Bond Deals of the Year — Investment grade corporates: Bravery and ambition shine through

Fixed income investors were desperate to buy long-dated bonds this year to lock in high yields before central banks started cutting interest rates.

Some companies went to 15 and 20 years, but investors wanted more. US pharmaceutical company Merck & Co dared to head all the way to 30 years, pricing one of only a handful of corporate bonds ever at that maturity in euros.

The deal was a roaring success, with the issuer’s eight to 30 year curve flattening during bookbuilding as investors piled into the long tranche. Other borrowers took notice, with three more following the path Merck & Co forged with 30 year bonds of their own. But Merck & Co did it first and, for that reason, it is GlobalCapital’s Corporate Deal of the Year.

Cisco Systems knew it had a lot of funding to do to fund the biggest acquisition in its history — the $28bn purchase of enterprise software company Splunk.

Cisco was sitting on $25.7bn of cash on its balance sheet in February and the acquisition was not expected to complete until at least the third quarter of 2024.

But Cisco judged the conditions early in the year to be strong enough for a big bond issue and grabbed the market with both hands, drumming up $54bn of demand for its $13.5bn deal.

Cisco proved that an acquisitive company can also be as nimble and quick off the blocks as the most opportunistic bond market users.

This is a rarity for jumbo deals, which can take weeks of planning. Cisco’s feat demonstrates a company that knows the dollar bond market inside out can use it for maximum advantage, even for event-driven, one-off situations.

French rolling stock company Alstom knew it had to deleverage to maintain its investment grade rating, but it also still needed money to refinance short-dated debt.

The company announced a €2bn deleveraging plan after issuing a profit warning in October 2023 and its debut hybrid bond in May 2024 was widely seen as the first major test of whether fixed income investors thought it could succeed.

It was a make-or-break deal for Alstom’s deleveraging ambitions, with a major rights issue following.

The hybrid sale was a roaring success. The company drummed up a massive €8bn book for the €750m trade, allowing Alstom to cut the yield on offer by 87.5bp during bookbuilding.

Everything went right at a crucial time in the company’s turnaround, with the issuer deftly using the hybrid market for the exact reason it was created — to access capital while defending a credit rating.

In a year of elections, France’s snap parliamentary poll over the summer did the most to upset markets.

Two days after president Emmanuel Macron called the election, Electricité de France surprised the market by opening books on a triple tranche green deal. This was at a time when all European corporate bonds were being treated as delicacies that needed careful handling, let alone one from a French issuer.

The company electrified the market with more than €12bn of demand coming in for its €3bn deal. The shortest tranche was earmarked for nuclear spending, giving a tacit endorsement to one side of the fiercest debates in ESG funding — whether nuclear energy can be classed a green.

The company paid a chunky concession to get the deal away, but that was beside the point. EDF proved without doubt that, no matter the political shocks, investors would pile in to buy its green debt.

Hammerson, the UK shopping centre company that owns the Birmingham Bullring, had a tough time during the Covid lockdowns. But a new management team led by chief executive officer Rita-Rose Gagné helped the company turn its fortunes around with asset disposals to address deep losses.

It had not sold a bond since 2015 when it opened books on what was to become a £400m 5.875% October 2036 deal.

The turnaround tale impressed investors. The order books brimmed with £2.4bn of demand, one of the largest of the year in sterling.

This allowed Hammerson to hack at the spread, which it tightened by 32bp during bookbuilding to land at 183bp over Gilts — a minus 7bp new issue concession.

As well as the impressive recovery story, Hammerson shrewdly held a tender offer on old bonds and set the maximum acceptance offer on the new deal at £400m to remain debt neutral. This proved to investors that Hammerson had a tight rein on its debt.

The deal went far beyond anyone’s expectations and marked a triumphant milestone in Hammerson’s recovery from Covid.