Four months after flagging a bond issue in the Australian market and three months after suffering a credit downgrade, the Coca Cola Company (CCC) has joined the rush of companies who have recently issued bonds. The Atlanta-based company has issued $1bilion worth of bonds in two tranches comprising $450 million June 2020s and $550 million June 2024s at Swap + 67bps and Swap + 105bps respectively, which is not too far from guidance levels.
Regular YieldReport readers will recall how Apple and a host of other US companies have been sitting on piles of cash outside the US. Repatriating that cash will see them hit with tax at the US corporate rate of 35%. By issuing bonds outside the US the company can raise money for buy-backs or other corporate purposes without triggering the tax payment. CCC is one such company with a large pile of cash outside the US and YieldReport understands this to be the driver of the bond issue.
Coca Cola Amatil, a company listed on the ASX, is 29% owned by CCC. While Coca Cola Amatil has been a regular issuer of bonds locally, this is CCC’s debut bond issue in the Australian market. CCC is rated AA- by Standard & Poor’s and Aa3 by Moody’s Investor Services.