Budweiser maker buying back US$3.5b bonds to cut huge debt pile

EUROPE’S most indebted brewer is seeking to buy back bonds in a move to further reduce its large debt pile.

Anheuser-Busch InBev will spend as much as US$3.5 billion buying back dollar and pound denominated notes through Dec 14. The Belgian brewer of Budweiser and Stella Artois has been trying to reduce its debt since it took on a loan to fund its acquisition of SAB Miller in 2016. Its net debt stood at US$76 billion as of the end of June.

Companies in Europe are trying to reduce their debt burdens as borrowing costs soar. German real estate company Vonovia this week offered 1.5 billion euros (S$2.13 billion) in social and green bonds to repay existing indebtedness, while pharma firm GlaxoSmithKline Capital also undertook a tender offer, stating its goal as managing its balance sheet.

“Companies have decided to reduce short-term maturity walls and alleviate liquidity risks,” said Daniel Ender, a credit analyst at Actiam in Rotterdam. “In the case of AB InBev, they’re also tackling long-term debt and hence are able to buy back at massive discounts to par.”

Today’s offering is the latest in a series of steps the brewer has taken, including the listing of Budweiser Brewing Company APAC in Hong Kong and the sale of Budweiser Brewing’s Australian unit to Japan’s Asahi Group Holdings.

AB InBev – along with other beverage companies – is also facing a crunch from higher raw material costs. Still, the brewer last month reported results that beat estimates and said demand for beer remains resilient. The company is set to benefit in the coming weeks from the football World Cup, whose sponsors include Budweiser, as fans gather in pubs to watch the games. BLOOMBERG