Please ensure Javascript is enabled for purposes of website accessibility

Instant Analysis: Anheuser-Busch InBev's Big $46 Billion Bond Offer

By Rich Duprey - Jan 14, 2016 at 6:43PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The brewer's corporate debt offering is one for the record books.

What happened?
In an effort to pay for its pending $106 billion merger, Anheuser-Busch InBev (BUD 2.75%) has completed the pricing of a $46 billion bond offering, the second-biggest corporate debt offering in history. The issuance is expected to close Jan. 25.

Does it matter?
Anheuser-Busch's acquisition of rival brewer SABMiller (NASDAQOTH: SBMRY) hasn't received the necessary regulatory approvals yet, and it will be some time before they materialize, but the maker of Budweiser, Stella Artois, and Shock Top prepared for the eventuality with the corporate debt offering.

At $46 billion, it falls just short of the record set by Verizon (VZ 0.36%) in 2013 when it sold $49 billion worth of bonds. Yet unlike that deal, which carried a 50-basis point premium,  Anheuser-Busch's offering didn't need such a large spread to attract demand, though the 15 to 30 basis points added across all seven tranches was still seen as solid.

Anheuser-Busch saw investors put in orders for some $117 billion worth of bonds, which allowed the brewer to increase the size of the offering from its initial $30 billion offer.  Analysts thought A-B's high-quality and very liquid offer might even run as high as $60 billion.

Bank of America's Merrill Lynch division, Barclays, and Deutsche Bank were the brewer's global coordinators for the offering, while Mitsubishi UFJ, Santander, and Societe Generale served as its joint bookrunners. The bond has seven different tranches offering fixed rates across three, five, seven, 10, 20, and 30 years. There is also a floating-rate five-year issue.  

Part of the proceeds from the bond offering will be used to pay off some of a $75 billion syndicated loan Anheuser-Busch originally took out to pay for the Miller merger, which itself was the largest commercial loan in the history of the global loan markets, beating out the $61 billion loan Verizon took out at the time.

Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Anheuser-Busch InBev NV, Bank of America, and Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Anheuser-Busch InBev SA/NV Stock Quote
Anheuser-Busch InBev SA/NV
$55.02 (2.75%) $1.47
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
$44.84 (0.36%) $0.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.