Sanofi-Aventis has completed a debt offering of $7 billion, the proceeds of which will be used in part to fund its $20.1 billion acquisition of Genzyme Corp.
The bond issue consists of six tranches, three floating parts and three fixed. Specifically, in the first section, Sanofi is offering $1 billion of notes due next year, bearing interest of the three-month London interbank offered rate (Libor) +0.05% and another $1 billion of notes due 2013 of Libor +0.20%. Some $750 million of notes due 2014 will offer Libor +0.31%.
As for the fixed-rate bonds, $750 million of notes due 2014 pay interest at an annual rate of 1.625%, while $1.5 billion of notes due 2016 pays 2.625%. Finally, $2 billion of notes due in ten years' time have been issued, bearing interest at an annual rate of 4%.
This is the biggest bond offering in more than a year and shows that investors are still extremely keen to buy debt in high-quality firms. Sanofi seems to fit the bill and is rated AA- by Standard & Poor's and A2 by Moody's Investors Service, both with a stable outlook.
The French drugmaker noted that it would redeem both the fixed rate notes and the 2014 floating rate note at 101% plus interest if the Genzyme deal falls through. Remaining proceeds from the 2012 and 2013 floating rate notes would be used for general corporate purposes.
Bank of America Merrill Lynch, BNP Paribas, JPMorgan, Societe Generale, Credit Agricole, Deutsche Bank, HSBC, RBS and Santander acted as joint-bookrunners for the offering.