Irish-controlled glass and metals packaging group Ardagh has launched a £400m (€457m) eight-year bond offering, with the proceeds set to be used for the early repayment of existing debt.
The group, which has grown aggressively through acquisition in recent years and is looking for more purchase opportunities, closed 2016 with debt levels of €7.2bn.
It recently raised over $300m (€268m) from the flotation of nearly 7% of its business. That money will go towards the early redemption of €405m in bonds not due to mature until 2022.
The fresh £400m will be used to redeem $500m of senior notes originally not due for repayment until 2021.
Both moves will help Ardagh save on interest costs.
“One of the key strengths of Ardagh has been the effective management of its balance sheet,” said Barry Dixon at Davy Stockbrokers. “This was illustrated earlier this year with the issuance of $2.2bn of new bonds at attractive rates. [This] announcement is further evidence of this skill and should result in additional interest costs reductions.”
Prior to yesterday’s bond launch announcement, Ardagh had its long-term corporate credit rating upgraded from a ‘B’ to a ‘B+’ classification by S&P Global Ratings based on its “financial discipline” and “focus on deleveraging from the current high levels”.
S&P added there is a one in three chance of a further upgrade in the next year if Ardagh successfully integrates its acquired assets and “we see further evidence of a less aggressive financial policy”.
S&P reported: “We believe that incremental improvements in both business risk and financial policy have strengthened Ardagh’s credit profile.”
It added that it sees Ardagh’s recent partial IPO only increasing the group’s financial discipline.
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