Solid demand for high rated corporate bonds prevented two low-beta companies from having to vie for attention in the euro market on Thursday, despite offering similar maturities and stemming from not dissimilar sectors.
First out of the blocks, General Mills joined the ranks of almost half a dozen low-beta US issuers that have accessed the euro market over the last fortnight, opening books on a well-flagged seven-year bond.
Following a roadshow late last month, the producer of branded and packaged consumer foods, rated A3/BBB+/BBB+, set initial price thoughts on the November 2020 paper at mid-swaps plus 60-65bp for pricing later in the day via Barclays, Bank of America Merrill Lynch and Deutsche Bank.
By mid-morning, books had scaled over EUR2.5bn, allowing leads to fix the final terms at mid-swaps plus 55bp for a EUR500m issue and price shortly thereafter.
General Mills has no euro paper outstanding, leading bookrunners to reference bonds from the likes of McDonald's, Cargill, AB InBev, Coca Cola Enterprises, Heineken and Tesco for guidance.
All of those, rated high Triple B to Single A, have bonds maturing between March 2019 and November 2023 and bid between mid-swaps plus 35bp and plus 75bp.
One lead said that fair value on General Mills therefore looks to be around mid-swaps plus 50-55bp, implying a slim new issue concession at most.
Nonetheless, order books are solid.
Thanks to General Mills being rated slightly lower than other blue chip US names that have visited the euro market recently though, it does offer slightly more spread.
Last week, Procter & Gamble, rated Aa3/AA-, printed EUR750m of November 2021 notes at just mid-swaps plus 32bp. IBM, rated Aa3/AA-/A+, printed EUR1.5bn of November 2020 notes at swaps plus 42bp, as part of a two-tranche transaction, which combined, represented the largest high grade euro bond of the year in the corporate sector.
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