UPDATE 2-Carlsberg lines up EUR1bn bond financing

Thu Nov 8, 2012 8:18am EST

(Adds bonds sizes, final spreads)

By Natalie Harrison

LONDON, Nov 8 (IFR) - Danish brewer Carlsberg is set to raise EUR1bn in the bond market, joining a wave of corporates that have taken advantage of soaring investor demand for longer dated debt to lock in record low funding costs.

Earlier on Thursday, the world's fourth-largest brewer announced that it had mandated Bank of America Merrill Lynch, BNP Paribas, Citigroup and Danske Bank for a new 10-year euro benchmark bond, and a ma ximum EUR250m increase of its EUR500m 2.625% July 2019 bond that it issu ed in June.

On the back of strong demand, the leads were able to tighten guidance to mid-swaps plus 100-105bp for the 10-year and plus 80-85bp for the tap, before setting final terms at plus 98bp and plus 80bp.

The 10-year was sized at EUR750m, and the tap at the maximum stipulated EUR250m on combined orders of almost EUR5bn.

Carlsberg, which is rated Baa2 by Moody's and BBB by Fitch, had earlier announced i nitial price thoughts for the new bond at mid-swaps plus 110bp area and for the increase at mid-swaps plus 85bp area.

Investor interest was skewed towards the longer-dated bond, which attracted around EUR4bn-worth of orders, while the tap drew orders of around EUR900m, bankers close to the transaction said.

The new issuance, Carlsberg's second outing of the year, follows third-quarter results on Wednesday.

The company said a drive to focus on its top brands and major supermarket customers had revived sales in its key Russian beer market in the teeth of tougher regulations and rising taxes.

The group's last bond was the aforementioned July 2019 issue which priced at 112bp over mid-swaps, and was trading at 75bp over prior to Thursday's announcement.

Aside from that, the company also has two euro issues maturing in May 2014 and October 2017, and two sterling issues due in February 2013 and November 2016.

Extrapolating from the pre-announcement spreads of the euro paper suggests a new issue premium for the 10-year of 3bp, observers said. (Additional reporting by Josie Cox, editing by Julian Baker)

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