PepsiCo Raises €1 Billion in Two-Part Euro Bond After Cutting Profit Outlook

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PepsiCo Inc. entered Europe's public bond market on Friday with a €1 billion ($1.12 billion) two-part deal, a day after cutting its profit outlook on mounting costs in North America. The deal is split between a three-year tranche and a nine-year tranche, each fixed at a size of €500 million, with initial pricing for the shorter part around 60 basis points above mid-swaps and the longer slice marketed at around 105 basis points, according to a person familiar with the matter. The company lowered its earnings growth outlook on Thursday, citing weakness in both its beverage and snack businesses, and Chief Executive Officer Ramon Laguarta told analysts on a call that the company doesn't "feel good about the beverage business," with sales volumes of North American beverages down 3% so far this year. PepsiCo is turning to Europe for the second time this year while staying away from its home market, adding to a record boom in so-called reverse Yankee issuance that has pushed sales above €140 billion this year, with Alphabet Inc., Danaher Corp. and Baker Hughes Co. among the US borrowers contributing. The sale, managed by Deutsche Bank AG and HSBC Holdings Plc, is expected to price later today.

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PepsiCo cut its profit outlook on rising North American costs and weak beverage/snack volumes, then raised €1B in euro bonds.

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