Nestlé Sets Record Low for European Bond Yield

Swiss food giant Nestlé has set a new record for the lowest coupon offered on a four-year bond in Europe.

The company issued €500m worth of debt at a coupon of 0.75% on 11 October. The average coupon on three- to five-year corporate debt is around 2.4%, according to the Barclays Index. Lead managers were Bank of America Merrill Lynch (BofA Merrill), Citi, Santander GBM and Société Générale.

Nestlé, the world’s biggest food company by sales, lost its AAA rating in August 2007 following the launch of a share buyback programme, but its Aa2 from Moody’s and AA from Standard & Poor’s (S&P)are among the best credit ratings in Europe. Earlier this year it also set records for the lowest seven-year and 10-year European coupons, in July and September respectively.

The record low coupon for a corporate bond comes as after average yield on corporate debt have fallen sharply, following the European Central Bank’s (ECB) launch in September of a fresh bond-buying programme to support the eurozone.

Earlier this week, Nestlé increased the size of its first sale of US dollar bonds in four months to US$500m as European companies tap US debt markets at the fastest pace in 18 months.


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