Mondelez Follows Microsoft Selling Bonds in Europe as Costs Fall

Mondelez Follows Microsoft Selling Bonds in Europe as Costs Fall

U.S. food and beverage company Mondelez International Inc. (MDLZ) is following Microsoft Corp. selling bonds in Europe as borrowing costs fall. The maker of Oreo cookies is marketing 18-month floating-rate notes and fixed-rate bonds due January 2017 and January 2021, according to a person familiar with the matter. The average yield investors demand to hold corporate bonds in euros instead of government debt dropped six basis points this week to 123 basis points, the lowest since June 12, Bank of America Merrill Lynch index data show.American companies are raising funds in the common currency at the fastest pace since 2008, with Microsoft’s 3.5 billion-euro ($4.8 billion) issue yesterday boosting the total for the year to 44 billion euros, according to data compiled by Bloomberg. Borrowers are speculating the European Central Bank will hold benchmark rates at record lows as a report today showed the region’s economy slowed in the third quarter.

“In Europe we’re still in an environment of easing from the central bank, whereas everyone is expecting tapering in the U.S. early next year,” said Nicolo Bocchin, a Milan-based credit portfolio manager at Aletti Gestielle SGR SpA who helps oversee about 3.5 billion euros. “U.S. companies see that there is demand in Europe so they issue here where there are lower yields.”

The average yield gap between investment-grade bonds in dollars and euros widened to 1.3 percentage points this week, near the biggest discount since Sept. 13, according to Bank of America Merrill Lynch index data. Euro-denominated notes yield an average 2 percent while securities in dollars yield 3.3 percent, the data show.

Three-Part Deal

Mondelez, based in Deerfield, Illinois, last sold bonds in euros in 2008, data compiled by Bloomberg show. The company’s floating-rate notes will be priced to yield about 50 basis points to 55 basis points more than the three-month euro interbank offered rate, according to the person, who asked not to be identified before the transaction is completed.

The bonds due 2017 will be priced to yield about 60 basis points more than the benchmark mid-swap rate, while the securities maturing in 2021 are being offered at a spread of about 95 basis points, the person said.

The cost of insuring corporate bonds against losses was little changed, with the Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies falling 0.4 basis point to 81 basis points at 11:21 a.m. in London. The gauge dropped to a 3 1/2-year low of 77 basis points on Nov. 27.

To contact the reporter on this story: Katie Linsell in Madrid at

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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