(Bloomberg) — Companies that typically borrow via a German credit instrument are branching out to the bond market for the first time, as they look to take advantage of its wider investor base to raise larger amounts.
German retailer Rewe Group, biopharmaceutical firm Sartorius AG, and Netherlands’ equipment leasing company Boels Topholding BV tapped the bond market for the first time last week — a period that saw the highest issuance since June as borrowers rushed in ahead of further potential interest rate increases by central banks.
This represents something of a shift for the firms in terms of them favoring bonds over their usual channels of loans and Schuldschein notes — an instrument seen to offer a stable liquidity pool where lenders tend to hold their debt till maturity. Schuldschein aren’t publicly traded.
Larger sums can be raised from the bond market with similar maturities and sometimes pricing to the Schuldschein market. Sartorius, which produces precision scales for laboratory and industrial uses, sold a €3 billion ($3.2 billion) bond — larger than the biggest Schuldschein on record.
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Rewe and Sartorius may have chosen to sell bonds as “right now a Schuldschein with such volumes, pricing and maturity mix would have been a stretch,” said Heiko Möhringer, managing director for debt market EMEA with BNP Paribas.
Sartorius sees itself as a regular bond issuer in the future after blowout demand of more than €18.7 billion for its offering, said spokesperson Timo Lindemann in an email.
Supermarket giant Rewe wants to diversify its funding and investor base through its €900 million bond, which is tied to the firm’s aim of reducing greenhouse gas emissions, according to a company spokesperson. The seven-year transaction attracted more than €3.3 billion of demand.
Boels meanwhile sold a €400 million bond to repay its term loan and revolving facility. Rewe will also use bond proceeds to replace some of its Schuldschein debt, while Sartorius is refinancing a bridge loan that backed its acquisition of Polyplus.
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