(Bloomberg) -- Europe’s most indebted brewer is seeking to buy back bonds in a move to further reduce its large debt pile.
Anheuser-Busch InBev NV will spend as much as $3.5 billion buying back dollar and pound denominated notes through Dec. 14. The Belgian brewer of Budweiser and Stella Artois has been trying to reduce its debt since it took on a loan to fund its acquisition of SAB Miller Plc in 2016. Its net debt stood at $76 billion as of the end of June.
Companies in Europe are trying to reduce their debt burdens as borrowing costs soar. German real estate company Vonovia SE this week offered €1.5 billion ($1.56 billion) in social and green bonds to repay existing indebtedness, while pharma firm GlaxoSmithKline Capital also undertook a tender offer, stating its goal as managing its balance sheet.
“Companies have decided to reduce short-term maturity walls and alleviate liquidity risks,” said Daniel Ender, a credit analyst at Actiam NV in Rotterdam. “In the case of AB InBev, they’re also tackling long-term debt and hence are able to buy back at massive discounts to par.”
Today’s offering is the latest in a series of steps the brewer has taken, including the listing of Budweiser Brewing Company APAC Ltd. in Hong Kong and the sale of Budweiser Brewing’s Australian unit to Japan’s Asahi Group Holdings Ltd.
Bloomberg Intelligence says:
“AB InBev’s bond tender of up to $3.5 billion of bonds could grow to $4 billion and prioritizes the brewer’s longest-dated notes at the lowest prices,” credit analyst Louise Parker wrote. “The brewer has an improving profile with positive rating outlooks.”
AB InBev -- along with other beverage companies -- is also facing a crunch from higher raw material costs. Still, the brewer last month reported results that beat estimates and said demand for beer remains resilient. The company is set to benefit in the coming weeks from the football World Cup, whose sponsors include Budweiser, as fans gather in pubs to watch the games.
Barclays Plc, BNP Paribas SA, Bank of America Corp., Deutsche Bank AG and JPMorgan Chase & Co. are the lead dealer managers for the tender offer.
AB Inbev’s £900 million bond due in 2037 rose 3.3 pence to 81.75 at 2:21 p.m. in London. Trading in the firm’s bonds surged ahead of the debt tender. At one stage on Tuesday, the volume in New York was more than three times the average for that time of day.
--With assistance from Andy Hoffman.
(Updates with comment from Bloomberg Intelligence.)
©2022 Bloomberg L.P.
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