AP Moller-Maersk has entered the international capital markets for the first time with a ?750m ($1.1bn) bond sale.
Shipping giant AP Moller-Maersk has entered the international capital markets for the first time with a ?750m ($1.1bn) bond sale.
The shipping and energy conglomerate, which currently faces an expected full year loss of $2bn and has $19.3bn worth of debt on its books, intends to use the proceeds to refinance its bank debt as well as for ?general corporate purposes?.
The five year euro bond issue, which was six and a half times oversubscribed and generated significant demand from investors all over Europe, was the company"s first foray into bond sales.
The move represented a significant shift away from its traditional reliance on bank debt and a bid for independence from banks at a time of potential acquisitions.
?What we have said is that due to the situation in the financial markets we feel it is prudent to broaden our sources of funds,? Maersk"s head of group finance and risk management Jan Kjaervik told.
?Historically we have tapped the banks, ship finance institutions and the export credit agencies, but it is prudent to take proactive action,? he said.
With excessive bank debt now a major concern for many analysts the move was welcomed by the market as a positive step forward for Maersk and an opportunity for potential acquisitions.
?Corporate bonds are increasingly being used as an additional funding source for large European corporates, and in the light of that development it is only natural that we look at the funding opportunities in the European capital markets? said Mr Kjærvik.
?If you look at a corporate of our size with a similar debt portfolio, most are already in the capital markets, so from that point of view we have been slower than most,? he continued.
Maersk officials also pointed out that the company"s strategy of diversifying its finances away from over reliance on the banks was based on the realisation that despite continuing good relationships, the traditional finance institutions were increasingly unavailable.
The decision to enter the capital markets has been expected ever since Maersk unveiled its plans to raise nearly $1.8bn through a share offering in September.
While raising the share sale, Maersk was quite clear in that its aim was to ?preserve financial flexibility in line with our traditionally conservative capital structure and to provide additional flexibility to pursue strategic opportunities?.
The euro bond was priced to yield 236.8 basis points more than German government debt, according to Bloomberg data, offering investors a coupon of 4.8%. Maersk is understood to have received orders totalling over ?5bn for the securities.
Given the success of the issue the sale is unlikely to be last trip Maersk makes to the markets.
?I think this will depend on the terms and conditions in the future in the capital markets, but if it is worth doing you will probably find us doing it again in the future,? said Mr Kjaervik.
The bonds are expected to be dual listed on NASDAQ OMX stock exchange in Copenhagen and the Luxembourg Stock Exchange. The Bonds were placed by Danske Bank, HSBC, ING, JP Morgan Securities Nordea.