AB InBev lining up expected record mega-bond

[NEW YORK] Beer giant AB InBev was holding its first investor calls Monday to line up the sale of what could be the largest bond ever sold, part of the financing for its purchase of SABMiller.

Sources told IFR that the maker of Budweiser, Stella Artois and Corona hired Bank of America Merrill Lynch, Barclays and Deutsche Bank to arrange calls Monday and Tuesday.

Market participants expect the bond to be anywhere between US$30 billion and US$60 billion, which could top the current record-holder, a US$49 billion deal from Verizon in 2013.

Through the bond deal, AB InBev is expected to take out US$30 billion of bridge loans it received last year and a portion of the US$35 billion in term loans that were part of the same bank financing.

Even at the low end of estimates, the deal would be the second-largest corporate bond issue ever, ahead of the US$21 billion sold by Actavis last year to help fund its takeover of Allergan.

It is still unclear whether AB InBev will opt to raise all the funds in US dollars or might include tranches in euros or other currencies.

One banker said that even if the company were to raise the entire amount in US dollars, a strong marketing effort in Europe would not be unusual for a deal of this size.

"For something like this, 25 per cent of the book could be European accounts," said the banker.

Market participants say that if market conditions remains supportive, a formal announcement could be expected as soon as Tuesday or Wednesday.

"Usually you don't see calls unless they are going to do a deal," one buyside trader said. "They can prime everybody now and move fast." US companies have rushed to the bond markets to finance acquisitions and share buybacks, selling a record US$1.269 trillion of new bonds in 2015, and there is an estimated US$200 billion pipeline of M&A bond financing in the works for 2016.

AB InBev, rated A2 by Moody's and A- by Standard & Poor's, has backed its US$100 billion-plus bid for SABMiller with a record US$75 billion syndicated loan, TRLPC reported in November.

The company's vice president for treasury, risk management and financial markets, Fernando Tennenbaum, and director of funding Matt Amer will host the calls.

IFR