UPDATE: Coca Cola Readies $4 Billion 4-Part Bond Issue--Sources

Coca Cola Co. (KO) is in the market Thursday with a four-part debt offering, and intends to sell at least $4 billion of bonds, according to people familiar with the sale.

The offering consists of a tranche of floating-rate notes and three tranches of fixed-rate notes going out three, five and 10 years. It could also be the soft-drink maker's largest bond deal ever, after the company sold $2.25 billion in five- and 10-year bonds in March 2009.

Price guidance on the floating-rate notes is five basis points over the three-month London interbank offered rate, or Libor, and around of 35, 55 and 75 basis points over comparable Treasurys on the three-, five-, and 10-year tranches, respectively. Orders are already said to be in the range of $6.5 billion.

At 35 basis points over Treasurys, the three-year piece will likely be the lowest nominal interest rate, or coupon, on record for debt of that maturity, said people familiar with the deal.

The three-year record low coupon is held by Wal-Mart Stores Inc. (WMT), which sold $5 billion in debt last month with a coupon of 0.75%.

The five-year piece being talked at 55 basis points may tie the record with that currently held by Colgate-Palmolive Co. (CL), which sold $438 million in debt last Friday with a 1.375% coupon. It was sold at a discount to face value to yield 1.532%, or 38 basis points over comparable Treasurys.

"This potentially could be at or through all-time lows," one investor said. "It's the number-one brand in the world."

Coca Cola's bond sale in March 2009, when borrowing rates were higher, featured a coupon of 3.625% on the five-year piece and 4.875% on the 10-year piece, according to data provider Dealogic.

Bank of America Merrill Lynch, Deutsche Bank Securities, Goldman Sachs & Co. and HSBC are managing the new sale, proceeds from which will be used to meet payments in connection with Coca-Cola's tender offer for outstanding debt. The balance should go toward general corporate purposes.

The bonds will be paid in full at maturity and are expected to be rated Aa3 by Moody's Investors Service and A+ by both Standard & Poor's and Fitch Ratings.

-By Katy Burne, Dow Jones Newswires; 212-416-3084; katy.burne@dowjones.com

Colgate Palmolive (NYSE:CL)
Historical Stock Chart
From May 2024 to Jun 2024