• FULL mini budget speech

    Read the full mini budget speech delivered by Finance Minister Pravin Gordhan.

  • #FeesMustFall reporting

    What are the real issues and whose voices are being suppressed by social media, asks Solly Moeng.

  • Matchmaker businesses

    Multisided platforms can create huge value for society and fortunes for entrepreneurs, says Ian Mann.

All data is delayed
See More

AB InBev starts marketing debt to finance SABMiller takeover

Jan 13 2016 19:36
Aleksandra Gjorgievska

New York - Anheuser-Busch InBev NV started offering debt on Wednesday, backing its takeover of SABMiller [JSE:SAB] in the first test of the corporate-bond market’s ability to finance mega-mergers since the Federal Reserve raised interest rates.

AB InBev is selling debt in as many as eight parts with maturities ranging between three and 30 years, according to a person familiar with the matter who asked not to be identified because they’re not authorised to speak publicly.

The total US-dollar portion of the deal from the world’s biggest brewer may be around $25bn, according to a separate person familiar with the transaction on Tuesday.

That would make it the second-largest corporate sale in the greenback after Verizon Communications’s $49bn deal two years ago to fund its buyout of Vodafone Group’s stake in a wireless venture.

“It’s a well telegraphed deal of a global company with a solid business, but ultimately it will come down to price,” said Matthew Duch, a money manager at Calvert Investments in Bethesda, Maryland, which oversees more than $13bn in assets.

“There is an expectation that the company will have to leave something on the table to get the deal done but there are plenty of investors looking for quality assets to buy."

The brewer revealed in November that it has lined up $75bn of loans to help fund the purchase. That would be the largest amount ever borrowed in a single loan financing, according to data compiled by Bloomberg.

Officials at AB InBev declined to comment on the bond sale when contacted by e-mail.

Fed Policy

The offering is the biggest since the Fed ended its zero-rate monetary policy last month and comes at an increasingly volatile time in credit markets.

Investment-grade bond buyers are demanding the largest yield premium over Treasuries in more than three years amid a stock-market meltdown in China and plunging oil prices.

“Even though spreads are wide in corporate bond market, in the longer-term context of the absolute interest rate” company borrowing costs are low,” said Joe Mayo, the head of credit research at Conning, a global insurance investment manager with about $92bn under management.

The company agreed to buy SABMiller in October for about $110bn. Combined they would produce almost one in three beers worldwide.

The takeover would give AB InBev beer brands such as Peroni and Grolsch and control of about half of the industry’s profit.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

sabmiller  |  companies  |  industrial


Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Do you use all your downloaded apps on your smartphone?

Previous results · Suggest a vote