BUILDING MATERIALS giant CRH yesterday borrowed €750 million from 250 financial institutions and investors through a bond sale.
The move came just weeks after the Dublin- and London-listed group issued new shares to existing stakeholders to raise almost €1.24 billion, €500 million of which will be used to repay existing debts.
The bonds will be repaid after five years at a rate of 7.375 per cent annually, and were the first euro-denominated bonds issued by the company.
A spokesman said that the bond sale was routine and added that it regularly raises cash in this way. “It’s just part and parcel of the normal debt-management process,” he said.
He added that the offer of the bonds was six times oversubscribed and said that 250 institutions in 20 countries bought the instruments.
The rate compares favourably with previous bond sales. Dollar bonds it issued last year carry an interest rate of 8.125 per cent, while an earlier sterling bond sale was at 8.25 per cent.
Credit watchdog Fitch recently re-affirmed a BBB+ rating it had earlier given to CRH, but put the Irish group on a “negative” outlook, meaning that it could lower that rating. The BBB+ rating means that Fitch classes the company as “satisfactory” and indicates that it believes there is a low risk that CRH will default on any of its loans. The lower a company’s rating, the more interest it generally has to pay on its borrowings.
Up to two years ago, CRH would have earned AAA ratings from agencies such as Fitch.
However, the building slump means that it is now more vulnerable, hence Fitch’s decision to take a “negative” outlook.
