Pricing Update: Heineken

Heineken was able to complete a $725 million private placement issue Friday in the face of market volatility, a source familiar with the deal confirmed.

Agented by JPMorgan Securities, the deal was done in an eight-year bullet tranche and was priced to a 4.60% coupon. Due to widespread uncertainty about global markets and fickle Treasury rates, the agent decided against pricing the deal based on spreads, which is the norm in the private bond market, the source said. Because Treasurys were fluid towards the end of last week, the deal, based on the coupon, priced between 150 bps and 155 bps above Treasurys.  

The senior note transaction was launched with $200 million on the cover. Heineken is viewed as a strong NAIC-2. This deal is the year’s second largest, trailing the National Football Association, which raised $835 million in March via Bank of America Merrill Lynch.

In 2008, the Dutch brewer used JPMorgan and BAML to tap the U.S. private bond market for $500 million, including a euro tranche. Last year, Heineken issued €400 million seven-year notes in unrated eurobonds.

This most recent transaction comes on the heels of Heineken’s acquisition of Fomento Economico Mexicano’s (FEMSA) beer operations, FEMSA Cerveza. This deal also makes FEMSA a 20% shareholder in Heineken.

In addition, JPMorgan priced a smaller deal for Watts Water last week. The $75 million transaction was offered to existing lenders. In 2006, Watts used BAML to raise $225 million at 110 bps above Treasurys for a 5.85% coupon. It was viewed as a NAIC-2 issuer.