Bond Sales Smash Record in Q1

Low borrowing costs elicit $430 bln of corporate issuance.

Heineken NV, the biggest Dutch brewer, and baker Flowers Foods Inc. tapped the U.S. bond market for the first time as sales soared to a record $430 billion in the first three months of 2012.

Heineken sold $750 million of 10-year notes, boosted from earlier plans to sell $500 million, which yield 127 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg. Thomasville, Georgia-based Flowers Foods raised $400 million of 10-year bonds that pay a spread of 225 basis points, Bloomberg data show.

Offerings by companies from the neediest to the most creditworthy surpassed the previous record of $397 billion reached in the first quarter of 2011 as companies tap the debt market at the lowest-ever borrowing costs, Bloomberg data show. Yields on investment-grade bonds fell to 3.4 percent on March 2, the lowest dating back to 1986, according to a Bank of America Merrill Lynch index.

“Non-financial spreads are very close to their tights of the last several years, and yields are near their all-time lows so it’s a fantastic time to issue,” Justin D’Ercole, head of investment-grade syndicate for the Americas at Barclays Plc in New York, said in a telephone interview. “With an increasingly volatile rate backdrop, many issuers are choosing to accelerate their funding plans.”

The Amsterdam-based maker of the namesake beer is issuing dollar-denominated notes after raising 1.35 billion euros ($1.77 billion) of debt in Europe on March 12 in a two-part offering, Bloomberg data show.

Heineken’s offerings this month are its first in three years after the 148-year-old brewer gained investment-grade status from its first public credit ratings. Standard & Poor’s rated the company at BBB+ and Moody’s Investors Service assigned an equivalent Baa1 rating.

Barclays, Citigroup Inc. and JPMorgan Chase & Co. are managing Heineken’s deal, with the proceeds expected to be used for general corporate purposes, a person familiar with the transaction said.

Flowers Foods, the producer and distributor of baked goods established in 1919, plans to use the proceeds from the sale for paying down debt, possible acquisitions, working capital and other general corporate purposes, it said in a preliminary prospectus filing. It is rated Baa2 by Moody’s and BBB- by S&P.



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