PepsiCo taps Europe for €1B bond a day after cutting profit outlook
What's the deal? PepsiCo entered Europe's public bond market on Friday with a €1 billion ($1.12 billion) two-part deal, managed by Deutsche Bank and HSBC. The debt is split evenly: a three-year tranche and a nine-year tranche, each sized at €500 million.
Why now? The raise landed a day after PepsiCo cut its earnings growth outlook, citing weakness in both its beverage and snack businesses in North America.
The details: The shorter tranche was marketed at around 60 basis points above mid-swaps, the longer slice at around 105 basis points, according to a person familiar with the matter. The sale was expected to price later that day.
The pressure: North American beverage sales volumes have fallen 3% so far this year, with zero-sugar and flavoured options outperforming full-sugar versions. Chief executive officer Ramon Laguarta told analysts the company doesn't "feel good about the beverage business," adding it is "putting all of the urgency of the business and the focus in improving our performance in soft drinks."
By the numbers: The deal ranks in the top 10% of post-IPO debt rounds in the food sector by size, out of 687 comparable deals tracked all-time.
The signal: PepsiCo is tapping Europe for the second time this year while avoiding its home market, adding to a record boom in reverse Yankee issuance. US borrowers including AlphabetDealroom has a profile for this one. Try Dealroom →, Danaher, and Baker HughesDealroom has a profile for this one. Try Dealroom → have pushed such sales above €140 billion this year.
Read more: finance.yahoo.com
Image credit: Presidencia de la República Mexicana
