Anheuser-Busch InBev (AB InBev), the brewer in the middle of a historic merger with its smaller rival, SABMiller, has attracted a record $110bn in demand for its $46bn bond deal, as investors look to put their money into relative safety of high-grade US corporate debt at the start of a turbulent year for global markets.
The brewer’s offering, which will help pay for its takeover of SABMiller was initially set to raise $25bn but was forced to increase the deal more than 80 per cent to $46bn following heavy demand.
“It’s fairly positive for credit markets that a deal this size is coming in with the volatility we’ve seen,” said Mitch Reznick, co-head of credit at Hermes Investment Management.
The merger between AB InBev and SABMiller, to create the world’s largest brewer was agreed to in November for $108bn.
Since the beginning of the year, stock market exchanges around the world have fallen 6 per cent while oil prices have shed 18 per cent to $30 per barrel amid fears the Chinese economy is slowing down.
“The market is telling you what they want and they want strong stable revenue streams that don’t have anything to do with commodities,” says Matthew Brill, a portfolio manager with Invesco.
Estimates suggest that AB InBev will need to raise about $60bn from global credit markets either by increasing the size of the bond deal, returning to the US market later or by looking towards the euro and sterling markets.
“The outright coupon on a euro deal should be attractive to them so I wouldn’t be surprised to see it announced as early as tomorrow,” Chris Telfer, a portfolio manager at ECM, said on Wednesday.
Source: Financial Times, Edited