Ardagh Group Plans Dual-Currency Bond Offering Totaling US$1.28 Billion Equivalent
Original article credit: IFR by Owen Sanderson
Ardagh Group, a global supplier of infinitely recyclable metal and glass packaging, has unveiled plans to issue a dual-currency bond totaling approximately US$1.28 billion equivalent. These senior secured notes are split between euro and US dollar denominations, each with a final maturity date in January 2031 and a non-callable period of two years.
The offering comes at a critical time for the packaging sector, as macroeconomic factors, including fluctuating interest rates and shifting consumer spending patterns, have placed increased demand on companies to reevaluate their capital structures. With this bond issue, Ardagh aims to refinance its existing debt and manage maturities more effectively while addressing investor appetite for secured instruments.
Overview of the Bond Issuance
Ardagh’s transaction involves the issuance of two tranches of senior secured notes (SSNs):
– A euro-denominated tranche maturing in January 2031
– A US dollar-denominated tranche maturing in January 2031
Both tranches have a non-call period extending to two years from the settlement date. After this period, the bonds may be called at a premium, giving the company flexibility for future refinancing.
Key details regarding the bond structure:
– Total offering size: Approximately US$1.28 billion equivalent
– Currency split: Euro and US dollars
– Maturity: January 2031 for both tranches
– Non-call period: Two years (until January 2026)
– Format: Senior secured notes (SSNs)
– Use of proceeds: Refinancing existing debt and general corporate purposes
The proceeds are expected primarily to refinance portions of Ardagh’s existing capital structure, including bonds and other debt instruments that are approaching maturity or carry higher interest costs.
Lead Bookrunners and Banking Consortium
A consortium of leading investment banks has been appointed as active bookrunners to support the marketing and distribution of the offering:
– Citigroup
– Deutsche Bank
– Goldman Sachs
– Bank of America
– Barclays
– Credit Suisse
– HSBC
– ING
– JP Morgan
– Morgan Stanley
– RBC Capital Markets
– Societe Generale
– UniCredit
Each of the listed banking institutions brings extensive experience in high-yield offerings and international bond placements, especially in the packaging and industrial sectors.
Some key roles and responsibilities assumed by the banks include:
– Structuring the pricing and documentation for the euro and US dollar tranches
– Identifying target investors in both the European and North American high-yield markets
– Conducting investor roadshows and private meetings
– Managing demand, pricing, allocation, and overall execution strategy
Market Context and Investor Appetite
The timing of the transaction follows positive developments in the broader leveraged finance markets, which have begun to recover following heightened volatility seen in 2022 and early 2023. Risk appetite has returned gradually as central banks have managed to ease inflationary pressures through interest rate frameworks, and spreads in the high-yield bond market have compressed in recent months.
Key market developments influencing Ardagh’s timing include:
– Stabilization of inflation in the US and Europe
– Easing of recession fears, supported by stronger-than-expected consumer activity
– Recovery of debt capital markets following a quiet first half of 2023
– Improved demand for secured instruments driven by investor caution
Given these market conditions, Ardagh’s offering appears favorable for investment-grade and high-yield investors looking for long-dated exposure to a consistent cash-generative business with a solid customer base in the consumer goods and beverage industries.
Details About Ardagh’s Credit Profile
Ardagh Group, headquartered in Luxembourg, operates in more than a dozen countries, with production facilities for both metal and glass container packaging. It serves a core group of beverage, food, and consumer goods companies.
As of its latest financial
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