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Diageo taps 'bargain' bond market

THE makers of Guinness have tapped the bond market at rates that are half what the Government here pays to borrow. Diageo completed a €2.5bn bond deal paying as low as 0.6pc a year for some of the loans.

Diageo raised $3.25bn (€2.5bn) in four slices of dollar denominate bonds.

Its made up of $750m of 0.625pc bond due to be repaid in April 2016; $650m of five-year bonds with an interest rate of 1.125pc; $1.35bn of 10-year bonds at an interest rate of 2.625pc; and $500m of bonds that don't have to be repaid until 2043.

Even after the recent run of positive news, the Government would struggle to find lenders to hand over cash until 2043.

To borrow for five years, the State would have to pay 2.3pc compared to 1.125pc for Diageo.

Barclays, BofA Merrill Lynch, Goldman Sachs, JP Morgan, Santander, Standard Chartered Bank and UBS Investment Bank were joint book-running managers.

The cash will be for general corporate purposes, including repayment of maturing long-term debt and outstanding commercial paper.

Unlike the Government, Diageo has a prized 'A' credit rating. The London-based company is ranked A- by Standard & Poor's and Fitch Ratings.

Irish Independent