(Bloomberg) -- Barry Callebaut AG is seeking to sell junk-rated bonds in euros as European Central Bank stimulus drives investors into high-yield debt.
The maker of chocolate and cocoa products is offering 450 million euros ($509 million) of eight-year notes, according to a person familiar with the sale who asked not to be identified because they’re not authorized to discuss it publicly. The Zurich-based company, which has the highest junk grade at S&P Global Ratings, said May 9 that it planned to offer at least 350 million euros of bonds to help repay debt.
Euro borrowing costs have fallen to the lowest in a year for the least-risky junk issuers as investors are turning to the debt to boost returns. Yields on investment-grade corporate bonds have tumbled as the ECB is preparing to start buying highly rated company debt next month as part of its enlarged quantitative easing program.
“The theme of people moving down the credit-quality spectrum continues,” said Philipp Buff, a Geneva-based senior credit analyst at Pictet Asset Management, which oversees about 149 billion Swiss francs ($152 billion) of assets. “Good quality BB credit should continue to see strong demand from high-yield and investment grade accounts.”
The average yield on BB rated corporate notes in euros has fallen to 3.25 percent on Monday from 4.93 percent on Feb. 12, according to Bank of America Merrill Lynch index data.
A spokesman for Barry Callebaut declined to comment on the bond sale. The company will use proceeds from the issue to repay debt including a 175 million-euro leveraged loan, according to a May 9 S&P note.
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