By Josie Cox
French utility GDF Suez has become the first company in more
than 14 years to issue bonds in euros bearing no regular payments
for investors, according to Dealogic data.
The Paris-based group sold four tranches of debt, with
maturities ranging between two and 20 years, for a total value of
EUR2.5 billion ($2.77 billion), according to bankers involved in
the deal. Usually, bonds carry an annual payment for investors,
known as a coupon. In this case, for the EUR500 million two-year
tranche, the coupon will be 0%--another sign of the hard bargain
borrowers can demand while investors' appetite for bonds is so
strong.
This is the first time any company has done that in euros since
the financing arm of Italian car maker Fiat priced a EUR10 million
bond in July 2001. No company has ever printed a bond in euros
greater than EUR160 million in size that offers a zero coupon,
according to Dealogic.
The 20-year debt that GDF Suez sold Wednesday offers a coupon of
just 1.5%--also a fresh record low for a corporate bond in euros of
that maturity.
The transaction comes on the eve of a key meeting at which the
European Central Bank is expected to shed more light on how it will
execute the bumper bond-buying program it announced in January.
The program, known as quantitative easing, which could see the
ECB buy as much as EUR1 trillion worth of on top-rated bonds in the
eurozone, has already aggressively driven down funding costs for
companies and triggered a rush of issuance, including from
companies beyond the region.
GDF Suez, which is a fairly regular player in the bond market,
has a solid investment grade rating of A1 from Moody's Investors
Service and A from Standards and Poor's. Bank of America Merrill
Lynch, BNP Paribas, HSBC, Barclays and Crédit Agricole managed the
transaction.
Write to Josie Cox at josie.cox@wsj.com
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