Two sterling-denominated debt deals launched today, a week after the UK voted to leave the European Union.
British American Tobacco (BAT) is reportedly selling a five-year benchmark bond totalling £500m.
And US drinks company Brown-Forman, which makes Jack Daniel’s and Finlandia vodka, is in the market with a £300m, 12-year deal. It also announced a €300m (£248m), 10-year offering.
After Brexit and the subsequent financial turbulence, the euro market was expected to reignite the capital markets.
Jonathan Brown, co-head of investment grade syndicate at Barclays, which worked on both transactions, said: “It’s positive that borrowers have now reopened the Sterling and Euro primary bond markets. The current political uncertainty in the UK is not preventing us from delivering clients execution advice on where best to raise financing for their business. Both issuers and investors will be pleased to see capital markets now fully functioning so soon after last week’s referendum.”
Jane Morreau, chief financial officer of Brown-Forman, said: "We consider our inaugural step into the European debt capital markets to also be a milestone in our company's international development."
A lead banker of BAT’s five-year trade told Reuters: “I imagine many are looking at these deals and thinking, 'sterling, really?'. But there actually is overwhelming demand, which will be evidenced today.”
Another is quoted saying: “We held around 30 to 40 calls with investors this week to ensure demand was there. Many had assumed there would be no appetite, but it's really very strong.”
Deutsche Bank’s Frazer Ross told the FT: “I’m positively surprised and very happy to see the biggest UK investors stepping up to the plate and buying sterling new issues.”