AB InBev to refinance US$100b debt through mega bond sale

SOUTH AFRICA – Multinational brewer, Anheuser-Busch InBev (AB InBev) plans to sell senior unsecured bonds in six parts presenting one of the biggest bond sales of the year as it seeks to refinance part of its US$100 billion debt load.

According a report by Bloomberg, the sale comes in line with a tender offer of up to US$11 billion of notes in 12 series with the longest portion of the offering, a 40-year security, projected to yield 2.9% points more than the US.

The report says that the bond sale will not only be a test for the investment- grade bond market, where risk premiums have generally been on the rise but also for AB InBev, whose credit ratings have faltered of late. 

Moody’s Investors Service downgraded the company last month, citing slow progress in reducing its debt burden following the acquisition of SABMiller in 2016.

“Deleveraging is behind original expectations due largely to foreign currency fluctuations and under-performance of certain emerging economies,” Moody’s said.

Continued deterioration of the company’s financial position has raised eyebrows to its credit investors as AB InBev continues to deplete its profit generating operations owed to the depreciating currencies.

AB InBev expansion plan saw its decision of taking over SABMiller for US$100 billion in 2016 as part of the company’s strategy to command more than 25% market share of all beers sold worldwide and be the fifth largest consumer goods company.

The eye-catching investment deal was overwhelmingly backed by SABMiller shareholders.

Recently, AB InBev’s Zimbabwe unit, Delta Beverages, also made headlines after it pulled back from its decision of selling its product in hard currency as it struggled to cope with crippling shortage of US dollars in the country.

This move was motivated by government’s intervention as it promised to provide forex.

For the third quarter of its previous financial year, AB InBev reported 11% loss of its shares resulting to the firm reducing its dividend in half  owed to weak third-quarter profits hit by slower sales in key markets including Brazil, the US and South Africa.

AB InBev shares at Johannesburg Stock Exchange have been wavering and recently closed at 0.74% lower at the bourse.

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