Siemens Looks To Raise Europe’s Largest Corporate Bond So Far This Year
Siemens AG is looking to raise Europe’s largest corporate bond offering so far this year following its credit-rating upgrade and possible sale of its carved-out Innomotics business.
(Bloomberg) -- Siemens AG is selling Europe’s largest corporate bond offering in a year on the heels of a credit-rating upgrade.
The engineering and manufacturing company is raising €5 billion ($5.4 billion) from a four-part bond deal, with maturities between 4.75 years and 20 years, according to a person familiar with the matter. It drew a total €17.5 billion of bids, said the person, who asked not to be identified because they’re not authorized to speak.
Investors are piling into the offering after Siemens’s long-term credit rating was upgraded this week to AA- from A+ by S&P Global Ratings, which pointed to structural improvement and higher resilience in profitability and cashflow. The 20-year tenor saw the most interest at more than €6.1 billion of demand, enabling the firm to shave 37 basis points off pricing from initial guidance.
It’s an opportunity for funds to grab this tenor as borrowers in the region don’t often sell such long maturities. In fact, it’s the longest euro-denominated corporate bond in three months, and there were only 11 senior deals with 20-year tenors last year, according to data compiled by Bloomberg.
The bumper offer follows a slow start to the year for corporate issuance in the region, with many firms held back by blackout periods ahead of earnings releases. While corporate sales at €59 billion this year only make up 14% of record bond issuance across all sectors, they’re expected to pick up.
Siemens’ earnings this month showed the company, along with the rest of the industrial sector, is still grappling with weaker demand in China. It’s weighing a carve-off of its heavy duty electric motors business Innomotics, with direct lenders and banks working on proposals to provide a debt package worth at least €1.2 billion.
While its current bond sale looks set to be the biggest in Europe since International Business Machines Corp.’s five-parter in January 2023, it still pales in comparison with some of the issuance in the US market.
On Wednesday, Bristol-Myers Squibb Co. sold $13 billion of bonds in nine parts, gathering orders exceeding $85 billion, to help finance its acquisitions of Karuna Therapeutics Inc. and RayzeBio Inc. Also this year, IBM sold a seven-part deal raising $5.5 billion, and Eli Lilly & Co. a five-part deal for $6.5 billion.
(Updates with final pricing details throughout.)
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