Tuesday 11 December 2018

CRH shares up on $1.5bn new US bonds

CRH chief Albert Manifold
CRH chief Albert Manifold
Ellie Donnelly

Ellie Donnelly

Shares in building materials giant CRH were up slightly yesterday after the company issued $1.5bn (€1.2bn) of bond debt at a lower cost than expected.

Ireland's biggest company issued a 10-year $900m bond that carried a coupon of 3.95pc and, a 30-year $600m bond that carried a coupon of 4.5pc.

Both bonds were issued around 200 basis points below the initial pricing indications highlighting the level of demand, according to Davy Analyst Robert Gardiner. The funds will be used to part finance the acquisition of Ash Grove Cement, which the company purchased for $3.5bn (€2.94bn) last year, according to Mr Gardiner.

In addition the group, which employs over 41,000 people in the US, announced the early redemption of its 8.125pc guaranteed notes due in July 2018, of which over $288m was outstanding.

The note was originally issued as a $650m bond in 2008. In May last year, $362m of the issued notes were redeemed by CRH America as part of a normal liability management exercise.

"These 2018 notes represent CRH's most expensive debt funding in the public bond market," Mr Gardiner said. "The next highest coupon is 6.4pc on a $300m bond raised in September 2003. This bond has already been part of a similar early redemption with $87m acquired in 2009 and 2010."

At end-2017 CRH's average net fixed rate cost of debt was 3.3pc. Last year the group recorded earnings of €3.3bn, a 3pc increase on the same period in 2016 on a like-for-like basis.

CRH's strong performance last year was driven by increases in underlying demand in the Americas, and continued positive momentum in Europe, the company said in its annual results presentation.

Earlier this year CRH announced the appointment of former Bank of Ireland CEO Richie Boucher to its board, while it recently bought assets from Irish competitor Kilsaran as growth in its Irish business picks up.

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