EU: Diageo returns to bonds market for the first time since 2020

Diageo Plc is returning to Europe’s market for new bonds for the first time since 2020, Bloomberg reported on April 5.

The maker of Guinness beer and Smirnoff vodka is selling at least 1.6 billion euros ($1.75 billion) of debt in a four-part deal in euros and sterling, according to a person familiar with the matter. It’s the company’s first venture into the public market since September 2020, when it sold a two-part 700 million euros and 400 million pounds deal, according to data compiled by Bloomberg.

Diageo’s offer is a signal of improving market sentiment, as measures of credit risk fall to the lowest in about three weeks. It adds to a resurgence in supply, with borrowers resuming sales after having largely stayed on the sidelines following Russia’s invasion of Ukraine.

“We are now returning to our usual regular issuance strategy, and we believe that current market conditions are supportive of an appropriate time to access the capital markets,” a Diageo spokesperson said in response to Bloomberg News questions.

The offer follows strong demand seen for industry peer Pernod Ricard SA’s sale last week, which pulled in 3.4 billion euros of orders for 750 million euros of sustainability-linked notes due in seven years. Diageo’s four-part transaction is the first multi-tranche sterling and euro offering since GlaxoSmithKline Plc’s consumer healthcare company Haleon last month.

Diageo’s euro tranche maturing in June 2029 is being marketed at 60 to 65 basis points over mid-swaps, according to the person familiar with the deal, who asked not to be named as they aren’t authorized to speak publicly. Back in September 2020, the company priced notes due in eight years at 50 basis points over the same rate.

Diageo said the proceeds will be used for general corporate purposes. Barclays Plc, Bank of America Corp, Deutsche Bank AG and Goldman Sachs Group Inc. are running the deal.

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