Diageo taps investors for cash with $3.25bn in fixed rate bonds

 
Kasmira Jefford
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DIAGEO, the world’s biggest spirits group whose brands include Guinness and Smirnoff vodka, launched $3.25bn (£2.11bn) in fixed rate bonds yesterday, in part to repay maturing debt.

The FTSE 100 company is selling the dollar-denominated debt in four part tranches including $750m of 0.625 per cent notes that mature in April 2016; $650m of five-year notes at 1.125 per cent; $1.35bn of 2.625 per cent notes due in 2023 and $500m of 3.875 per cent notes payable in 2043.

Proceeds will be used primarily for what Diageo called “general corporate purposes”, including repaying commercial paper and its €1.15bn ($1.49bn) of 5.5 per cent bonds due July 2013.

Barclays, BoA Merrill Lynch, Goldman Sachs, JP Morgan, Santander, Standard Chartered and UBS acted as joint book-runners on the offering of notes, which was handled through the company’s Diageo Capital unit.

Shares in Diageo fell 2.08 per cent yesterday, which analysts put down to rival drinks firm Pernod Ricard’s third-quarter sales missing analyst expectations after a slowdown in Asia over Chinese New Year.

The French group said like-for-like sales rose six per cent to €1.74bn, while underlying sales in Asia rose two per cent, a sharp slowdown from 11 per cent in the first half.

ADVISERS

MARK KITCHEN
BANK OF AMERICA MERRILL LYNCH

A CONSORTIUM of banks acted as joint book runners on Diageo’s bond issuance including Bank of America Merrill Lynch (BoAML), Goldman Sachs, JP Morgan, Santander, Standard Chartered Bank and UBS. Mark Kitchen, head of UK & Ireland corporate debt capital markets (DCM) at BoAML advised on the bond launch together with Valentina Saredi, an associate. Kitchen has worked on a number of big deals this year so far including Imperial Tobacco’s $2.25bn five and 10 year bond issue in February. He also acted for water company Pennon when it sold its first hybrid capital issue in sterling in March, raising £300m. Goldman Sachs’ team was led by Rob Ritchie, head of European corporate debt capital markets Elis Jones, executive director in UK debt capital markets.