Indianapolis-based Eli Lilly and Co. is marketing its first bonds in euros as the deluge of U.S. borrowers crossing the Atlantic Ocean to raise cheaper funds continues.
The drugmaker plans to sell 2.1 billion euros ($2.3 billion) of securities in three parts, according to a person familiar with the matter who asked not to be identified because they’re not authorized to speak publicly. Darling Ingredients Inc. is also debuting bonds in euros, according to a statement on the Irving, Texas-based recycler’s website.
U.S. companies have sold a record 59 billion euros of notes this year, dwarfing the 24 billion euros raised at the same time last year, data compiled by Bloomberg show. Borrowers including Coca-Cola Co., McDonald’s Corp. and BlackRock Inc. have been lured to the region by average yields on investment grade bonds in euros that are about 2 percentage points lower than those in dollars, according to Bank of America Merrill Lynch index data.
Lilly is selling 600 million euros of seven-year bonds to yield 45 basis points more than benchmark rates, 750 million euros of notes maturing in 11 years that will pay a spread of 70 basis points and the same amount of securities due in 15 years with a premium of 107 basis points, according to the person.
“By diversifying our debt portfolio in the European market, Lilly better matches its debt with our global profile and takes advantage of the current market conditions in Europe,” Thomas Grein, senior vice president of finance and treasurer at Lilly, said in e-mailed comments. Grein gave no details of the sale.
Darling Ingredients is marketing 515 million euros of bonds and some of the proceeds will refinance an existing euro loan, the maker of food and fuel from animal by-products said in its statement. The sale wouldn’t increase the company’s total debt, director of investor relations Melissa Gaither said by e-mail.
The average spread over benchmark rates that investors demand to hold investment-grade debt in euros is 67 basis points, according to Bank of America Merrill Lynch.
Lilly shares were down 22 cents in morning trading Tuesday, to $74.08.