AstraZeneca has raised some $6.9 billion through a bond issue, which the firm says will be used to repay a significant portion of the outstanding US commercial paper taken in connection with its $15.2 billion acquisition of MedImmune.
A number of firms have pulled bond issues in the USA of late, prompted by the turmoil in the credit markets, but the scale at which investors have leapt on the AstraZeneca debt offering shows that high-quality stocks can still raise funds. The transaction consisted of four tranches, the largest of which involved $2.75 billion of 30-year fixed rate notes, paying a coupon of 6.45%.
Chief executive David Brennan said that the deal “represents part of our refinancing of the acquisition of MedImmune and enables us to enhance our financial flexibility by diversifying our sources of funding”. He added that the firm is “delighted by the investor reception” for AstraZeneca in the bond markets, and the Anglo-Swedish drugmaker was pleased to note that all four tranches were oversubscribed, helped by what financial experts said was very competitive pricings.
There had previously been concerns that the bond issue would damage AstraZeneca’s credit rating. In summer it was downgraded by Moody’s Investors Service (to A1 from Aa2) and Standard & Poor’s (to AA- from AA+) but the company noted that it is committed to keeping its rating stable and while the firm will also continue to repurchase stock, it will consult with credit rating agencies before doing so.