineken's US$3.25bn four-part issue is likely to set records for the lowest coupons paid by a Triple B rated issuer for three and five-year bonds, sources said on Tuesday.

Heineken is in the process of completing a deal that was launched earlier on Tuesday to take out a EUR2.5bn (US$3.25bn) bridge loan to fund its acquisition of Asia Pacific Breweries.

The company is issuing three-, five-, 10.5 and 30-year notes, and together the four tranches were heard to have garnered a book of over US$20bn.

The guidance on the four tranches was about 20bp tighter than initial price talk. The guidance on the three-year was at a spread of Treasuries plus 60bp area; on the five-year at plus 90bp area; on the 10.5-year at 120bp area; and on the 30-year at plus 135bp area.

The final spreads are 5bp tighter on all tranches and at that level, the three-year is likely to pay a yield of 0.856%, the five-year about 1.469%, the 10.5-year 2.771% and the 30-year 4.116%.

At those yield levels, Heineken may be the first Triple B rated issuer to price a three-year bond deal with a coupon below 1% and also set the record for the lowest coupon for a five-year bond in that rating category.

The final coupon and yield levels will be dependent on where the company spots the Treasury level and the dollar price on each tranche.

The current record for the lowest three-year coupon paid by a Triple B company is held by Ecolab Inc which priced a US$499.8m deal in August 6, 2012 with a coupon of 1%.

In the five-year part of the curve, the record is held by HJ Heinz which priced a US$299.5m five-year with a coupon of 1.5% on February 28, 2012.

The acquisition is still subject to regulatory approvals and is expected to close in November.

(Reporting by Shankar Ramakrishnan and Andrea Johnson; Editing by Ciara Linnane)

((shankar.ramakrishnan@thomsonreuters.com; Reuters messaging; shankar.ramakrishnan.thomsonreuters.com@reuters.net))